LeO says confusion over unregulated providers leaves consumers unprotected

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By Legal Futures

18 July 2011

Sampson: huge risk of overlap and confusion

The confused system of regulation for legal services risks leaving consumers without protection when things go wrong, especially with unregulated businesses “masquerading as traditional law firms, branded with more legal wigs and gowns than you can shake a quill pen at”, the Legal Ombudsman (LeO) has warned.

LeO’s annual report also shows that conveyancing and family are the main areas that cause complaints, and identifies poor communication as being “at the heart of many disputes between lawyers and their clients”.

But the bigger problem facing consumers – which might only intensify with the advent of alternative business structures – is understanding what are regulated legal services and what are not, with will-writing and claims management the two main areas where consumers approach LeO only to find them beyond its jurisdiction.

The report said that even LeO can struggle to assess whether a complaint falls within its jurisdiction. “If we, as the experts, have to agonise, what hope is there to break through the confusion even for the best-informed consumer?”

It said the increased bundling together of legal services with financial services and other products, including more being offered via the Internet, poses serious dangers for consumer protection.

LeO has mustered support on this from consumer organisation Which? and the Law Society. Which? executive director Richard Lloyd said: “We want the government and regulators to wake up to the current lack of clarity and to provide a clear and straightforward route of redress for consumers.

“The arrival of a legal services market in which consumers will, potentially, have complaints about ‘hybrid’ services poses some serious questions about who they’ll be able to turn to for help.”

The chief ombudsman, Adam Sampson, said: “In many cases it will be the Legal Ombudsman taking the matter on, but sometimes we are aware that we may not be the first point of call for the consumer. In some cases, the issue might go instead to another ombudsman. In some, Trading Standards. Sometimes, there may be no-one in a position to help. There is a huge risk of overlap and confusion here which it is important that the regulators and policy-makers begin to focus on.”

He added: “Some firms offer ‘expert’ online legal advice which is often bundled with financial or insurance services, and many of these are backed by large corporations. Naturally, consumers expect the same standard of care as from their local lawyer, but in some cases it’s woefully lacking.

As first reported on Legal Futures last month, more than 38,000 people have contacted LeO during its first six months of operation, which led to 4,000 investigations.

For the most part, the quality of legal services being provided is reasonable, the report said. “We know that most lawyers do a good job for their clients and, when things do go wrong, we generally see a great willingness from the profession to work and to learn with us,” says Sampson. “But some of the stories we hear are shocking, and all have a heavy impact on the people involved.”

Some 20% of complaints arose from residential conveyancing matters, followed by family (19%), wills and probate (13%), litigation (10%) and personal injury (10%). The main causes of complaint were failure to advise (16%), failure to follow instructions (15%), delay (12%), and excessive costs (10%).

The report said poor communication was already emerging as a key theme. “We are seeing cases where a clear, non-legalistic, helpful and early response to the issues raised would have resolved misunderstandings.”

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