Ombudsman rejects Law Society claim that new complaints system will not be cheaper

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By Legal Futures

23 August 2010

Sampson: more cost-effective service than current arrangements

The Legal Ombudsman (LeO) has rejected suggestions from the Law Society that the new complaints-handling service will not prove any cheaper for solicitors, Legal Futures can reveal.

We understand that Law Society chief executive Des Hudson has written to chief ombudsman Adam Sampson to correct various public statements that the new arrangements will lead to substantial cost savings for the solicitors’ profession.

Mr Sampson has put the amount of money the Law Society spends on the Legal Complaints Service (LCS) at £30m, which it was around the time when the Legal Services Act was going through Parliament and the annual running costs of LeO were estimated at £19.9m. Last week the government issued the commencement order that ensures the LeO will open on 6 October, and it is apparently on target to stay within that budget.

However, figures seen by Legal Futures show that the LCS will cost £14.9m in direct costs this year (which is £1m under budget and £2m less than its full-year budget for 2009), together with about £7m in central service costs, taking the total costs to £21.9m. The society says it will only be able to save around £3m of those central costs – mainly as a result of selling the LCS’s Leamington Spa headquarters – and so the £19m saving the society will make from closing the LCS will be around the same as its contribution to LeO.

The regulators are paying for LeO in proportion to the number of complaints their members generate, and solicitors are responsible for the vast majority. Mr Hudson is believed to emphasise that Chancery Lane is not criticising Mr Sampson, but says it does not want solicitors to be under the impression that LeO will save them money.

Mr Sampson has dismissed this argument, however. In a statement issued to Legal Futures, he said: “The Legal Ombudsman is keeping within budgets set four years ago, which have not been increased for inflation – which is clear evidence of our financial efficiency. The LCS has for a long time now been winding down and their current costs are reflective of that; in addition, the closure of the LCS clearly creates the possibility of the Law Society realising savings from its infrastructure costs base.

“The new Legal Ombudsman scheme aims to provide a more cost-effective service for the legal profession than the current arrangements – we are building upon practice at the best of current ombudsman schemes to make sure our service will be timely, informal and fair but most of all efficient. The future cost of the scheme will critically depend on the level of complaints generated by the legal profession.”

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