The Legal Ombudsman is planning a 66% rise – to £50,000 – in the maximum amount of compensation it can force lawyers to pay clients who receive poor service. It also plans a six-fold increase – to six years – in the time limit within which clients can lodge a complaint with the watchdog. The proposals are outlined in a consultation paper that suggests reforms of the ombudsman scheme and case fee structure.

The current compensation limit of £30,000 is ‘insufficient’ in some cases, LeO argues. On time bars, the ombudsman proposes changing the scheme so that complaints can be accepted up to six years from an event or three years from knowledge of the event. A one-year limit presently applies in both cases. The regulator is also considering changing case fees so that they take into account how the levy on regulators and case fees interact, and circumstances in which it might accept third-party complaints.

Desmond Hudson, chief executive of the Law Society, said: ‘[We] wonder whether LeO is moving from its initial and welcome semi-informal route of resolution of consumer complaints to a much more formal adjudicator-style approach. If so that would be unfortunate.

‘There will be hard cases occasionally, but it doesn’t seem sensible or proportionate to allow complaints six years after the event. An exercise of discretion sensibly applied may be a better way of dealing with problems.

‘Any limit on the value of compensation will be artificial but LeO is not intended to be a substitute for a court. Does it have sufficiently robust procedures on which to base an enforceable requirement to pay such a significant sum? It is hard to dispel the notion that awards of the scale proposed could become a ‘back-door method’ of resolving what in reality are assertions of negligence without the protection that a court-based process for a claim of that scale provides.

‘LeO needs to be very careful before it seeks jurisdiction to cover third parties other than the solicitor or client. Solicitors are subject to significant regulatory controls to ensure that they behave properly to third parties in what are often contentious and difficult situations.’