The Legal Ombudsman (LeO) has scaled back its planned increased budget for the coming year, but it is still set to increase by 13%, or another £5 per lawyer.
Officials at the Legal Services Board (LSB) have recommended to its full board, which is meeting tomorrow, that it should approve the £14.5m request.
They said that, without more funding, there was a risk that LeO’s performance may further deteriorate and “create a situation from which it may be impossible to recover”.
On the flip side, the paper prepared for the board meeting said that, should the expected benefits from the extra cash not materialise, “the board would be justified in calling on the government to pursue alternative arrangements to deliver effective consumer redress in the sector”.
In November, the Office for Legal Complaints (OLC), the body that oversees LeO, consulted on a 19% increase to £15.3m, and a further 6% the year after to £16.2m, arguing the scheme was in an “unsustainable position”.
It said that, without an injection of extra cash, delays in handling complaints would continue to lengthen, and reach nearly 11 months in around two years’ time.
However, there was a negative response from the profession, uniting the Law Society, Bar Council, Chartered Institute of Legal Executives and Council for Licensed Conveyancers in opposition.
The paper recognised the progress made at LeO over the past year in leadership, governance, engagement and innovation, and said the board could have “much more confidence than a year ago that the investment will be wisely spent”.
But nonetheless, the decision to back the budget proposals was “finely balanced”.
Officials said: “We consider that the additional funds sought are necessary to give the Legal Ombudsman the opportunity to stabilise and then improve its performance, in the context of a challenging external environment.
“The Legal Ombudsman’s recovery is critical to the regulatory objective of promoting and protecting the interests of consumers, and to our strategic aim of stronger confidence in regulation.”
LeO is funded by a levy on the regulated legal profession. While “mindful of current financial pressures because of the pandemic”, the paper said the impact on lawyers would be “relatively modest”, representing an increase in levy income from the profession of £5 per head to £73.
It went on: “There is also a tendency for some in the sector to see these issues as the OLC’s problem, rather than there being a shared responsibility for finding solutions.
“These solutions must include activity by regulators and professional leaders to address poor customer service and improving complaints handling by legal services providers.”
LeO responded to feedback from the profession by reducing planned levels of recruitment and “seeking to maximise improvements that can be made with existing resources and by reviewing operational processes”.
Its forecasts showed that, in 2021/22, the larger budget would reduce the pre-assessment pool – the near-5,000 cases awaiting allocation to an investigator – reduce waiting times and increase case closures.
The impact would be felt more in the following year, however. It projected that the number of files waiting in the pool would fall to 4,696 by the end of 2021/22, with a further reduction to 3,609 in 2022/23.
By the end of 2022/23, “as a minimum”, LeO expected to reduce wait times for all case by 32% (from 277 days in 2020/21 to 186 days by end of 2022/23) and increase the number of case closures by 73% (from 4,583 in 2020/21 to 7,962 by the end of 2022/23).
Among the initiatives being considered to improve the service are requiring lawyers to respond to a standardised information request at the point a complaint is accepted for assessment, rather than waiting until the investigation starts to request information; introducing adjudication for some lower-complexity work, rather than supporting parties in trying to reach an agreement between themselves; and using artificial intelligence to automate some of the initial processing and triage complaints.
The complaints handler has also committed itself to establishing a stakeholder advisory group from April 2021.
LeO is anticipating roughly the same number of complaints (7,200) in the next year as this. It said that, while there may be a reduction from practice areas badly affected by Covid – such as personal injury – there could also be an increase from those with more activity, such as conveyancing and employment.
“It is also arguable that the challenges presented by Covid-19 could place further strain on service standards and customer care which could in turn drive increased levels of complaints.”