Legal Ombudsman budget to top £15m after 5.8% increase approval

LSB: Budget request approved

The Legal Services Board (LSB) has approved a 5.8% increase in the budget of the Legal Ombudsman (LeO) for the coming year, amounting to an extra £850,000 cost levied on the profession.

LeO’s budget for the 2022/23 financial year, starting next week, will be £15.3m.

The budget jumped 13% for the current year and a paper from the LSB’s executive to the full board meeting this week recognised “frustration” that the minimum delivery expectations set out for 2021/22 have not been met.

Staffing has been LeO’s big problem and it said it completed 90% of what it anticipated in the current year with 86% of the expected staff.

However, as chief ombudsman Paul McFadden told Legal Futures recently, a successful recruitment campaign means it will start the new financial year with a full complement of staff – and actually 12 more than needed in anticipation of attrition in the coming months.

The board was told there have been “positive recent signs of stabilisation and recovery”, with LeO implementing “some successful innovations” and showing greater willingness to embrace “radical change options”.

Changes to the scheme rules, allowing for the earlier resolution of complaints, are currently out for consultation.

Other “encouraging indicators” included a slowing of attrition and improved staff engagement – staff morale has been a major problem; two years ago, half of staff said they wanted to leave within a year.

The most significant metric is the size of pre-assessment pool (PAP), which contains cases accepted but not yet allocated to an investigator, meaning that complainants can be waiting months just for their case to be considered.

This increased dramatically to 5,000 by this time last year and was supposed to have gone down over the past 12 months. However, it has actually risen and in the draft business plan and budget LeO published in November, it predicted that the PAP would be 6,700 by 31 March 2022.

The recent improvements to processes outlined by Mr McFadden mean that there will actually be 6,143 cases in the PAP next week.

The intention is to nearly halve that over the next year and then reduce it to a manageable level of 500-1,000 by 31 March 2024.

The LSB was told that the budget increase was principally made up of three factors: inflation, the full-year cost of investigator staff recruited in 2021/22 and having three senior ombudsmen focus on introducing the principle of proportionality to the way complaints are dealt with – such as where poor service is found but it caused low or no detriment to the client.

LeO said it would have sought an increase of 8% but for “substantial savings” it has been able to find.

The board was told also to consider the possible negative impacts on performance if it did not approve the budget.

The paper recorded that the professional bodies have greater confidence in LeO than a year ago but were sceptical about whether it could achieve the anticipated performance, a position the LSB described as “understandable”.

“There was limited support for the higher budget option for two reasons: underperformance against the 2021/22 performance trajectories; and the financial impact on providers and ultimately consumers.”

In recommending approval, the LSB executive said: “The board’s ambition is for the sector to have a world-class system of consumer redress, and it has been engaging in discussions about how best to achieve this in the longer-term.

“However, the focus over the next 24 months is on pursuing a path of stabilisation and recovery so that the Legal Ombudsman is delivering sustainable and acceptable performance…

“On balance, while it will be challenging for [LeO] to deliver the performance trajectory it has set out, we consider that the additional funds sought are necessary to give the organisation the opportunity to further stabilise and deliver sustainable and acceptable performance over the next 24 months.”

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