• December 4, 2023
 CLC urges Legal Ombudsman to step up costs control

CLC urges Legal Ombudsman to step up costs control

The Legal Ombudsman (LeO) needs to do more to show that it can control its very high costs, the Council for Licensed Conveyancers (CLC) warned today.

While the CLC said its confidence that LeO can deal with its case load has increased “slightly”, it has “yet to be assured” of the organisation’s control of costs.

The CLC was responding to the draft 2023/24 business plan and budget of the Office for Legal Complaints, the body which governs LeO, as it looks to continue reducing the backlog of thousands of complaints that has built up in recent years.

The response said:

“The CLC’s level of confidence in LeO’s ability to deal with its case load has slightly improved since this time last year, largely because it seems to be broadly on track with its backlog reduction plan and is continuing to forecast achieving the plan it set out in spring 2022.

This achievement is largely due to ‘low-hanging fruit’ being dealt with through the new early resolution route, however, the challenge in the coming year will relate to cases that are not open to that approach but that require investigation and decision.”

The cost effectiveness of LeO is often judged by a simple “cost per complaint” calculation – dividing the number of complaints by its budget – and the CLC accepted that this was not necessarily an accurate measure given the different routes to resolving complaints.

“But it is an important focus given that LeO continues to be a very high-cost operation,” the response went on, noting that the cost of an investigated complaint is £3,401. This reduces to £1,456 when the “early settlement” cases are included.

LeO is seeking a 9.6% increase in its budget for next year – largely driven by inflation – to £16.8m. The CLC “reluctantly” accepted this “as it seems necessary to ensure that the backlog is reduced quickly and that new approaches are embedded and to maintain efficiency and effective complaints handling in the longer term.’’

Nonetheless, the CLC observed that many of the front-line regulators were absorbing the impact of inflation on their operations to support the financial health of the sector overall.

It also set out its expectation that LeO’s 2024/25 budget – by which time the backlog of complaints should have been very significantly reduced and recent rule changes to resolve cases earlier taken full effect – could be as much as £6m lower.

The response went on:

“The CLC’s most significant concern is that new and more efficient ways of working are firmly embedded at LeO over the course of the next financial year so that the overall cost of the operation can be reduced very significantly while maintaining acceptable levels of service to complainants and the legal sector.

Other issues raised by the CLC included the need to improve “early and clear reference from LeO to the individual frontline regulators for disciplinary intervention”, and to review how the levy from the profession that funds the operation works.

Looking ahead to what could be achieved once LeO has its case work under control, the CLC said it could consider automating the handling of simple complaints.

It might be a challenge to set the burgeoning legal tech sector to develop systems for legal service providers or LeO to use. Given the rules – and precedent-based approach LeO follows, automation should be a possibility for many complaints.”

CLC chief executive Sheila Kumar said:

“There is no doubt that the Legal Ombudsman is moving, albeit slowly, in the right direction after a long period of drift and underperformance. We do not underestimate the challenge but the users of legal services who ultimately fund LeO cannot write a blank cheque for this recovery.

LeO has improved its engagement with the frontline regulators and in that spirit, we hope we can work together to deliver a complaints regime which is fair, efficient and cost effective.”

Council for Licensed Conveyancers