LeO bids to slash cost per case and ring-fence CMC complaints

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1 April 2014


Green: new OLC chief added to pressure to reduce costs

The Legal Ombudsman (LeO) has revised its target costs for resolving complaints downwards for the next financial year, which if achieved would be almost 20% lower than a year ago.

Meanwhile, LeO will keep its handling of complaints against claims management companies (CMC) – which it is expected to take on later this year – separate from legal service complaints to avoid confusion over the cost, it has emerged.

Launching its 2014-17 strategy and budget 2014-15 this week, LeO revealed that it anticipated the number of cases handled by LeO this year and next would remain constant at around 8,000, compared to 7,630 in 2012-13.

In 2012-13, the cost per case was £2,138 and for the current year it is expected to come in at £1,938 a drop of more than 10% and below the £2,000 goal LeO set itself last year. To meet the target, LeO shed 44 staff roles.

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According to the budget, LeO expects the unit cost of complaints to fall by a further £200 next year to £1,734, which would be a drop of £404 in just two years. The target is substantially lower than the £1,865 per case it first said it aimed to achieve in its draft budget, published in December.

LeO came in for criticism from the Legal Services Consumer Panel late last year about the high unit cost of handling legal services complaints relative to other complaints bodies. It was compounded shortly afterwards when Stephen Green, the chairman-designate of the Office for Legal Complaints (OLC) – LeO’s governing board – warned that memories of complaints-handling before LeO were fading and should no longer be used as a comparator.

Mr Green, a former police chief constable and member of the Legal Services Board, took over from Elizabeth France as the OLC chairman yesterday. Ms France was the OLC’s first chair and served two terms of office.

The task of handling CMC complaints is expected to transfer to LeO later this year from the Claims Management Regulator (CMR), after a legislative impasse was broken in December during the passage of the Financial Services (Banking Reform) Bill.

Legal services complaints could be dwarfed by CMC complaints, if the 10,000 “contacts from the public” to the CMR in 2013-14 translate into complaints. LeO acknowledged “there could be a high volume of CMC-related complaints when the scheme opens its doors”.

To concerns raised at an LeO roundtable in January about the possible impact on legal services complaints handling, chief ombudsman Adam Sampson argued that, on the contrary, it would bring economies of scale. He said that in the medium term he expected “the cost of the service we offer to existing customers to be reduced”.

But the strategy made it clear the two functions would be kept separate in most respects, insisting: “There must be no confusion.” Further, LeO would “ring-fence our approach to CMC complaints to… limit any adverse impact on our existing work”. Separate budgets for the CMC complaints work will be produced “once the funding and governance arrangements and parameters of financial risk are finalised with the Ministry of Justice”.

The overall cost of running LeO, which has 13 ombudsmen and 117 investigators, is forecast to come in at £15.7m, £1.4 less than budgeted and 6.5% lower than the previous year. The organisation plans to spend £13.87m on legal services complaints handling next year, £12.8m of it drawn from a levy on the legal profession, and the rest through case fees. CMC complaints will be funded separately.

LeO said each practising lawyer would pay £83 towards the service in 2014-15, 13% less than the current year and nearly £30 less than the £110 they were paying two years ago.

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