By Russell Cocks, Solicitor
First published in the Law Institute Journal
Lawyers face difficulties as regards charging costs and/or commission when acting as a lawyer to, and executor of, a deceased estate.
Traditionally lawyers practicing in all but large city firms would dabble in property law and wills and estates.
And despite moves during the past couple of decades for lawyers to build practices by concentrating on specific areas of law, these areas remain important income sources for many practitioners in small to medium size firms. However, practitioners who do not deal exclusively in those areas need to be aware of changes brought about by greater regulation of practice standards and supervision by the courts and other authorities.
One such development is the effective prohibition on lawyers acting as both lawyer to, and executor of, a deceased estate and charging both professional costs and executor’s commission. A useful summary of the law in this area was provided in an article in the LIJ in September 2002 at page 77 called “The solicitor-executor”.
Undoubtedly, it was common practice in the past for lawyers to be asked by their clients to act as executor of the client’s estate. The euphemistic reference to “the senior partner for the time being” is well known to lawyers, as is the practice of including a provision that the firm preparing the will would be appointed to act for the estate. However, just as such a provision is unenforceable (Nowakowski v Gajdobraski, unreported Vic Sup Crt, 12 April 1996) so too the habit of appointing a lawyer as executor is subject to much greater scrutiny – at least in relation to the financial consequences of that appointment.
That courts are more prepared than ever to closely scrutinise the lawyer’s role in this area was reinforced in a recent decision (In the Matter of the Will and Estate of Mary Irene McClung [2006] VSC 209) that warned that “[t]he occasion on which a solicitor receives instructions for the preparation of a will for a client by a solicitor can place the solicitor on the horns of a dilemma if the solicitor is asked to act as executor under the will” and described such a situation as giving rise to a “very real potential for a conflict arising between the interests of the client and the interests of the solicitor”.
This scrutiny also extends to the retention of estate funds, with the case of Hill v Roberts, unreported, 21 October 1995 having established that trust funds ought not lie in trust for longer than 14 days.
It is not only the courts that are taking a greater interest in such matters. The Professional Conduct & Practice Rules now require a practitioner to disclose to a client details of any commission or costs clauses included in a will and to advise the client that the client could appoint an executor who might not claim commission (r10.1.1-3.)
It may be concluded that great care must be exercised if a lawyer seeks to act as executor. Given that it is not permissible to charge both commission and costs, consideration should be given to instructing another firm to administer the estate and complete details of all “pains and trouble” should be kept to support a claim for commission.
Alternatively, the executor/lawyer’s firm undertakes the legal work and no claim is made for commission.
Tip Box
Whilst written for Victoria this article has interest and relevance for practitioners in all states.