Chief Legal Ombudsman, Adam Sampson, talks compensation, the regulation of will-writers and a new policy to publish the names of lawyers who top the complaints list.
The Legal Ombudsman recently released a report that found the most common complaint from a member of the public about a lawyer's services, is cost. Do you perceive this to be because of over-pricing, or a lack of clear pricing structures and poor customer service?
The core issue here does seem to be about the traditional approach taken by the legal profession, when pricing their work. There is a huge difference in cost attached to legal services and it is not easy always to understand how that different costing attaches to differences in the volume and quality of the work.
The real issue, I think, is that lawyers have always traditionally costed their work on an hourly rate. The cost traditionally goes up, or down according to the amount of time a lawyer says they have worked on a case. Now the problem with that is, it gives very little transparency to the client, about how the final bill has been arrived at.
It is very different to how you buy other services. When you purchase most services, you have a very clear idea at the start as to how much it is going to cost you. You accept that the bill might vary a little bit, but you have a degree of certainty. Going to see a lawyer who quotes you £201 an hour plus VAT, gives you absolutely no understanding as to whether you are in for a £500 bill or a £50 bill.
How has the legal industry responded to the findings of the report and are they willing to adapt their practices?
The pressure from the Legal Ombudsman is only one of a number of pressures on lawyers, to adapt their pricing structures. Perhaps more important than what the Lgeal Ombudsman recommends, is the growing developments in the legal services market and the growing evidence that customers are increasingly expecting lawyers to price their services in a way that they recognise. As we see the beginnings of much greater commercialisation of lawyers, and the opening up of legal services to big corporate players. Then we will start to see more fixed price products and services coming onto the market and that will put those traditional lawyers who price things in a traditional way, at a commercial disadvantage.
The lawyers who have a greater understanding of the way legal services are developing, have very much welcomed what we have said. Some of the lawyers, who are less forward thinking, have dismissed it as irrelevant.
Are things likely to change and evolve with the introduction of the likes of alternative business structures, and automated services?
There are lots of pressures on the legal services market, which does mean things are going to change. Alternative business structures are one of the pressures and they have enabled some big corporate entities to offer services that have traditionally only been offered by high street practices. That is not the only pressure, and alternative business structures are not the only way in which big corporate entities can enter the legal services market. We are seeing much more interest from banks and insurance companies in offering linked legal and financial products. The growth of the internet, and sophisticated computer software means that services traditionally carried out by lawyers, can be systemised, modified and ultimately carried out by software algorithms, rather that traditional solicitors.
Do you publish information on law firms that top the complaints list? If so, where would a member of the public find this information?
We are beginning to implement this process. We have only been established for 18 months and we have spent much of that time consulting on whether and how we should publish that material.
From April 1 we are gathering statistical data on the firms and the lawyers that are complained about most, and we will be publishing that on a quarterly basis on our website. In addition to that we will be publishing details of specific cases, if we regard it in the public's interest to do so. This will include publishing the names of individual lawyers.
If a complainant brings a case to the Legal Ombudsman and it results in a decision in their favour, what type of redress are you able to offer them?
We can pretty much order a lawyer to do whatever we consider will put the matter right. However there is an upper financial limit to that. Currently I can only order compensation, or remedial action up to the value of £30,000. I can, however order the return of fees without limit, so if you paid more than £30,000 I can get you that back.
Your scheme rules recently went out for consultation. What are the key suggestions being put forward?
The core suggestion is that we need to increasingly harmonise the way in which our scheme operates, with the rules which govern other similar schemes, such as the Financial Ombudsman. That means we are suggesting extending the time period that people have to bring complaints to us, and extending the upper limit of our ability to order compensation.
In most cases do you try and ensure an informal resolution to a complaint, rather than a formal Ombudsman decision?
The idea in most cases is to try and bring the partners together and broker an agreement. It is very rarely the case that the lawyer has been totally unreasonable and the complainant has totally missed the point. Most of our cases involve a breakdown in relationships between the lawyer and the complainant.
In most of our cases we try and get that relationship resolved. It is only if we can't that we take it to a formal decision and make the judgement on one side or the other.
What percentage of cases are taken to a formal Ombudsman decision?
We are going to a formal decision in a far greater proportion of cases than we would actually like. Around a third of cases now have to go all the way to a formal decision. That is usually because a complainant demands that an Ombudsman has to make a judgement. I think that reflects the deep attachment of many complainants to the nature of their complaint. That in turn reflects the fact that unlike, for example, financial services, when people are dealing with legal services it is often at a time when people have a lot at stake. People go to lawyers when there are big things going on in their lives, for example, when people have died, when we are getting divorced, when we are accused of crime and when we are buying a house, which is the biggest financial transaction we will ever make. That I think is partly why complainants in particular find it very difficult to accept some sort of informal resolution.
Are there any plans for the Legal Ombudsman to take on a wider jurisdiction to cover will writers and claims management companies in the future?
There is a lot of legal activity that is carried out by non-regulated lawyers, such as will-writing companies, claims management companies and unqualified employment or immigration advisors. These are things which I think everybody, particularly the general public thinks of as legal, but are not currently regulated activities. We think it is important that anybody who is buying or accessing a legal service should have access to the Ombudsman. We are pressing to have essentially anything that is a legal service, brought within the boundaries of our scheme, whether it is regulated or not,
How will you proceed with that?
Any extension of our jurisdiction has to go through a full period of consultation, and we will do that.
There are three means of doing it. One is to work with the Legal Services Board to extend regulation to things like will-writing, which is something that they have recently announced they are intentioned to do. Secondly there is a power within the Act that created the Legal Ombudsman, to include claims management companies within our scheme, and ministers have recently signalled their willingness to have that happen. So we are hoping to have that happen soon. The third thing is to create a voluntary jurisdiction, so that those people offering legal services who want to be able to offer to their customer some element of protection, can voluntarily come within the scheme.