The legal ombudsman has successfully appealed a ruling quashing a decision to penalise a law firm over fees charged to a family client who lacked mental capacity. 

In Aina Khan Law Limited v Legal Ombudsman, Lord Justice Holgate, with whom Lord Justice Coulson and Lord Justice Baker agreed, set aside the quashing order made by David Pievsky KC, sitting as a deputy High Court judge.

Aina Khan Law Limited was contacted by CXV, as referred to in the Court of Appeal judgment, for urgent advice after her marriage ended. The judgment noted that ‘from the outset there was evidence that CXV had mental health issues’.

The firm provided CXV with an estimate and agreed there would be cost reviews throughout. Later, CXV’s sister complained to the firm about the level of fees – CXV paid a total of £113,963 including VAT against an original estimate of £43,500 – and  lodged complaints with the legal ombudsman, which were rejected. CXV asked for a review.

A revised decision found the charges to have been £35,500 too high and that the firm had failed to arrange for CXV’s capacity to be assessed at the point of instruction. It awarded compensation of £51,192.60 in relation to two of the complaints.

The firm issued a claim for judicial review, following which part of the compensation order. The ombudsman's office appealed.

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The appeal judgment noted the ombudsman had 'addressed the main issues using reasoning which was succinct, accessible and intended to satisfy the purposes of the scheme’.

It found that ‘much of the [High Court] judge’s criticism of the decision letter’ was directed at two paragraphs, ‘but those passages have to be read together with the reasoning which preceded and followed them’. The judge ‘did not read the relevant parts of the decision as a whole’ and his approach was ‘selective’.

Lord Justice Holgate concluded: ‘Reading the ombudsman’s decision letter fairly and as a whole, in the context of the Law Society’s Guidance, I do not consider that there was any irrationality of any kind in her reasoning and decision. I must respectfully disagree with the judge. I consider that the ombudsman was entitled to reach the conclusions she did on the materials before her and that she gave legally adequate reasoning.’

Allowing the appeal, the CoA said: ‘Having clearly explained at the outset the approach she was taking, there was no need for the ombudsman to keep repeating herself in the decision letter. The judge’s criticisms of the ombudsman’s reasoning were unjustified.'