The ADR pain in the backside

Posted by Neil Rose, Editor, Legal Futures

ADR, European-style

ADR, European-style

Who would have thought that something as inoffensive as ADR could cause such a rumpus? But the impact on the profession of the EU Directive on Consumer ADR has done just that.

The directive aims to ensure that all consumers in the EU have access to an ADR scheme to seek redress for problems with goods and services, and set common standards for ADR providers. Fair enough, one might say.

It means that, from today, every lawyer is obliged to point clients in the direction of an ADR provider should both of them wish to resolve a complaint that way, although the client still has the option of referring their complaint to the Legal Ombudsman (LeO).

The plan for some time was that LeO would be certified as an approved ADR body for these purposes, meaning nothing much would change for anyone, except that its scheme rules would have to change to bring them into line with the directive, such as increasing the time limit for making a complaint from six months to a year.

But last month, LeO’s oversight board, the Office for Legal Complaints (LeO), unexpectedly withdrew its application for approval and instead set about launching a consultation on the changes it proposes to make.

The problem is that lawyers need an approved ADR provider today. The Law Society’s advice points solicitors to the Chartered Trading Standards Institute, which has approved a number of organisations, while the Bar Standards Board has recommended three particular providers to barristers.

The nonsense at the heart of these new requirements is that, as a lawyer, you have to signpost clients to an ADR provider, but you don’t have to agree to use it. Were there such a body as the Association of UKIP Lawyers, I imagine they’d be waving this directive around as exhibit number one.

This is why it would have been neater all round if LeO was already in place. So, why isn’t it?

It is not as if this issue has sneaked up on the OLC, which has been talking about the directive for ages and in the summer of 2013 even outlined ambitions to offer itself as the ADR provider for other sectors.

The directive was actually meant to have come into force in July, but was put back after the government failed to publish the final regulations implementing it until June. As I understand it, while in the early days it was expected that bodies like LeO would be passported into the new scheme, by the time the regulations were published, they had to apply for approval.

The OLC is able to alter its scheme rules unilaterally when it is effectively mandatory because of a change in the law of, say, discrimination, but otherwise it is required to consult. LeO was not obliged to become an ADR provider, and so the OLC board took the view that it had not consulted properly.

Hence the consultation that is currently live. There will be a final decision in December, which all things being equal will be followed by an application to the Legal Services Board for approval as an ADR provider. Assuming this is forthcoming, then the profession will then be obliged to name LeO as its ADR provider. (Actually, subsequent to publishing this blog, I’ve been told this might not be right – lawyers may still be able to nominate a different ADR provider.)

Speaking to me yesterday, Steve Green, chairman of the OLC board, said all this “ambiguity” would go on for only a “relatively short period of time”, but acknowledged that it was not ideal.

But, he went on, “even if there is a moment of embarrassment, it is more important to do it properly”.

It is not clear to me how long the direction of travel became clear ahead of formal publication of the regulations, and whether swifter action by the OLC could have avoided what is now a messy and confusing situation that is unhelpful to lawyer and client alike.

But there’s not much anyone can do about it now, and indeed there may be those who would like to have an alternative to LeO.

For everyone else, it might be best simply to tell clients, as you signpost them to your ADR provider of choice, that you don’t agree to use them (see the Law Society’s guidance for suggested wording to this effect) and that the client should instead go to LeO.

Daft, perhaps, but this one is out of lawyers’ hands.

    Readers Comments

  • Alex du Sautoy says:

    Actually, the new law means lawyers (and all businesses) will have to point clients in the direction of an ADR provider even if the don’t want to use ADR. Which will be nothing but confusing for the client – why are they being told about the option and then told the business won’t use it? I get that it is for spreading the word, but it is still an odd law.

  • John West says:

    This blog fails to point out the downside of signposting to the LeO as ADR directive provider and the advantages of mediation.

  • In place of ombudsmen says:

    I am surprised at your negative stance in this. What is not to like about encouraging clients to mediate and avoiding the ombudsman? Nb they are proposing to get rid of time limits. Roll on indefinite indemnity insurance….

  • In place of stuff says:

    Very shortsighted piece – what about the Legal Ombudsman widening its scope to get rid of time limits! What about the future of litigation which may involve more mediation rather than redress systems? What of the advantages of sidestepping the ombudsman? Many solicitors will welcome the opportunity to resolve things in a confidential quick and cost effective manner.

  • Peter Causton says:

    You can’t really blame the EU for this as it is the implementation in the UK which has resulted in the “nonsense” dichotomy in the regulations.The ADR Directive is a ‘minimum’ harmonisation directive in that member states have some flexibility as to how certain parts of it are implemented. Other Directives such as the Unfair Commercial Practices Directive are ‘maximum’ harmonisation in that member states have no flexibility in how they are implemented.

    The ADR Directive allows member states the option of making ADR mandatory to settle a dispute and some member states have gone down this route. The previous administration took the view that the ADR Directive should be implemented in as light a touch a way as possible. This included not putting additional requirements on business than those contained in the Directive, sometimes known as ‘gold plating’. Making ADR mandatory for traders would have introduced significant additional burdens on business so given the flexibility the UK had in how it implemented the Directive a decision was taken not to make it mandatory.

    One area where there is no flexibility for member states is that ‘approved’ or ‘certified’ ADR must be available for all consumer to trader disputes. Hence the dichotomy.

Leave a Comment

By clicking Submit you consent to Legal Futures storing your personal data and confirm you have read our Privacy Policy and section 5 of our Terms & Conditions which deals with user-generated content. All comments will be moderated before posting.

Required fields are marked *
Email address will not be published.

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Loading animation