We all like to complain. There is probably somebody sat nearby in your office complaining about something right now. And poor Christina, my unflappable PA, has been putting up with my constant moaning as a key part of her job description, never easy at the best of times, let alone in a week when the battle to bring claims management under our jurisdiction has taken yet another irritating turn (but that is a story for another day).
Grumbling is a necessary, even pleasurable part of life, an unbecoming but necessary emotional release in stressful work or family environments. But formally complaining is an altogether more taxing, even arduous, affair. Anybody who has ever made a formal complaint will tell you that it requires some effort on the complainant’s part: citing evidence; recalling dates, times and facts; generally assisting investigators in their enquiries. This all takes time and commitment. So, unless a person has a major issue with the person they are complaining about or far too much time on their hands, it is unlikely they are complaining just to be a nuisance.
Of course, vexatious complaints happen from time to time. They form a small but significant part of our caseload and vexatious litigants are an established part of the court landscape. But purely vexatious (as opposed to genuine but misguided) complainants are few and far between. Generally speaking, there is usually something behind the complaint, if only some sort of breakdown in the lawyer/client communication somewhere along the line. And the good news is that what has gone wrong can usually be remedied.
Of course the ideal is that it is the law firm itself which should take the lead in sorting out what has gone wrong and putting it right. We should not be needed; a profession which prides itself on its duty to its clients should be intolerant of poor service. The only cases which should be coming our way are cases where the customer simply refuses to trust the answer the lawyer has given. Which was, in theory at least, the intention behind the case-fee structure built into the Legal Services Act. If lawyers had genuinely tried to resolve the complaint immediately after the complaint came in, they should not have to pay if the complainant insisted on escalating it to the ombudsman. It was only if they could have done better in handling the complaint that they should incur the cost of the ombudsman’s investigation.
It was with this in mind that we approached the discussion of our case fees during our recent review of the scheme rules. When we first began our work, we had deliberately taken a cautious approach to the case-fee issue, deciding to levy a fee only on the third chargeable case in any 12-month period. But in our review process, we were urged by the Law Society and consumer groups to remove this buffer, putting more of the financial burden on those firms actually generating unnecessary complaints. By scrapping the ‘free’ case rule, we could potentially cut the leviable amount by just over £1.5m for 2013/14, and to recover more costs directly from the lawyers we are investigating.
The trouble is that the reason for – and more importantly the effect of – the change does not seem to have been grasped by many firms. More than once in my travels around the country to meet local Law Society groups, I have been challenged by lawyers unhappy at the prospect of being charged £400 every time a complaint comes to the ombudsman. Since many of the complaints are worth far less than that, they say, they are simply paying off complainants rather than risking the cost of an ombudsman’s complaint. The change is a ‘licence for blackmail’, one told me – part of a deliberate government attempt to force lawyers out of the profession.
Leaving aside that, if the move is part of a conspiracy, it is a conspiracy of which the Law Society and Citizens Advice are apparently a part, the allegation simply misunderstands the law (and it seems a bit presumptuous for a layman like myself to lecture lawyers on the importance of understanding the law). Simply put, the change is aimed not at lawyers who generate complaints, but at lawyers who generate avoidable complaints. If a complaint is vexatious, and the lawyer has done all they can to appease it, they will likely not have to pay for it.
What does the law say then? Well, the Legal Services Act requires that the Legal Ombudsman must set a structure for a case fee that will be charged to lawyers. The trigger point is when a case is accepted for investigation. Where a case that we investigate turns out not to be within our jurisdiction, then no case fee will be charged. Similarly, a fee will not be charged if the case is dismissed or discontinued under section 5.7 of our scheme rules, or it is withdrawn or abandoned during the course of the investigation. However, once a case is accepted, we are legally obliged to charge a fee; this is not discretionary, it is legally required.
All this goes some way towards justifying the sense of grievance on the part of some of my challengers – albeit a grievance directed at the drafters of the act rather than us. However, the act explicitly sets out circumstances where the fee is to be waived. The fee must be waived, it says, if the case is settled ‘in favour of the lawyer’ and if the first-tier case-handling was done well. Both tests have to be satisfied. It is no good having been found to have given reasonable service and then not taking the complaint seriously at the first tier. But if the case is settled ‘in your favour’ and you have made a good stab at answering the initial complaint, you should not be charged.
But that does not take us much further. What does ‘in favour of’ mean? How is a lawyer meant to know how we will assess decent first-tier complaints-handling? Yes, our website lists a full breakdown of the sorts of things we look for from complaints-handling: ensuring a complainant was kept informed; responding to the complaint in a clear and understandable manner; adopting an objective and appropriate tone (regardless of the manner of the complaint); and, finally, making a customer aware that in the event they remain dissatisfied the ombudsman is available to resolve the matter. But how does that work in practice in the case fee decisions? These are all legitimate questions. So I hope that these case studies help to illustrate how we approach case-fee decisions.
Fee waived – complaint withdrawn
Mr A instructed a firm under a conditional fee agreement (CFA) with after-the-event (ATE) insurance in place to make a personal injury claim against his former employer. In initial discussions, Mr A told his lawyer that he did not have any previous back problems and that he had made no previous injury claims. The lawyer discovered a little while later that he did have a back problem. However, a barrister advised they could continue with the case.
At the hearing, the judge found that Mr A had been lying and that his claim was fraudulent – as such the ATE was deemed invalid. Subsequently, the firm chased Mr A for outstanding fees of £24,000. Mr A said that the legal process, including the meaning of certain documents, had not been properly explained to him; but there is evidence that the lawyer visited Mr A at his home address early on in the case to explain the documents and sign him up.
The lawyer could not be held responsible for the judge’s findings, but in any case Mr A chose to withdraw his complaint before a decision could be made. As we could see that the lawyer had followed all reasonable steps in dealing with the complaint before it was withdrawn, we waived the case fee.
Fee waived – no poor service
Mr C instructed a law firm in a litigation case. At an initial meeting with the firm, Mr C claims he was asked to pay £360 upfront and subsequently sent a cheque to their office by post. Mr C then claims he attended another appointment at a different office where he was advised that his cheque had not been received. He was subsequently asked to pay £360 either by cash or guaranteed banker’s draft; no credit cards were accepted.
Mr C paid but shortly after decided to end his relationship with the firm. He felt that this, combined with some other issues about the quality of service, meant the firm could not be trusted. Mr C complained to the firm and requested a refund on the fees he had paid to them.
An ombudsman investigation found that the firm had acted reasonably. It turned out that they advised Mr C prior to their first meeting that the costs would be £150 an hour and that he would also have to pay an upfront fee of £360. We found that costs were explained well. Mr C decided to no longer instruct the firm, which was his choice. In this case it was found Mr C had not received poor service and we established that the law firm took reasonable steps to resolve the complaint under their complaints procedure, therefore the case fee was waived.
Fee applied – reasonable steps to resolve the complaint were not taken
Mrs D instructed a barrister in a litigation case. Mrs D’s claim was dismissed and she subsequently raised a complaint that the lawyer performed poorly during her court hearing, failed to submit relevant paperwork to the judge, and failed to take instruction from her husband. The barrister failed to respond to Mrs D’s complaint or follow his own complaints procedure, at which point she contacted the Legal Ombudsman.
After the ombudsman had been contacted, the lawyer later responded to the complaint and incorrectly referred Mrs D to the Bar Standards Board as the second-tier complaints-handler. The lawyer also wrongly advised that her complaint was outside the time limits for referring the complaint to the Bar Standards Board. The ombudsman did not see any evidence that the service provided was unreasonable; it was also not established that the service failings claimed by Mrs D led to the outcome of the case.
Following the ombudsman’s investigation, we found that there was no poor service with the lawyer handling of the actual case and offered no remedy in this respect. However, a remedy of £300 was issued in recognition of how the complaint was handled.
Despite no poor service being found with the handling of the litigation work, the case fee was still applied. This was because the lawyer did not take reasonable steps to resolve the complaint, did not follow their own complaints procedure and incorrectly signposted Mrs D to the wrong organisation to follow up her complaint.
Case fee waived – sufficient remedy offered at first tier
A lawyer represented Ms B in a personal injury claim against a medical institution for a stomach illness contracted during an operation. Ms B had been due to go to trial when the other side offered damages of £21,000 plus an agreed amount on top to cover her legal costs.
Ms B was advised by her lawyer to accept the offer based on what turned out to be inaccurate information. Unfortunately, the amount given for costs was insufficient and Ms B had to use some of the money awarded for damages to cover them. As the ATE insurance policy her lawyer had put in place did not cover going to trial, Ms B felt that she had been pressured into accepting the other side’s initial offer. Ms B felt that he had acted in his own best interests and had not sought the best financial outcome for her. In attempting to resolve the complaint the lawyer offered £2,000 to cover Ms B’s outstanding costs. However, Ms B did not accept this offer.
After bringing the complaint to the ombudsman, we decided that the firm’s offer had been fair and that it had dealt with Ms B’s complaint effectively, despite the initial poor service. Consequently, the case fee was waived.
Adam Sampson is chief legal ombudsman