ROBERT VERKAIK SURVEYS THE RANGE OF OMBUDSMEN AVAILABLE TO SOLICITORS AND THEIR CLIENTSThe relationship between the legal profession and ombudsmen in Britain took on a new dimension last week when the Pensions Ombudsman claimed that one leading solicitor had threatened defamation proceedings against him.In his annual report, Pensions Ombudsman Dr Julian Farrand QC uses this example to illustrate the hostility with which the legal profession regards his office.

However, for ombudsmen generally there is no such thing as bad publicity and, for all his protestations, Dr Farrand is at least one of the few ombudsman with whom solicitors are well acquainted.

The mere existence of many of the other ombudsmen -- unless the job is being performed by a lawyer -- is something about which some solicitors are still in the dark.In April this year, the powers of the Independent Housing Ombudsman became statute-based under the Housing Act 1996.

The present ombudsman, Roger Jefferies, is also a solicitor.

Like the Pensions Ombudsman, he too can offer final and binding determinations.

Yet how many solicitors can claim they know how to get in touch with Mr Jefferies if it will help their client's case?Rafael Runco, case work manager at the office of the Independent Housing Ombudsman, maintains: 'The availability of our ombudsman scheme is not as widely known as say that of the Parliamentary Ombudsman .

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We are absolutely certain that a number of legally aided cases end up in court unnecessarily.'Mr Runco says the solicitor referrals come from a core of just 20 law firms, mainly in London and the south east.

'Once they have tried it they keep coming back to use,' says Mr Runco.

'But the vast majority of firms we never hear from.'Judges have become more aware of the role of the ombudsman that solicitors and this can lead to embarrassing courtroom situations.

Mr Runco says: 'There have been a handful of cases which have gone to the county court where the judge has advised the parties to withdraw the case and go to the ombudsman instead.' He says the earlier the ombudsman is involved the better the chance of reaching a cheap resolution.In harmony with Lord Woolf's recommendations on seeking alternatives to litigation, the Independent Housing Ombudsman is using pioneering methods of alternative dispute resolution alongside the more traditional ombudsman methods of investigation and adjudication.Suzanne Burn, secretary to the Law Society's civil litigation committee, agrees that 'many solicitors are not as aware of the potential of ombudsmen as they might be.' She says one reason for this is that it has been difficult to get hold of the relevant information for each ombudsman.

But, says Ms Burn, there is a move towards making greater use of the service.'Clients want cost-effective remedies and the Legal Aid Board is already recommending using ombudsmen complaint systems,' she says.The Pensions Ombudsman is the exception to the rule of under-use.

The Pensions Ombudsman's casework director, Tony King, maintains that one reason Dr Farrand is in demand is because he is able to make statutory, binding and final decisions, subject to appeal to the High C ourt.

'To solicitors, this process looks more like the normal court process than an ombudsman whose decisions don't have the legal force that the Pensions Ombudsman's decisions do,' says Mr King.

'Really he is a tribunal of just one person, a unibunal.'Peter Woods, a partner at London law firm Stephens Innocent, is currently representing the two pensioners in the National Grid case concerning the use of pension fund surpluses.

He has taken the case from the first ombudsman decision to its overruling in the High Court.Mr Woods says: 'I see the ombudsman as the poor man's court because he has a unique jurisdiction.

His determination can be enforced in the court.

The beauty of the Pensions Ombudsman is that he does the investigation, so if you have an impecunious client with a valid complaint you know it will be properly investigated.'Mr Woods, who is representing the two pensioners on a pro bono basis, adds: 'I think solicitors have a reflex action to avoid ombudsmen because most of them will think its not going to give you justice or be conclusive.'Since the courts have the power to order costs and the ombudsmen generally do not, there is natural temptation to ignore the ombudsman procedure.

And it is noticeable that some ombudsman -- for health service, local government and prisons -- tend to be more conservative in their recommendations.

Says Ms Burn, a former assistant director at the office of the Local Government Ombudsman: 'They make recommendations for financial compensation which are rather less than you would get in the courts if you could litigate the same thing.

A lot of solicitors would say if the client can afford [to litigate] or get legal aid then go to the courts first time and use the ombudsman as a backstop.'However, Mr King points out: 'A solicitor's proper advice might be go to the Pensions Ombudsman anyway but don't use me because the Pensions Ombudsman does not require you to be represented and you will not get your costs.'It might even be negligent not to suggest that a client takes up a grievance with an ombudsman.The industry ombudsmen -- such as the office of the Insurance Ombudsman, a post now held by Walter Merricks, the former director of professional and legal policy at the Law Society -- are non-statutory bodies.

Their decisions are binding only because their members have agreed to be subject to them.

For example, those insurance companies which are not voluntarily members will be outside the Insurance Ombudsman's jurisdiction.

The Insurance Ombudsman's decision is not binding on the complainant.

This might be a good reason for a solicitor to advise a client to go to the ombudsman first because it still leaves the door open to go to court if his ruling is against the complainant.

Conversely, a solicitor might argue the case will end up in court anyway if the respondent refuses to accept the ombudsman's decision.However, Ms Burns said private sector ombudsmen can be of more use to a client than those in the public sector, such as the Local Government and Health Service Ombudsmen.

'They [private sector ombudsmen] have the power to make direct awards, often for large sums of money.

The public sector ones only have power to make recommendations which are not always accepted.'Martin McKenna, a litigation partner at Eversheds' Birmingham office, advises banks and building societies on how to deal with the more serious complaints being handled by the Banking and Building Society Ombudsmen.

'For the clients [banks and building societies] it's a means of filtering out unmeritorious claims,' he says.

He does not think the widening of the ombudsman's remit will necessarily save the banks and building societies money in facing less litigation.

'It's swings and round-abouts,' he says.

'There are people who, if there is a free ombudsman service, use that rather than pay a lawyer to go to court.'BIBI BERKI TALKS TO THE SOON-TO-RETIRE LEGAL SERVICES OMBUDSMAN, MICHAEL BARNES, ABOUT HIS YEARS SPENT WORKING WITH THE LEGAL PROFESSIONWhen Michael Barnes applied for the job of the first Legal Services Ombudsman in 1990, the former Labour MP for Brentford and Chiswick and then-director of the UK Immigrants Advisory Service had more than a passing knowledge of complaints against the profession.

The legislation which created his post -- the Courts and Legal Services Act -- specified that the holder should not be a lawyer.

But Mr Barnes already knew the legal profession from the inside -- from the then-Solicitors Complaints Bureau.

From its birth in 1986 and for the next four years, Mr Barnes said on the bureau's investigation committee.It is unimaginable that his experiences at the bureau -- a body which managed to court controversy since the day it began business -- did not colour his approach to the post of ombudsman.

Although fair and scrupulous in his task, he has not been afraid to criticise where necessary.

The profession and its methods of self-regulation have come in for occasional chastisement.

In his first annual report he said poor communication was a 'recurring theme' in many complaints about solicitors and barristers; in his third report he said the pursuit of big fraud charges could have been diverting the bureau from its primary role of investigating ordinary complaints; last year he warned the Law Society to improve the way it handled complaints or it would risk losing the right to regulate the profession; and in his last report, which came out last month, he issued another warning, that if the newly formed Office for the Supervision of Solicitors (OSS) did not prove itself, 'the pressures for a major shake-up of the system are likely to become irresistible.'The Lord Chancellor appointed Mr Barnes to the new post of Legal Services Ombudsman in January 1991.

'My terms of reference are first of all to investigate the way the professional body [the OSS, the Bar Council and the Council of Licensed Conveyancers] dealt with the complaint itself,' explains Mr Barnes.

It is at his discretion whether he goes on to investigate the original matter.

This happens 'if there has been a definite failing on the part of the lawyer and when the professional body has not dealt with it properly'.The ombudsman's teeth lie in his power to make recommendations against firms.

This may not, in the eyes of some complainants, be sanction enough.

He can tell the professional body to reconsider the complaints; he call tell the body to exercise its powers against the lawyer complained about; or he can recommend that the body or the lawyer pays compensation for the inconvenience or distress caused to the complainant.But his power is only to recommend, not impose or penalise.

What happens if firms refuse to pay up? Mr Barnes explains: 'The Act says that within three months of the recommendation being made the person or body must inform the ombudsman what action they are taking.

If they fail to do so or they do not comply with the recommendation then the Act requires them to publish their reasons for not complying with the recommendations.'This involves the respondant taking out an advertisement in a newspaper and explaining itself.

It is arguable that to some firms this threat of bad publicity -- and they are allowed to attempt to vindicate themselves in the advertisement -- is less of a threat than paying compensation.

But in practice, says Mr Barnes, firms would rather comply.'Out of about 300 recommendations made in the course of a year we find that only about a dozen are not going to be complied with,' he says.The penalties, then, are not especially harsh, but the presence of an ombudsman is significant.

The profession had been left to regulate itself and the result was a growing suspicion by the users of its services that maybe the system was unfair or too hard for them to use.

Bringing in an ombudsman to some extent put legal services users in the same bracket as other consumers.

Mr Barnes had ideas of his own as to how the former system was letting people down.

'I certainly felt that the self-regulatory complaints systems that were in operation were not enough by themselves,' he says.

He worked hard to supply the extra tier.

With his team, based in Manchester, his office has handled a growing number of complaints.

In the first three years, between 1,200 and 1,300 complaints a year.

In 1994 and 1995 the number rose by 30% each year and was stable for the next two years.

Although the number of referrals is considerable, Mr Barnes gives his time to each case.

If this is an arduous task, Mr Barnes does not mention it.

He describes his six years as the first Legal Services Ombudsman as 'a fascinating experience', because it 'gives one a very interesting insight into the way the legal profession functions'.Or fails to function.

But then, the ombudsman points out, the new OSS is a much more 'consumer friendly' organisation and seems to have 'started off the right way'.

His successor, who is yet to be announced, may have a diminished task on his or her hands.

But Mr Barnes does not let the OSS get off scot-free.

It has started off well, he says, but 'it is too early to pass judgement'.THE OMBUDSMEN-- Banking Ombudsman: David ThomasCovers all high street banks in the UK and deals with complaints about negligence, maladministration and other breaches of duty.

Does not cover complaints involving claims of more than £100,000 or claims which are subject to court proceedings unless the bank in question has given its written consent.

May occasionally require a bank to pay compensation for the cost of the complainant's solicitor.-- Building Societies Ombudsman: Brian MurphyCovers all UK building societies and their associated bodies.

All complaints must relate to the operation or termination of building society accounts.

Does not cover decisions relating to legal action by the building society to enforce its rights.

Maximum possible financial compensation is £100,000.

Often awards the costs of legal advice against a building society.-- Insurance Ombudsman: Walter MerricksAround 96% of eligible companies are covered.

Deals with complaints about personal general insurance policies but not life or long-term insurance.

Covers any complaint concerning a claim made under an insurance policy.

Can order financial compensation for failure to pay a claim or for administrative failure.

Can award the costs of legal advice to a complainant.-- Legal Services Ombudsman for England and Wales: Michael BarnesCovers solicitors, barristers and lay conveyancers.

Deals with complaints about the way in which complaints have been handled by the professional bodies and can also investigate the original complaint.

Does not cover issues covered by advocates' immunity or comp laints subject to court proceedings.

Financial compensation can be recommended.-- Pensions Ombudsman: Dr Julian FarrandCovers all occupational pension schemes by law, including those run by insurance companies for employers and trustees.

Deals with complaints about maladministration and disputes on a matter of fact or a point of law.

Does not cover complaints about state pensions or cases which are subject to court proceedings or tribunal.

Can make an award for financial loss for which there is no maximum amount.-- Personal Investment Authority Ombudsman: Tony HollandAll independent financial advisors and investment companies providing long-term insurance investments and other personal investments which are members of the Personal Investment Authority must belong to this scheme.

There is a mandatory jurisdiction which covers all firms and a voluntary jurisdiction which covers most, but not all, firms.-- Broadcasting Standards Commission Chair: Lady HoweCovers all radio and television broadcasters and deals with complaints about unfair treatment and infringement of privacy.

Complainants who chose to be legally represented cannot cover costs.

The commission cannot give financial compensation or order the publication of an apology or correction.-- Independent Housing Ombudsman: Roger JefferiesAll social landlords registered with the Housing Corporation must belong to the scheme.

Covers all complaints about the duties and services provided by landlords, but not complaints about the level of rent and service charge increases.

The complainant must chose between using the Ombudsman or court action.-- Parliamentary Ombudsman: Michael BuckleyDeals with complaints that maladministration by government departments and non-departmental public bodies has led to injustice but not about the content of legislation, the conduct of court proceedings, or, usually, complaints for which there are other ways of obtaining a remedy.

All complaints must be referred to the Ombudsman by an MP.-- Ombudsman for Corporate Estate Agents: David QuayleAbout half of eligible estate agencies are members.

Does not cover complaints involving claims of over £100,000 or which are subject to court proceedings and members keep the right to take legal action to enforce the payment of their commission.

A financial award is the only remedy.-- Adjudicator for Inland Revenue, Customs and Excise and Contributions Agency: Elizabeth FilkinCovers complaints about the way in which a department has handled somebody's affairs, but not matters that can be dealt with by VAT and customs duties tribunals or disputes on matters of law relating to the complainant's national insurance liability.-- Local Government Ombudsmen England: Edward Osmotherly, Jerry White and Patricia ThomasCovers bodies including local authorities and police authorities.

Deals with complaints that personal injustice has been caused by an authority's maladministration.

Does not cover cases where the complainant has a right of appeal to a court.-- Health Service Ombudsman: Michael BuckleyCovers all NHS authorities, trusts and individuals providing NHS services.

Does not usually cover complaints for which there are other remedies available.

Can only recommend financial compensation in cases involving loss because of maladministration.

The Ombudsman does not recommend damages as courts may do in medical negligence litigation.-- Funeral Ombudsman: Professor Geoffrey WoodroffeAlmost half the funeral industry are members.-- Investment Ombudsman: Peter DeanHandles complaints about f inancial loss, distress, and inconvenience.-- Police Complaints Authority Chairman: Peter MoorhouseWill only address complaints subject to court proceedings where perjury is alleged.-- Prisons Ombudsman: Sir Peter WoodheadCovers complaints from prisoners but not about ministerial decisions.

Can order the payment of costs (but has never done so).