The legal complaints handler has been forced to back down over controversial plans to ask lawyers to pay an extra £2m to fund its running costs.
Plans to hike the budget, criticised by the Law Society and Bar Council, were this month brought to a halt after a damning assessment of the proposal process by the oversight regulator, the Legal Services Board.
The Legal Ombudsman, through its umbrella organisation the Office for Legal Complaints, had applied for a total budget of £14.949m, representing an increase of 21% over the current budget.
But at its meeting last week, the LSB board was invited to reject this proposal, which had initially asked for a 30% increase. Faced with the inevitable, the OLC withdrew its proposed budget in favour of an inflation-only increase.
In her post-meeting blog, Dr Helen Phillips, LSB chair, wrote: ‘The board and the OLC representatives had a frank and open conversation about the Legal Ombudsman performance and we all agreed that it continued to be unacceptable. The OLC presented the issues and causes candidly to the board and we had a constructive discussion about the critical improvements that must be made within the organisation and to services.’
Board papers reveal that LSB chief executive Matthew Hill wrote in February outlining ‘significant concerns’ about the substance of the ombudsman's proposals and saying it was highly unlikely his board would approve them.
It was suggested the process for setting next year’s budget has ‘undermined confidence’ in the ombudsman. Significant new concepts have been introduced including heavy reliance on a new ‘fast stream resolution process’ that will be trialled this year, but the LSB said there was no information provided about the impact of this change.
A proposal to increase the levy on the legal profession by 30% came with no prior notification or consultation, even though the LSB had expressed concerns when the levy was envisaged to rise by 19.5%. The LSB noted weaknesses and change management, with high levels of attrition and ‘worrying’ staff survey results.
While the LSB praised the ombudsman’s greater candour about its problems, it was felt the significant problems had not been properly addressed and performance had deteriorated since October. The latest budget plan was ‘inadequately evidenced’ and did not make out a sufficient case to show potential improvements. Allied with a historical pattern of failure to meet existing performance targets, the LSB lacked confidence in the ombudsman’s ability to deliver its new targets.
The papers also outline the extent of the performance issues suffered by the ombudsman. Investigators are expected, according to their targets, to close an average of 7.3 cases per month. This was achieved last October but since then performance has dropped to 6.5 cases per month. More than a third of staff are currently closing fewer than five cases a month. Staff turnover remains, with average attrition of 22% and around 30% of investigators leaving the organisation.
More than 3,000 cases are currently waiting in a pre-assessment pool. Low complexity cases currently take around six months on average to conclude, with the time rising to 12 months for higher complexity cases.
Meanwhile, the LSB confirmed the appointment of Elisabeth Davies, a former chair of the Legal Services Consumer Panel, as the new chair of the OLC.