Legal Ombudsman dilemma: Increase funding or find an alternative

Complaints: Three-year plan to get back on track

The decision on whether to approve a 19% increase in the Legal Ombudsman’s (LeO) budget is likely to be “finely balanced”, with the possibility of having to find an alternative to it lurking in the background, the Legal Services Board (LSB) will hear today.

The oversight regulator will not make the final decision until next March but is holding a preliminary discussion at today’s meeting of its full board to feed back comments to the Office for Legal Complaints – the body that oversees LeO and sets its budget – about the draft it has produced.

The OLC issued a consultation last month proposing a 19% increase in its budget for 2021/22, and a further 6% the year after, arguing the scheme is currently in an “unsustainable position”.

It said that, without an injection of extra cash, delays in handling complaints would continue to lengthen – as it is, straightforward complaints are taking six months or more.

It was also clear that this is a three-year project – the projected improvement trajectory showed that some of the big gains for users were unlikely to materialise until 2022/23.

A paper before the LSB today acknowledges that the OLC has new leadership, the Legal Ombudsman executive team was being strengthened and progress was being made in addressing the underlying institutional weaknesses identified in the 2020-21 funding round, which led to the OLC withdrawing its bid for a 20% increase before the LSB rejected it.

The paper goes on: “However, the challenges facing the Legal Ombudsman remain significant. The board has also stated that ultimately if it becomes evident that the Legal Ombudsman scheme, however well-led, is not capable of delivering for consumers to the required standard, alternatives to the current model must be contemplated.”

The board’s decision in March was “likely to be finely balanced”.

It explains: “The dilemma is that the performance situation has created a lack of confidence in the scheme, but without the resources necessary to offer the opportunity for sustainable recovery, the sector will have to accept less progress at a slower pace than is desirable.

“This may have consequences for public and professional confidence as well as lead to more delay for the Legal Ombudsman’s customers.”

The authors warn the OLC that, to make a convincing case for further investment, it needed to offer “assurance on the substantive transformation programme, in particular plans to explore alternatives to existing delivery models within the current legislative framework”.

They also highlight the issues of attrition and staff engagement as a key underlying cause of the performance situation.

“While its attrition rate is currently just under 18%, in the recent past it has been significantly higher within the Investigator cohort. The new OLC chair has brought a strong focus on people and there are recent signs of improved staff engagement.

“However, it is possible that Covid-19 is suppressing attrition and the organisation remains fragile.”

Meanwhile, the LSB has reappointed Annette Lovell and Jane Martin to the OLC until the end of February 2023 and April 2024 respectively.

Ms Lovell is the director of engagement at the Financial Ombudsman Service, while Ms Martin is a former chair of the Legal Services Consumer Panel and before that the Local Government Ombudsman.

The LSB has also reappointed current consumer panel chair Sarah Chambers for a further three-year term, starting on 1 May 2021, while panel members Adam Cooper and Mark McLaren have been reappointed to the end of March 2024 and December 2023 respectively.

Mr Cooper is director of remedies, business and financial analysis at the Competition and Markets Authority, while Mr McLaren – who used to work at Which? – provides public affairs and policy advice to a range of organisations and is also the class representative for the collective action on car delivery charges.

Ms Chambers, a one-time civil servant and head of Postcomm, said: “People in need of legal services are experiencing more difficulties this year than ever before in recent memory, with the toxic combination of the pandemic and restricted access to legal aid and free legal services compounding the problems that many individuals face in securing high-quality services that they can afford.

“The next three years will be critical in finding ways to tackle these problems, to give greater confidence to individuals and businesses that they can choose providers who can give them the service they need.”

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