"It pays the WIP or it never leaves."
Knights has failed in its audacious attempt to force a partner to personally pay it back for her unbilled work in progress after she resigned.
Katie Brassington joined Knights’ Chester office from Slater & Gordon as a partner in its private client team in 2016.
One of her duties was acting in Court of Protection (COP) matters as a professional deputy, which required her to make legal decisions for people lacking the mental capacity to do so themselves.
Fixed fees for deputyship work are recoverable from the estates of clients after the costs have been assessed and capped by the Senior Courts Costs Office (SCCO).
An oddity of COP matters is that, because the lawyer is acting for their mentally incapacitated client, the engagement letter is not only sent by the lawyer or their firm, it is sent to the lawyer as well, to sign on the client’s behalf.
Brassington said that when she moved to Knights she was given no choice but to use its standard template letter of retainer for her deputyship matters, which set out that she was agreeing to purchase from Knights the legal services she and other Knights staff were providing to their COP clients.
Brassington said she complained to the compliance department that the letters were unsuitable, but to no avail.
She had a second concern which she said was ignored. Fees for deputyship matters routinely exceeded the SCCO cap, meaning that a portion of the bill was disallowed and could not be recovered from clients’ estates. But Knights, instead of writing off those irrecoverable fees, let them sit on the files as work in progress (WIP).
In respect of the COP client identified as ‘P’ whose matter formed the subject of the dispute between Brassington and Knights, the disallowed sum which was preserved on the file as WIP amounted to £166,468.97 by the time the partner resigned in 2022.
Brassington had made a request to Knights' accounts team to write-off the irrecoverable WIP. But the value was so large that approval could only be given by Jessica Neyt, the Chester office’s Client Services Director, or David Beech, Knights' CEO. Her request was never processed.
When she resigned from her £110k role at the 1,100 fee-earner firm, it had a nasty shock in store for her, which a source branded “Insane step number one”.
The listed company informed Brassington that when she signed the retainer letters on behalf of her incapacitated clients, she had actually become a client herself and, as such, was personally liable for the £166k which she and her team incurred working on P’s file.
Knights told Brassington that she would only be able to take her deputyship matters to another firm subject to "payment of our work in progress and all outstanding invoices".
Neyt wrote to her explaining that the retainer letters for P “say that you, as our client, remain responsible for payment of our fees and disbursements in full at all times".
After Brassington issued a claim against Knights seeking a declaration that she was not personally liable to the firm for unrecovered WIP, it took “Insane step number two”, said the source, and opted to defend the claim.
Brassington was granted a hearing for summary judgment, where her lawyer contended that Knights’ approach was ”unprincipled and unprofessional”, and relied on a "commercially absurd" understanding of the deputyship role.
The firm had told staff that they should record all their time "fearlessly", which took on a more ominous meaning as Knights' legal team made detailed arguments seeking to prove that its deputyship lawyers had put themselves on the hook for the cost of their own work.
Knights' position also saw it washing its hands of the vulnerable clients. In advance of the case, it wrote to Brassington's lawyers asserting that "Knights has no duty or obligation to the various patients whom Katie accepted responsibility for" and that "We are not involved in Katie's patient relationships or her duties and responsibilities" to them. Her lawyers told the hearing they were "startling claims for a firm of solicitors which provides deputyship services to advance".
Judge Hodge KC noted that Brassington's WIP had accumulated over six years, yet in all that time Knights had never asked for payment, nor required any other deputy to make any similar payment, according to Brassington.
He also observed that the WIP represented amounts which had "not been billed, and could not be billed, to P because they represent fees which have been disallowed by the SCCO”, but that while Knights accepted it could not pursue P, it had refused to hand over Brassington’s files unless she paid up the same irrecoverable sums.
An insider told ROF, “When she handed her notice in, they put her on garden leave immediately…Many of the families trusted Mrs Brassington very much and were very distressed when they were told they couldn’t talk to her”.
The judge said he had “no hesitation” in preferring Brassington’s submissions.
“Both parties understood that P, rather than Mrs Brassington, was Knights' true client, as evidenced by the way the client was identified and referenced in Knights' statements of account and, by inference, its files and other records”, he ruled.
Knights had attempted to dismiss the fact that all of its files referred to P as the client as a “pure matter of administrative convenience”.
In fact it was “common sense” to refer to P, said the judge, as “after all, the work Knights was being engaged to carried out was for the benefit of P, rather than Mrs Brassington personally”.
He also addressed the bizarre consequence of Knights’ line of argument, which was that all its lawyers who had acted as deputies and co-deputies under the standard engagement letter would be similarly liable for their clients’ fees.
“I do not accept that, by her standard deputyship letter, Mrs Brassington, still less her family co-deputies, were assuming any personal liability for any irrecoverable remuneration and expenses incurred by Knights”, he said: "Those co-deputies certainly never gave their informed consent to the assumption of any such supposed personal liability”.
“Nor can I understand why, if Knights ever considered and understood that Mrs Brassington (or any of her co-deputies) had assumed the risk of non-recovery of Knights' remuneration and expenses through the SCCO process, this was never drawn to her (or their) attention at any time during the period of more than six years that unbilled WIP was mounting up (to a level in excess of £166,000)", he said.
The judge expressed bafflement at Knights’ contention that the retainer letter operated to make Brassington liable for irrecoverable WIP, but not P. “I find it difficult to understand how the same words can bear different meanings, and produce different effects, for Mrs Brassington and for P. Counsel have supplied me with no satisfactory answer to this conundrum”, he said.
The judge was too polite to spell it out, but multiple sources amazed at Knights’ conduct were not.
“Getting desperate”, "Another fantastic example of Knights being unreasonable”, “Embarrassing stuff”, they said, while a fourth suggested the problem amounted to more than just sour grapes: “1 deputy = 166k. They have several deputies so it’s a big mis-statement of WIP!”
“Storing it up so it can shaft unsuspecting employees when they move on", added another: "Which spivvy firm would try that one?”
RollOnFriday asked Knights whether it would appeal. ROF also asked what possessed the firm to pursue its own former employee for irrecoverable WIP by using the idiosyncrasies of Court of Protection requirements to make out that she was a client. And we asked what message its stance sent to other Knights’ staff except, ‘If you’re not with us, we will do whatever we possibly can to hurt you’.
The firm declined to comment.
Brassington said she was unable to comment as the proceedings had not entirely concluded.