Lawyers face £1.4m bill after government confirms end to ‘free’ ombudsman cases

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21 November 2012

Case fees: thousands of firms to face £400 bill

Thousands of law firms are set to contribute £1.4m to the Legal Ombudsman (LeO) after the government confirmed that they will no longer be eligible for two ‘free’ complaints every year that do not incur the case fee.

Meanwhile, LeO has not ruled out entertaining complaints by third parties, such as against the opposing party’s lawyer.

Changes to LeO’s scheme rules – first revealed by this website – have now been approved by ministers (although it remains subject to parliamentary approval) and, according to LeO papers published this week, will lead to an increase in the number of £400 case fees it invoices each year from 750 to 4,200.

There will be a corresponding fall in the levy on all of the approved regulators that pays for LeO, but this will only be felt marginally at law firm level.

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Solicitors have expressed concern that an end to ‘free’ complaints would allow savvy complainants to hold them to ransom, but the scheme rules continue to empower LeO to waive the case fee where the firm has followed a reasonable procedure in initially dealing with the complaint. In 2011/12, LeO waived 35% of case fees, substantially more than it anticipated.

Explaining the other changes, LeO said that the new right for prospective clients to complain will encompass consumers who have unreasonably been refused a service or who have persistently been offered an unwanted service.

As a safeguard, LeO will be able to dismiss complaints without investigation where the complainant does not produce evidence that the service was refused by a lawyer or firm for anything other than “legitimate business reasons” – such as a lack of capacity to handle the work or where there are concerns about money laundering.

While LeO has decided not to press ahead with allowing third-party complaints for the time being, it has backed the principle of listing specific circumstances where it would be able to look at such complaints.

“We will work with stakeholders over the next three months to create a specimen list for consultation. This list will comprise third-party complaints where there is no conflict of interest between the complainant and the person who engaged the authorised person. This would exclude, for example, complaints by litigants against the opposing party’s lawyer.”

An impact assessment produced by LeO indicates that the change in the time limit for making a complaint – from one year to either six years from the event or three years from knowledge of the event – will probably increase case volumes by 10% increase. In turn this will lead to a £100-£120 reduction in its unit cost for dealing with each complaint to £1,900. “The increase in case levels will mainly be absorbed by current staffing levels.”

Separately, the Chief Legal Ombudsman, Adam Sampson, has blogged about LeO’s approach to putting information in the public domain in the light of Legal Futures’ recent story and a series of Freedom of Information Act requests we have subsequently put in. Read it here.

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