Righting wrongs

The Legal Ombudsman is finally up and running. Chris Fitton and Elizabeth Hughes find out how it’s working.

Just three months after it formally opened for business, the Legal Ombudsman issued its first final decision on 23 December 2010.

The Chief Ombudsman, Adam Sampson, announced on his blog that the first case had gone through the system to a final decision, marking the start of “business proper” for this much-anticipated organisation.

The first in a new body of decided cases is an important milestone, telling those who provide legal services in England and Wales what the system expects of them when it comes to complaints about poor service from their clients.

The Legal Ombudsman’s aim is to provide a new approach to handling complaints about legal services, resolving grievances about lawyers in a more streamlined, efficient and effective way.

When a complaint is referred to the new service, the first step in every case will be the preparation of a recommendation report, which will be sent to both parties for their comments. The complaint will be passed to an ombudsman to make a decision. It remains to be seen whether the body will be mired in administration like its predecessor organisations, the Legal Complaints Service and the Bar Standards Board.

The Legal Ombudsman will charge a case fee – currently £400 – to lawyers, unless a complaint is resolved in favour of the lawyer and the Legal Ombudsman is satisfied that the lawyer took all reasonable steps to try to resolve the complaint themselves.

Although the Legal Services Act gave the Legal Ombudsman the power to publish reports of its investigations and outcomes, this first final decision has not been published. The Chief Ombudsman’s blog simply states that “the decision we have just made doesn’t give the complainant everything she wants, but it does give her more than the lawyer thinks is reasonable”. It gives no further details about the complaint or the final decision.

The Legal Ombudsman is still considering what sort of information it should make public, including whether it should identify the lawyers whose services are the subject of complaints. The Legal Ombudsman has a range of options at its disposal. It may publish only a selection of final decisions, without naming names, much like the approach taken by the Financial Ombudsman Service. Alternatively, it may publish all cases – even those which do not proceed to a final decision – and name the lawyers involved.

The Legal Ombudsman issued a discussion paper on this point in September, which closed for responses on 23 December, and will announce its decision on this contentious issue later this year. For the time being, it will publish anonymous summaries and statistical information.

Deciding whether to make cases public will be a complex balancing exercise. On the one hand, the Legal Ombudsman acknowledges that making decisions public is likely to increase consumer confidence, but that must be balanced against the rights of the lawyers concerned.

The Legal Ombudsman’s primary purpose is to consider complaints about service, rather than cases involving professional negligence, or legal wrongs such as a breach of trust. Like the Legal Complaints Service and Bar Standards Board before it, the Legal Ombudsman can require the lawyer to apologise and pay a penalty to a former client for distress and inconvenience arising from some aspect of poor service.

However, unlike its predecessors, the Legal Ombudsman does have statutory jurisdiction to make an award for compensation, capped at a limit of £30,000, which will be binding on the lawyer, in cases where a complaint also involves an element of negligence. Complaints wholly concerning misconduct will be referred to the relevant regulator.

This is likely to be of concern to professional indemnity insurers. If the Legal Ombudsman exercises this power, then awards could account for a significant portion of professional indemnity claim spend – something of concern to the whole profession. There is little doubt that if negligence is alleged and compensatory damages awarded, then any such finding would constitute a civil liability under the Solicitors’ Indemnity Insurance Rules.

Consistency is also a concern. Although the scheme rules say the Ombudsman will apply a ‘fair and reasonable’ test in deciding cases, how that is interpreted is very largely at the discretion of the individual ombudsman deciding the case.

The first published final decisions will be examined with interest by lawyers and their professional indemnity insurers alike, for indications of how the new service is likely to exercise that discretion and the potential impact of that on the profession as a whole.

Chris Fitton is a partner and Elizabeth Hughes is a lawyer in the professional negligence team at Berrymans Lace Mawer