We are often asked, ‘How much does it cost to remove an executor?’ Solicitor Lee Dawkins examines the complex but vitally important issue of legal costs in executor disputes.
Disputes between beneficiaries and executors, or between fellow executors, often rank amongst the most hotly disputed clashes in the arena of contentious probate law.
We always encourage people to make every effort to resolve their differences informally, without the intervention of the courts, so as to avoid significant legal costs being incurred. But while this works in a large proportion of cases there are situations where the dispute becomes intractable and the only way of overcoming the deadlock is to ask the court to decide. In the context of an executor dispute this will often involve an application to the court to have that executor removed from office.
Before embarking on litigation however there are various issues that need to be considered. High on the list is the question of legal costs because these can really mount up. It’s important to be as clear as you can about what it might cost you to go to court to have the executor removed. And if you are successful, will you be able to recover those costs?
Who can be ordered to pay legal costs?
Starting with the second part of this question first; who will have to pay the costs of an executor removal application? The basic legal principle governing costs is that the court has complete discretion to decide who shall pay the costs of a dispute and how much they shall pay (section 51 of the Senior Courts Act 1981 and 44.2 of the Civil Procedure Rules).
Legal costs are often determined on the ‘loser pays’ basis. This is sometimes referred to as costs ‘following the event’. As a general rule of thumb, if you end up on the losing side in litigation there’s a fairly good chance that you are going to have to pay at least some of the costs. Occasionally pyrrhic victories occur, when a court makes ‘no order as to costs’, leaving the winner to meet their own costs bill, despite their success. There are rarely any cast iron guarantees when it comes to legal costs and you therefore need to bear this in mind before embarking on a course of litigation. Litigation costs can quickly mount up and as the court proceedings progress you will have limited control over them.
Special rules for probate disputes
In contentious probate disputes special costs provisions apply. These give the court the option of ordering that legal costs be paid by the estate, but parties should not assume this will be the outcome and executors in particular need to be aware that they can be ordered to pay costs from their personal funds.
Every case will turn on its own facts, so it makes it difficult (and dangerous) to generalise. However the guiding principle is invariably ‘reasonableness’. The court will consider the conduct and actions of the parties and where it feels that one or other of them did not act reasonably then punitive costs sanctions are more likely to follow.
So in the context of removing an executor the court will scrutinise the executor’s actions. A judge will expect an executor to have acted in the best interests of the estate and in accordance with the duties that accompany the role. If a court concludes that the executor has for instance acted in breach of their duties or with a disregard to the law then not only will the executor be more likely to be removed, but there is also a much higher risk that they will be ordered to pay a significant proportion of the associated legal costs personally.
Sometimes a court may decide that it is best for the estate that an executor be removed without making adverse findings against that executor. In these cases it is much more likely that the order will provide for the costs to be met by the estate.
Standard costs or indemnity costs?
There are two types of costs order: standard costs and indemnity costs. Where costs are awarded on the standard basis, the receiving party is unlikely to be able to recover 100% of the costs they have incurred from the paying party. There is invariably a shortfall and this can often be quite significant in percentage terms. The indemnity basis on the other hand is far more generous to the receiving party, and consequently more onerous for the paying party.
Protecting your costs position
There are steps and measures that can be taken to reduce and minimise the risks of being on the wrong end of an adverse costs order. These include being open to mediation or asking the court to make directions. Above all, ensure you act reasonably at all times.
The threat of a costs order can also be used to bring an obtuse executor to their senses. Executors often overlook the fact that they risk personal liability for legal costs and a timely reminder from their opponent’s solicitor can often help to overcome an impasse and resolve the dispute.
What will it cost to remove an executor
Now to the question of what it will cost to apply to remove an executor.
Regrettably, this is not the type of application that lends itself particularly well to a fixed fee approach. Rarely are two cases the same. The issues in dispute can vary enormously and this impacts directly on the costs incurred.
Where the solicitor charges on an hourly basis the deciding factor will be the amount of work required to prepare and present the case. This in turn will depend on how clear-cut the allegations are, the complexity of the legal issues involved and what evidence will be required to convince a judge that an executor should be removed. The quantity of documents to be reviewed and the number of witness statements required are key components in determining what the overall level of costs is likely to be. Another major variable is the conduct of the executor. If they are uncooperative and cause delay then this will invariably result in costs rising.
The seniority of the lawyer conducting a case is a further factor in determining what the costs are likely to be. Lawyers are graded according to experience and those with the most experience tend to have the higher charge out rates. Geography is also relevant with lawyers in London usually charging more than those in the provinces.
Our approach to managing costs on an application to remove an executor
Before proceeding with an application to remove an executor we always plan a budget with the client, having carried out a thorough review of the above factors.
We often recommend adopting a staged approach to executors disputes, with each stage being budgeted for separately. So rather than immediately issuing a court application on day one, we suggest that we consider whether the dispute can be settled out of court. Judges like to see that parties have attempted to sort matters out by negotiation and as explained above this can have a direct bearing on any costs order subsequently made. If attempts to settle the dispute informally fail then Alternative Dispute Resolution can be considered, including mediation.
Where court proceedings are required and the legal issues are reasonably straightforward and discrete then we may give a costs estimate of between £5,000 and £15,000 plus VAT for making an application to remove an executor. Where the issues and associated evidential demands are more complex that figure is likely to be more, and the cost of removing an executor can rise to between £20,000 to £30,000 plus VAT. In particularly contentious and hard fought cases the costs can be even higher than that.
And it’s important to bear in mind that these figures apply to the applicant’s costs. The executor will incur their own legal costs and as explained, you could also become liable for these.
How we can help
We are always happy to talk matters through on a preliminary basis free of charge before you make a decision about proceeding with an application to remove an executor. Once we have an outline of the issues involved we will be able to give you a more reliable indication of how much it is likely to cost to remove an executor.
We are also able to assist with all other contentious probate disputes and contested Will claims.
Give us a call on 0808 139 1596 or email Lee direct at [email protected]