The Legal Ombudsman (LeO) has set out plans for further cuts in the amount it spends on complaints about law firms, but more on claims management companies (CMCs).
LeO also warned that “increasingly restrictive spending controls” imposed by the Ministry of Justice “may impact” on its performance.
In its draft budget for 2016-17, LeO said it planned to reduce spending on law firm complaints to £11.7m – down from £12.2m in the current year and now £5m less than the amount spent in its first year, 2012-13.
This money is recovered from the eight regulated legal professions – although it mainly falls on solicitors – as the major part of the levy that also covers the costs of the Legal Services Board.
Spending on CMCs, forecast at £2m this financial year, is set to rise to £2.1m for the following year.
LeO said that since early 2015, it had “seen significant and sustained reductions” in the volumes of complaints received for its legal jurisdiction. “These changes have been experienced across almost all areas of legal activity.”
The number of cases it took on reached a peak of 8,055 in 2013-14, but has fallen significantly since then, to an estimated 6,600 in the current financial year.
“At the same time,” the draft budget said, “we have successfully commenced the operation of a new claims management jurisdiction.
“We elected for a soft launch of this new jurisdiction and we are recently beginning to see an increase in claims management complaint activity levels. Whether this is sustained or not remains to be seen.”
LeO said it expected legal demand to remain at around 6,500 cases accepted for investigation, with CMC demand at around 2,000 cases, despite rapidly increasing complaints or ‘contacts’ made by consumers – reaching 15,000 in the first nine months of the jurisdiction going live. The CMC budget will continue to be “ring-fenced” and paid for by that sector.
The Legal Ombudsman said it had experienced “significant and sustained changes” in its senior management over the last two years, while dealing with an office move and the introduction of a new case management system.
“During this period it was also under close scrutiny from the Ministry of Justice in response to governance questions raised following the departure of the previous Chief Ombudsman and chief executive officer.
“This resulted in the Ministry of Justice assuming accounting officer status for us and increased scrutiny of our financial affairs. This continued throughout 2015-16 together with increasingly restrictive spending controls being imposed upon [us] as part of a wider spending review across all of government.”
LeO said the “separate nature” of its funding by the legal profession did not mean it was exempted from the spending controls applied by the MoJ, which “may impact” on its performance and “significantly limit” the discretion of LeO’s governing body, the Office for Legal Complaints, to commit expenditure and to deliver its strategy.
LeO promised to reconsider in the next financial year whether to become a certified provider of alternative dispute resolution (ADR) for the purposes of the European directive on the issue. LeO issued a statement late last month saying it did not want to be a provider “for the time being”.
Steve Green, chair of the Office for Legal Complaints, said reductions in expenditure meant “greater value for the professionals who ultimately pay for the scheme and lower costs for their customers”.
He added: “With legal services having to innovate more than ever before to ensure that people still have access to justice, it is right that we should do our bit to keep costs low while maintaining the quality of our service.”