The Law Society went to the High Court to argue that the newly established Office of Legal Complaints (OLC) should employ LCS staff under the transfer of undertaking, protection and employment (TUPE) laws.
Mr Justice Akenhead rejected the application because, he said, as the OLC is an independent government body the TUPE principles would not apply.
The OLC is an independent complaints service set up under the provisions of the Legal Services Act. It will come into being before the end of the year with Adam Sampson as chief ombudsman.
Sampson welcomed the decision, saying that it would enable the service to begin operating before the end of the year.
He said: “We want to develop a high-performing and diverse organisation and hope that many of the skilled and experienced employees of existing complaints handling bodies will want to be part of this new way of working.”
The OLC will be based in Birmingham and will employ between 300 and 350 people.
The LCS employs 320 staff in Leamington Spa and 51 in London.
Law Society chief executive Des Hudson called on justice minister Bridget Prentice to honour an earlier agreement for a TUPE style arrangement to transfer the staff.
LCS chief executive Deborah Evans added: “We’ll be working closely with the OLC to enable as many LCS staff as possible to seek roles with the new organisation.”