The dangers of using unregulated will writers

A recent case handled by our dispute resolution team, in which we were able to secure the proceeds of an estate for our client after an unregulated will writing company had gone bust, highlights the perils of using unregulated legal services. Partner Nick Booth looks at the issues involved and summarise the case.

In June 2023, the Solicitors Regulation Authority (SRA) published a report ‘Understanding the Unreserved Market’ which looked at the provision of commonly used services not regulated by the Legal Services Act, including wills, housing, family and employment law.

The report was commissioned to fulfil the SRA’s responsibility to protect consumers and build their understanding of the ‘whole’ legal market.

Distinguishing between regulated and unregulated legal services

Often, consumers are unable to distinguish between regulated and unregulated providers and don’t realise how much protection they can lose from using an unregulated provider.

Although using an unregulated provider can potentially reduce the cost of having a will drafted, for example, the SRA recognises that it brings the potential for increased risks.

There are fewer protections and routes to redress for poor quality services when a provider is not subject to regulation, such as by the SRA or Legal Ombudsman. The provider may not have the right technical expertise in the first place and is unlikely to have any professional indemnity insurance cover for if things go wrong.

Later this year, the SRA will take the findings from this report, along with other research, such as their evaluation of the transparency rules, and consider the potential for change to their regulatory requirements.

Unfortunately, in the meantime, for most consumers, it is a case of learning the hard way when a problem arises, for example as a result of a poorly drafted will prepared by an unregulated provider or the dubious practices of an unregulated provider.

All too often they find out they do not have the protection they think they are receiving and that they have limited recourse to address the issues arising.

A Harrison Drury case study

Harrison Drury recently acted for a client in a complex dispute which arose from a will having been drafted by an unregulated provider who subsequently dealt with the administration of the estate, with the provider going into liquidation before that process was complete.

In this case, the unregulated provider had drafted the will for the client. Following the death of the client, they acted on behalf of the estate in relation to its administration, selling the estate assets, including residential properties, amounting to many hundreds of thousands of pounds. However, the unregulated provider failed to hold and account to the estate for the proceeds of sale (as a regulated provider would have been obligated to do); instead treating those sums as money belonging to the unregulated provider.

The unregulated provider was put into liquidation and the liquidators continued to treat the estate proceeds as part of the assets of the unregulated provider, intending to treat the estate as an unsecured creditor.

Making it possible for our client

The original provider’s conduct and its subsequent liquidation led to a significant, complex, time-consuming dispute to show that the sums held by the liquidator belonged to the estate and pursuing claims to recover those sums paid away.

Working with its clients, Harrison Drury was able to reconcile the payments made by the unregulated provider from the estate’s funds and to formulate a legal claim which was ultimately accepted in full by a King’s Counsel, agreed by the parties to complete an independent expert determination.

Through expert advice and careful handling of the case, we were able to intervene and recover the funds held by the liquidator before they were distributed to creditors generally and to pursue the directors of the unregulated provider for the balance.

Whilst the case represents a positive outcome for the clients, it highlights the importance of instructing regulated providers to assist in the administration of estates; ensuring that estate assets are properly ring fenced and secured.

If you have been affected by any of the issues in this article, please contact our dispute resolution team in the first instance on 01772 258321.