Legal fees can often become a source of contention. Clients may feel charges are excessive, unreasonable, or lack sufficient clarity. The Solicitors Act 1974 provides clients the right to seek a court-ordered assessment of their solicitor’s bill if they believe the fees are unfair or disproportionate.

The case Kenig v Thomson Snell & Passmore LLP [2024] EWCA Civ 15 is a significant decision from the England and Wales Court of Appeal that addressed the scope of a beneficiary’s ability to challenge solicitors’ fees.

Legal costs and risk can be the biggest obstacles to litigating, which is why litigation finance, funding arrangements and insurance can allow clients to pursue claims by reducing those financial risks. At Annecto Legal, we can assist clients by helping them secure funding and insurance for their cases.

Kenig v Thomson Snell & Passmore LLP                             

Daniel Kenig, a beneficiary of his late mother’s estate, sought an assessment of solicitors’ fees paid out of estate funds as he was entitled to pay the bill, claiming they were excessive. The case revolved around whether fees already paid could be challenged and whether such challenges should be subject to the same restrictions as assessments initiated by solicitors’ clients under section 70 of the Act.

The Court of Appeal upheld the first-instance decision allowing the assessment, emphasising that section 71(3) offers broader rights to a beneficiary who is a person interested in the estate. Unlike section 70, section 71(3) does not impose a strict 12-month time limit for challenging fees if the beneficiary was unaware of the charges within that period.

The judgment clarified that an executor’s approval of fees does not preclude beneficiaries from contesting their reasonableness, though such approval is a significant factor in the court’s assessment.

Broader Implications

Beneficiary protections: The case expands protections for beneficiaries, allowing them to challenge fees that may reduce their share of the estate. It acknowledges the fiduciary obligations of executors to ensure fees are reasonable.

Solicitors’ practices: Law firms are reminded to provide accurate and updated cost estimates and ensure transparency with all interested parties to avoid disputes.

Detailed assessments: Courts can conduct thorough reviews of solicitors’ bills to determine if they align with the complexity of the work performed, even if they seem proportionate as a percentage of the estate’s value.

The decision signals a careful balance between protecting beneficiaries’ interests and respecting executors’ discretion in managing estates. By distinguishing section 71(3) cases from precedents like Tim Martin Interiors Ltd v Akin Gump LLP, this judgment sets a precedent that allows for a broader review of legal costs in estate administration. It confirms the court’s role in safeguarding the interests of beneficiaries and maintaining fairness in professional fees.

Commercial litigation funding

Litigation funding can be a valuable tool when disputing solicitor costs, especially in cases where the client feels the fees are excessive but lacks the financial resources to challenge them through legal proceedings. These tools can also also claims to be pursued without the concern of racking up large legal bills in the first place. Some of the commercial litigation funding methods available include:

After-the-event (ATE) legal insurance– ATE insurance is generally used to protect from adverse costs risks & Security for Costs requirements. After-the-event (ATE) legal expenses insurance is perhaps best thought as a similar to a ‘swap’. For either no upfront fee or a small upfront fee, the insurer takes on all of the risk of the potential adverse costs award.

The claimant has swapped their obligation to pay the defendants in the event of a loss, with the obligation to pay the insurer in the event of a win. This ‘swap’ is generally an attractive swap as the client is likely to be in a better financial position following a win than following a loss. Also, the payment to the insurer will only be a percentage of the adverse costs rather than the whole amount.

Third party litigation funding– In some cases, third party litigation funders may be willing to provide funding for a claim in exchange for a share of any financial settlement or damages awarded. This option can be attractive when there are no funds to pursue a strong case. ATE insurance is often used in conjunction with this type of funding.

Conditional Fee Agreements and Discounted CFAs – No Win, No Fee arrangements allow businesses to pursue or defend claims without the immediate burden of legal costs. This ensures that the solicitor’s interests are aligned with their clients.

At Annecto Legal, we connect clients with the right commercial solicitors and dispute resolution team to handle their claim effectively. Additionally, we can assist in securing litigation funding for your case.

How can Annecto Legal assist?

When handling disputing solicitor costs, clients should explore all options available to them. At Annecto Legal, we assist a wide range of clients in finding the appropriate litigation funding and after-the-event (ATE) insurance.

Annecto Legal regularly assists clients who are involved in dealing with solicitor costs. If you are looking to challenge your solicitor regarding costs and want to find out whether we can assist you in helping you secure the right deal, then please contact Annecto Legal now.