Davies: LeO must be radical
The Legal Ombudsman (LeO) has recommended a £2.4m, or 12.1%, increase in its budget for next year to cope with fast-rising levels of complaints and conduct a radical review of how it operates.
It said improvements in processing complaints could not keep pace with the rate of new cases coming through the door, which exceeded the worst-case scenario it had planned for.
A fundamental review of the scheme rules could help manage levels of demand by redefining “who can use LeO’s services, what can be complained about, the processes LeO adopts and the wider application of ombudsman discretion and proportionality”, according to a consultation on the draft 2026/27 business plan and budget [1] published yesterday by the Office for Legal Complaints (OLC), the board that oversees LeO.
There could also be a radical reform of the case fee regime “and in doing so incentivise improved service and first tier complaint handling [ie, by the service provider].
“Consideration could also be given to managing demand through more controversial changes such as charging up-front, refundable, fees for using LeO’s services.”
Given the review, the OLC has decided to put on hold the planned increase in the case fee [2] from £400 to £600.
New complaints have increased by 26% year-on-year in 2025; by 2026/27, LeO expects demand to be 115% more than before the pandemic.
LeO’s analysis indicated a rise in demand across all areas of law, but with residential conveyancing “a significant driver”.
Both the complexity and the number of issues in complaints have escalated too against the background of lawyers’ poor performance – in 2024/25 LeO found evidence of poor first-tier complaints handling in 49% of complaints with an investigative outcome.
A new driver of complaints were consumers unhappy with misleading advertising and the service received from lawyers in cases relating to unfair car finance commission.
“Future developments in this area are inherently uncertain, but the number of people affected means this could drive very significant demand for LeO,” the plan said.
“LeO is starting to see the use of generative AI in complaints, with emerging evidence suggesting this is both increasing the volume of complaints made, and their level of detail.”
As a result, LeO continues to dispose of more cases – it expects to resolve more than 10,000 in the next financial year for the first time – but also not reduce the queue of complaints awaiting investigation.
This reached a high of 5,862 in 2021/22 and though reforms – particularly the focus on early resolution, which now disposes of around half of all cases – have helped bring it down, it has not fallen anything like as quickly as first forecast (the original goal was to get it down to a workable level of 500-1,000 by 31 March 2024).
Last year’s business plan forecast that the queue would be 2,875 by 31 March 2025 and 1,949 a year later. This year’s draft plan said it would actually be between 3,378 and 3,754 by 31 March 2026.
While wait times have fallen by 22% compared to last year, and the average time to resolve complaints by early resolution is 60 days, the average overall wait time for all complaints is still 275 days.
LeO’s current budget is £20m after an 11.4% rise [3]. The consultation puts forward four budget increases for 2026/27. Including £186,000 to fund the scheme review, these are:
- 6.7% for a minimum operating budget. This would see unallocated cases and customer wait times increase.
- 8.7% to absorb increases in demand. This would maintain unallocated cases and wait time at current levels.
- 12.1% to reduce unallocated cases somewhat, in part through recruiting 26 new staff.
- 17.1% to reduce unallocated cases more dramatically, with the aim of reaching around 1,000 cases in 2027/28, “a level that has been previously used as an acceptable ‘work in progress’ position”.
The OLC has recommended the third option, saying it “balances the need to invest to maintain customer journey improvements alongside the planning and design required for wider scheme transformation”.
The first two options would be “a retrograde step for customer experience”, while the fourth represented a high operational risk, given the large-scale recruitment, onboarding and training involved at the same time as a significant transformation programme.
In the meantime, LeO has stepped up its learning and insight work, such as publishing 13 ‘public interest’ decisions [4] naming firms and barristers in full and piloting a new model complaints resolution procedure which will soon be rolled out.
The work to publish full decisions more generally will continue next year, using AI tools where possible “to streamline them and significantly reduce the time required for pre-publication checks”.
OLC chair Elisabeth Davies said: “LeO has transformed its service. These gains have been hard-won and must not be lost. But with complaints continuing to rise rapidly, LeO must be radical again and find new ways to meet growing demand.
“These challenges cannot be met by LeO alone. A sector-led approach is essential, including to improve standards of service and complaint handling, and LeO will continue to be a positive and proactive partner in supporting this improvement.
“Collaboration is key to lasting change, and that’s what sits at the heart of this consultation.”