Ombudsman report

Introduction

Wills and probate related disputes are among some of the more complex cases we see at the Legal Ombudsman.

Essentially, this area of law includes a number of functions including: will writing; obtaining a grant of probate; estate administration; and acting as an executor. However, not all of these need be authorised roles.

Wills can be prepared by anyone in principle; not all will writers are subject to regulatory scrutiny. For people on a budget, this creates headaches about the standard of service one could reasonably expect. It also means some people will have access to redress if things go wrong, while others won’t. In many cases, consumers will be unaware of these distinctions.

Probate and estate administration are equally complex. While obtaining the actual grant of probate is a reserved legal activity and can only be done by an authorised person, the administration of an estate is not; this means that not all persons carrying out the administration will necessarily be ‘authorised persons’. In addition, even where an authorised person is involved, their actual role and responsibilities can vary from case to case; some service providers may also be the executors, with responsibility for overseeing everything, while others may simply be instructed to assist with the administration – often by a lay executor.

The polarity in the views of regulators and representative bodies does not help us to see through this fog of issues. The Solicitors Regulation Authority (SRA), for instance, has advised practitioners not to exploit clients’ lack of knowledge for their own advantage1. In a recently issued guidance note, the regulator said clients should not be led to believe that appointing a solicitor as executor was “essential or indeed the norm”.

The Law Society and regulated providers, on the other hand, have argued that lay executors are responsible for a three-fold increase in court claims for mishandling a deceased’s estate.

Data from the Chancery Division shows there were 368 claims lodged for breach of fiduciary duty in 2013, up from 107 on the previous 12 months. The claims range from theft of assets by the executor to fraudulent distribution of assets to favour certain beneficiaries of the will above others2.

A lawyer quoted in the associated news report attributed the rise to an increase in the use of acquaintances or family members as DIY executors and trustees, rather than instructing solicitors.

And the Chairman of the Law Society’s wills and equity committee, Richard Roberts, said the risk of mismanagement increases as more and more people execute estate distribution themselves. ”Many wrongly perceive the task to be simpler than it is,” he said.

However, of the 368 claims lodged, it is unclear how many were about solicitors and how many lay executors, rendering this conclusion somewhat speculative.

Meanwhile, a ‘shadow shopping’ exercise of 101 wills, undertaken by the Legal Services Consumer Panel (LSCP), found that a quarter of wills prepared by both solicitors and will-writers were deemed poor quality – meaning problems could arise for clients whether they used a regulated provider or an unreserved will writing specialist3. This suggests that presently, the only advantage to clients using a qualified solicitor would be having access to redress from the Legal Ombudsman in the event of a problem.

The debate about whether to regulate will writing and estate administration or at least provide a safety net for consumers, perhaps in the form of a voluntary ombudsman scheme, will no doubt rumble on. The LSB has indicated that the government may look again at the question of whether to regulate will-writing4. Former Chief Executive, Chris Kenny, said that a reply to LSB correspondence from justice minister Shailesh Vara “interestingly seems to leave open the door for further consideration of the will-writing issue in due course.”

He said that it remained the LSB’s view that the government’s decision not to regulate “does represent a missed opportunity to both raise standards and to foster confidence in a more innovative and competitive market.”

This report uses only data involving regulated service providers, as we cannot currently look at complaints from elsewhere. But as the figures and case studies will show, using a qualified solicitor is no guarantee of a good service.

What our evidence tells us

Wills and probate accounted for around 13% of the complaints we resolved last year, making it the third highest source of complaints by area of law. The evidence therefore indicates that the sector is suffering from a number of quality issues.

18% of complaints in this area are about unclear or excessive costs5. Often these can be complaints from beneficiaries who were not clients of the firm undertaking the work. If they were the clients they would have some say over the costs of the work undertaken; but as a beneficiary their rights are limited and this can cause disputes.

It is also not unusual for an estate administration to take longer to complete than was originally anticipated or to find that there are unexpected problems, which can in turn mean that costs spiral upwards. However, we would expect clients to be made aware of any increase in costs as and when they occur.

In the case of Mr A, this didn’t happen. The process of administering his late mother’s estate took more than three years. During this time the firm managed to rack up significant costs, stating a change in personnel and ‘additional advice’ as reasons. This was despite the fact that many of the delays and changes in personnel were the fault of the firm and not Mr A. When he complained and asked for an indication of the final bill, he was told that some £7,500 would be deducted from the estate in fees; much more than they had originally indicated.

Similarly, Mr B, approached a firm for information about the intestacy rules, and for advice about gaining access to his estranged late father’s property to gather some family history. He had been clear from the start that he had limited funds and the firm agreed to carry out the work on this basis. Nevertheless, he was eventually asked to pay £1300 more than he had originally been quoted, having not received any indication that costs were accruing prior to the final bill.

It is very disappointing that some two and a half years on from our report into costs and customer service, these problems still arise so frequently. We will continue to promote best practice and to say to service providers: be clear about costs from the start; set out scenarios under which they could increase; and make sure you inform clients as and when costs are accrued so they don’t get a nasty surprise at the end of a case. Doing so could see a dramatic reduction in the number of unnecessary complaints making their way to our scheme.

In addition, service providers should consider that beneficiaries are directly affected by costs even if they are not usually a client of the service provider. It would be prudent, then, if firms – particularly where they are also the executor – aimed to provide costs information to residuary beneficiaries at the start of a case, even if they are not technically the client.

Delays (12%) are also a common cause of complaint in wills and probate work.

It is always difficult to predict how long a probate case will take as they can range from the straightforward to the extremely complex. Many people, however, still refer to the notion of an “executor’s year”. This is based on the idea that, assuming there are no complications – including with the will itself – executors should be able to discharge their responsibilities within 12 months of a testator’s death.

However, in the wrong hands cases can drag on for many years. Mr C was the son of a beneficiary (his mother) named along with eight others due inheritance following the death of a relative. The deceased gentleman had left an estate worth around £600,000, which included a property, to be split between the beneficiaries according to a will he had had drafted by a lawyer before he passed away.

The lawyer who prepared the will was also the named executor, which meant that he had overall responsibility for distributing assets. However, the lawyer did not take steps to administer the estate. Instead, he cited disputes between beneficiaries and third parties excluded from the will as a reason not to take any action. Such was the delay that six years later nothing had happened. To make matters worse, the named beneficiaries were elderly and in poor health; Mr C was concerned that they might pass away without receiving a penny. The property had also been allowed to fall into disrepair, impacting on its re-sale value.

An investigation revealed that the complexity of this case was beyond the lawyer’s skill set. In the end we had to recommend that the lawyer seek a barrister’s opinion to get things moving.

Regulation does not necessarily mean that estates are administered by people with the relevant skill; however, as this case shows, the existence of regulation means that the beneficiaries can seek redress.

Given that wills are sometimes required as a result of a sudden deterioration in a person’s health, there are situations where a quick, efficient service is vital.

Ms D instructed a lawyer to help draft a will after being diagnosed with terminal cancer. The firm was instructed on the basis that it could complete the work before she passed away.

Unfortunately, despite knowing of Ms D’s circumstances and agreeing to provide a speedy service, the firm failed to deliver the will in a reasonable time frame. In addition, the firm issued draft versions of the will containing significant errors – some of which had already been pointed out in previous drafts.

When we investigated we found that the delays were completely unnecessary. The firm had caused considerable upset and emotional distress to Ms D and her family at a crucial moment in her life. Additionally, Ms D and her brother incurred significant travelling expenses to instruct a new solicitor (who managed to complete the work in 24 hours).

Again, service providers must manage expectations effectively. This means being clear about timeframes and how long things are likely to take. Firms should also be clear in their own minds about their capacity to deliver what they promise. In sensitive cases such as Ms D’s, it is unacceptable to make a promise that can’t be kept. The firm could have saved everybody a lot of difficulty and unnecessary concern by accepting it couldn’t deliver the service she needed and by suggesting she look elsewhere.

Miss E’s case also demonstrates the discord that overzealous marketing can create between a customer’s expectations and their actual experience of a service. She felt the time was right to prepare a will and promptly instructed a legal firm to help her draft it.

She found the firm using a search engine and settled on them after reading their website which promised a quick, efficient service. However, she soon started to encounter problems contrary to what their marketing had told her to expect.

After investigating her complaint we found that the firm had delayed drafting the will and also delayed in responding to Miss E’s queries. They sent numerous drafts of the will, often containing errors. They also failed to address Miss E’s complaint despite her chasing for a response.

This complaint was resolved informally after an investigator suggested the firm pay Miss E £250 in compensation. But the fact that the complaint was resolved in this way suggests the firm could have saved everyone time by taking the complaint seriously when she first raised it. Miss E should not have had to escalate a simple grumble to our scheme. And this case is typical of many cases that we see. 55% of the wills and probate complaints we resolved last year were resolved informally, simply by getting an investigator to mediate6.

Research shows that good complaint handling at the first tier could generate net benefits to the legal industry of up to £80m over a ten year period. That equates to an increase in operating profits of 2-3% for individual firms. What more of an incentive do service providers need?

A large proportion of complaints also result from the service provider’s failure to follow instructions (12%). More often than not this is the result of an innocent mistake or because of a breakdown in communication. Of course, mistakes do happen. As long as steps are taken to rectify these mistakes, clients can be placated and their overall experience of the service can still be a positive one.

But in cases such as Mr F’s, where trust is breached and the motives behind a problem seem suspicious, real damage is done to the legal profession’s reputation.

Mr F’s mother sadly passed away. In her will, she had left shares which were to be sold with the profits going to her estate. Responsibility for selling the shares lay with a legal firm who were instructed to act by the executors, Mr F and his sister. In principle this would be a relatively straight-forward process for a firm of experienced probate lawyers. However, it took them three years to execute the will and to distribute the estate.

Eventually, the firm paid the estate £6,000, which it claimed were the dividends of the share sale.

But Mr F was sceptical about whether the shares had in fact been sold. When he questioned the firm and asked for a receipt of the sale, it was unable to meet his request. Mr F then escalated his complaint to the Legal Ombudsman.

When we investigated we found that the firm had not even sold the shares, but had instead paid the estate using their own funds. They then tried to justify this by stating that they had calculated what the shares would have been worth. However, when an investigator scrutinised the figures, it became apparent that they had miscalculated and underpaid Mr F by some £4,000.

It is not our job to judge the reasons behind a service failing; it is the role of regulators to investigate unscrupulous activity further. As a result, we have mechanisms in place to identify potential misconduct and to refer the matter to regulators for further scrutiny; this is what we did in this case. Sharing information with regulators in this way means that, as well providing a safety net for consumers, we can also help to address the causes of complaints directly; preventing people from suffering detriment in the first place.

Gaps in redress

In each of the cases above there has been one silver lining for the client: they could obtain redress from the Legal Ombudsman.

Although we couldn’t turn back the clock and take away the strain caused by their experience, we could put the client back in the position they would have been in had the poor service not occurred. That may have included waiving fees, ordering a sum of financial compensation or making the service provider complete outstanding work.

However, there are many cases where the client has no such course to redress. For those who use an unregulated provider, often unwittingly, there is simply nowhere to turn if things go wrong, unless they can afford a trip to court. Take the following example:

Mr G approached a firm of will writers to draw up a will and paid them nearly £2,000 to do the work.

After a period of time Mr G had not received any indication that the will had been drafted so he contacted the firm to complain. However, the firm failed to answer his calls. It soon became clear that they had no intention of doing the work or returning his money.

He complained to us and when we investigated we found that the firm was outside our jurisdiction. A solicitor, who would be an authorised person under the Legal Services Act 2007, was a partner in the firm but because there was no evidence to show that he had been involved in Mr G’s work (chiefly because no work had been carried out) we were unable to investigate the complaint. Consequently, Mr G lost his money.

A YouGov survey indicates that while the unregulated market for probate and estate administration is small, a third of the will-writing market is served by unregulated will writers. The Legal Services Consumer Panel estimated in 2011 that around 180,000 wills each year are written by unregulated providers8, exposing thousands of people to a fate similar to Mr G’s.

But this needn’t be the case. Currently there are three realistic solutions to the gap in redress, should the will writing industry and government wish to address it:

1. Make will writing, probate and estate administration a completely reserved activity.

2. Regulate, but less stringently. This might simply entail a regulatory requirement for providers to sign up to the Ombudsman scheme.

3. Create a voluntary ombudsman scheme, into which unreserved service providers could opt themselves.

Option one would bring the most benefit to consumers. It would ensure greater scrutiny of individual practitioners, set a benchmark for service standards and provide an opportunity for intervention where service providers are consistently poor.

As indicated in the introduction to this report, the LSB will continue to push for regulation. And news that government has left the door open for further negotiations is to be welcomed. However, this will all take time.

Potentially, the second option could help to move things along more quickly, while removing the possibility of a lay person attempting any estate administration or will writing activity. At the very least it would provide consumers – at least those suffering detriment up to the value of £50,000 (our financial compensation limit) – with a safety net when things go wrong and simplify their understanding of this area of law. Such a model would open up the possibility of regulatory tiers, meaning will writers – who may require less stringent regulatory oversight – aren’t required to meet the same criteria as criminal lawyers for instance, but still ensures they are subject to the Ombudsman’s jurisdiction.

Option three offers consumers interim protection. And though we’d prefer regulation, we believe that, at the bare minimum, unregulated providers should to be offered the opportunity to sign up to a Legal Ombudsman voluntary scheme. Provision already exists for the Lord Chancellor to make an order specifying a legal service to do just that.

Conclusion

This report documents some of the service failings faced by consumers in England and Wales; but there are many more. In fact, a remedy was required in around 72% of the wills and probate related complaints we dealt with last year. This shows that service providers are failing to meet the expectations of clients and beneficiaries far too frequently.

As we have seen, representative bodies are advocating the superior service standards of regulated providers over lay or unreserved providers, but clearly many of their members are not living up to the hype. The bar can be set for all providers of wills and probate services by better managing client expectations with clear costs information and realistic timeframes for completing work. In addition, all service providers should set out the limits of their roles and responsibilities at the start of a case.

Accepting that mistakes happen, service providers should aim to take complaints seriously where they arise and endeavour to resolve issues at the first tier rather than allowing them to escalate to the Ombudsman. Evidence suggests that this is in the interests of consumers and industry; potentially yielding improved financial returns and an enhanced reputation.

Finally, we believe that all consumers of will writing and probate service providers should have access to redress. This can only be achieved if regulators, representative bodies, and government work together to find a solution to the problems caused by an unregulated legal sector.

1 Legal futures: http://www.legalfutures.co.uk/latest-news/dont-tell-exploit-clients-lack-knowledge-wills-sra-tells-solicitors#

2 Law Gazette: http://www.lawgazette.co.uk/5042430.article

3 Legal futures: http://www.legalfutures.co.uk/regulation/solicitors/lsb-launches-formal-probate-into-regulating-will-writing-probate-and-estate-work

4 Legal futures: http://www.legalfutures.co.uk/latest-news/door-open-regulation-will-writing-kenny-says

5 This is ‘costs excessive’ and ‘costs information deficient’ combined

6 This percentage is taken from all cases resolved either informally or by ombudsman decision and excludes other types of closed cases i.e. those deemed out of jurisdiction.

8 The Guardian: http://www.theguardian.com/money/2011/jul/14/investigation-launched-into-will-writing