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LeO expansion could create “muddle” for consumers, will writers warn


Adam Sampson: LeO wants to widen remit

The Legal Ombudsman’s (LeO) plan to widen its jurisdiction will cause a “muddle”, the Institute of Professional Willwriters (IPW) has warned, revealing that other ADR providers had indicated an intention to move into the sector themselves.

It also suggested that if its own ADR scheme was an indication, LeO’s extension might be a commercial failure – reporting that it had received not a single complaint to resolve in the five years of its existence.

While it endorsed the concept of a voluntary LeO complaints scheme being made available to organisations providing legal services – and said it might even be incorporated into the IPW code of practice if it was – the institute flagged up a number of serious concerns and proposed a delay until the government has decided on the future of legal regulation.

Responding to an LeO consultation on activating its voluntary jurisdiction [2], the IPW pointed out there was nothing to stop other ADR providers offering a scheme covering the legal sector and that the ombudsman should not assume the field was clear for it to step into. In fact, the IPW said: “We have already been contacted by some who are ‘setting out their stall’.”

In the circumstances, it would be “a mistake” for LeO to think its own scheme would “make it any easier or clearer for a consumer to negotiate the system”. An LeO voluntary scheme would not prevent ADR providers from entering the sector, and “we think that the risk of competition should not be underestimated”, it argued.

Hammering home the point, the IPW said: “We can’t see how the provision of such an additional ADR service by the LeO is going to reduce overlaps with other providers, nor can we see how a voluntary scheme by the LeO is going to help harmonise outcomes across different ADR providers, who will be ‘in the market’ whether LeO is providing an ADR service or not.”

It added that “LeO has made a potentially dangerous assumption that its entrance into the voluntary ADR market place will be universally embraced by everyone in the legal profession and therefore the LeO will become a single avenue for resolution for all legal complaints.”

It also questioned the commercial viability of the LeO scheme. Although “attractive in principle”, it may attract few or no complaints from the wider legal services sector. In the five years that IPW had provided its own ADR service, run by the Chartered Institute of Arbitrators, no complaints had been referred to it.

IPW chairman Paul Sharpe said “the likelihood is that the scheme could just become one of many in the market”. He continued: “We don’t think that this muddle would be helpful to consumers and we don’t think that it is likely to guarantee the success of any voluntary scheme introduced by [LeO].”

The IPW response continued that the voluntary LeO jurisdiction could only work if it was a single scheme, irrespective of the location and type of service provided, was affordable compared with other providers, and if there was an element of compulsion to join. But it did not see the proposed scheme meeting any of these criteria.

The Ministry of Justice’s review of regulation and the Legal Services Act could lead to “all complaints in legal services being handled by LeO anyway”, it speculated. So adopting a “wait and see” approach until the government had made a decision on the future of regulation could be worthwhile, it suggested.

Earlier this month [3] the Legal Services Board’s consumer adviser, the Legal Services Consumer Panel, came out in favour of LeO widening its remit, although the Law Society warned that the ombudsman’s resources could be spread too thinly if it did so.