A risk management case study

In this month’s article from Lockton, the focus is on executry administration and asks the question, ‘How long does it take to wind up an estate?’

The nature of executry work and the variables involved will often make it very difficult to estimate how long it will take to wind up and (fully) distribute an estate. The speed at which a firm can wind up an estate is often directly affected by the cooperation that it receives from other people, outside the firm’s control. There are also other factors that can affect timescales – for example, winding up an estate which involves the sale of a house when the market is low can cause significant delays.

Allegations of delay have long been a feature of Master Policy claims arising in relation to executry administration. While genuine delays can cause loss to an estate or to beneficiaries, there are times where an allegation of delay is down to an unjustified perception rather than actual lateness.

Consider the following case study:

Dear Lockton

We need to intimate a potential claim on the Master Policy.

We act for Mr Bonnington in the administration of his late aunt’s estate. His aunt died last year and our private client team was instructed to deal with her estate. A few months later Mr Bonnington emailed to complain, stating that he was unhappy about the length of time taken to wind up the estate.

We are in the process of responding to him, but he has been in touch again and he says that he intends to raise both a complaint and a claim due to the delay. We don’t think there has been any delay at all, but we thought it sensible to notify the insurers of these circumstances.

Kind regards

The example above illustrates the importance of addressing and managing clients’ expectations. The firm’s letter of engagement should include a provision on timescales for executry matters (just as it should with all other types of transactions). While it might not always be possible to estimate exactly how long it will take to carry out the work, it will always be helpful to provide at least some information on timescales and to highlight the possibilities of external and uncontrollable factors that might make a difference to those timescales. If the client has been given an initial timescale but circumstances change, meaning it is going to take longer than anticipated to deal with the executry, the client should be updated as soon as possible.

For example, in the case study above, the complaint might have been avoided if Mr Bonnington had been advised at the outset in the letter of engagement that the administration of even a simple estate might well take much longer than six months to complete. At that point, Mr Bonnington might have been disappointed and may have expressed some surprise (along the lines of “my friend’s late father’s estate was wound up in two months”) but then the solicitor could have explained why that was simply unrealistic in this case. It’s always better to have these difficult conversations early on, to identify and weed out potential problems at the outset.

Client care and transaction vetting (if not claims avoidance) will always justify taking the trouble to manage the client’s expectations early on, by explaining the minimum and potential timescales involved.

Now consider this second case study:

Dear Lockton

We wish to notify the insurers of a claim against our firm.

We are acting for Sally Smith in the administration of her late mother’s estate.

Unfortunately, after the initial consultation, the file for this matter was handed to one of our senior associates, Michael, who has been unwell over the course of the last year. He was not up to dealing with the administration of the estate and he passed the matter to his colleague, Jack. Unfortunately, Jack missed the handover email and this matter fell between the cracks.

Sally Smith has raised a formal complaint, stating that she hasn’t heard from us in almost a year. To make matters worse, the late Mrs Smith’s flat has deteriorated and now cannot be sold. Her daughter intends to raise a claim for the costs of repairing and renewing the flat.

I’d be grateful if you could notify the insurers as a matter of some urgency.

Kind regards

The effectiveness of a firm’s risk management procedure is best judged by how well it works when a fee-earner is absent. There are claims that arise because files are overlooked, ignored, or not dealt with effectively when a fee-earner is away from the office. The absence might be down to annual leave, or it might be unexpected – illness or resignation. Whatever the reason, it is critical that the fee earner’s files are dealt with. There should be standard procedures for dealing with a colleague’s file, including:

• File/case management records
• Case review meetings
• Case planners
• Diary systems
• Task lists

If a fee earner is to be away from the office and unable to deal with work, tell the client and manage their expectations. It’s important to assure the client that their work will continue to be dealt with and where possible provide them with a clear alternative line of communication.

When taking on a piece of work for a client, after the initial consultation, try to get something back to the client within the next few weeks, and thereafter, try to keep in regular contact with them. This might be difficult to do when there are competing priorities, but do not let weeks go past without some form of communication. It is never a good idea to send out initial correspondence and sit back. Keep the client engaged and informed.

Article co-authored by Lockton and DAC Beachcroft Scotland