The legal profession is set to pay less than ever for the Legal Ombudsman (LeO) in the coming year, although the organisation has warned that the recent furore over its employee benefits scheme has increased the risk of extra costs arising from higher staff turnover.
The Legal Services Board has approved a 2015/16 budget of £12.21m for complaints against lawyers – most of which is collected through a levy on each of the regulated professions, plus some from case fees – with a further £2.63m to be collected from claims management companies now that LeO deals with complaints against them as well.
The cost of LeO has been coming down steadily since it was established in 2011, when its initial budget was £19.7m (although in fact only £17m was actually spent). The figure for 2015/16 is based on accepting 8,000 complaints against lawyers, the same as in 2014/15.
LeO’s budget paper to the LSB said that while the number of complaints about residential conveyancing – currently around 20% of the cases it handles – has increased in line with housing market, “this is more than offset by reductions across all other areas of law, in particular in the areas of family law and wills and probate”.
The January 2015 move from its original headquarters at Baskerville House in Birmingham to a smaller, lower-cost office nearby will reduce premises and facilities costs from £1.3m to £796,000.
LeO was rocked last year by the resignation of its then chief executive, Adam Sampson , after questions were raised about his expenses, but more substantially the Ministry of Justice has since declared over £1.2m of payments made to LeO staff  in the years since it was established to be “irregular”.
Listing staff turnover varying significantly from plan as one of its risk areas, LeO’s budget said it had allowed for a natural turnover in operational staffing of around one full-time equivalent per month on average, based on trends over the past year.
It continued: “With the recent classification of the organisation’s benefits scheme as novel and contentious, there is currently significant uncertainty as to the future structure of this element of employee’s remuneration packages and hence increased risk of higher turnover.
“This risk manifests itself both from the potential impact on staff turnover arising from the uncertainty regarding the future of this part of employee’s remuneration, and from the potential impact upon staff turnover (and motivation) in the event that the OLC is required to modify these benefits in a manner that employees regard as detrimental.”
Further, the report said that there is to be a “comprehensive review of all key financial processes and controls throughout the organisation” in order to provide the National Audit Office and LeO’s board – the Office for Legal Complaints – “with assurance that no issues exist other than those identified in the 2013-14 accounts”.
Following Mr Sampson’s departure, his role was split into two – a chief ombudsman and a chief executive. Both posts are currently held by temporary appointments, but full-time appointments are to be made.