Davies: LeO facing demand challenges
The Legal Ombudsman (LeO) is to increase its budget by £2m or 11.4%, having received fierce criticism of its initial plan for a 10.2% rise.
But it would have been even more, 13.4%, had the Legal Services Board (LSB) not refused to approve provision made for publishing summaries of all ombudsman decisions in a bid to improve transparency.
At the same time, LeO has put on hold plans to double to £800 the case fee paid by law firms which fail to take reasonable steps to resolve complaints.
LeO’s costs are paid for by a levy on all authorised lawyers and its budget for the year from 1 April 2025 will be £20m.
The consultation last year on its 2025/26 business plan and budget attracted opposition from the profession, and some of its regulators, arguing that throwing more money at the service has not proven especially successful to date.
Launching the final version of the plan yesterday, Elisabeth Davies, chair of its governing body the Office for Legal Complaints (OLC), said the budget “recognises the demand challenges LeO is facing and the importance of investing to continue reducing a historic backlog” and prevent a backlog arising again.
In a joint introduction with Chief Ombudsman Paul McFadden, Ms Davies argued that LeO had “transformed its service” in the last few years, resolving over 8,000 complaints in 2024-25, a 30% increase.
Despite the transformation, “persistently high numbers of people who’ve relied on legal services at critical times in their lives” were turning to LeO, with 10,000 new complaints expected in 2024-25 and 2025-26.
She said growing demand could reflect increased awareness by consumers of their right to complain, but LeO’s data showed that over the last few years standards of service and complaints handling in legal services had not improved and had “worsened” in some areas.
“The challenge for LeO is that, at current resourcing levels, it cannot reduce the number of people waiting for an in-depth investigation at the pace required to make meaningful improvements to the experience of these consumers.
“The higher demand effectively absorbs the increased output that would otherwise reduce the time customers have to wait.”
The queue of complaints awaiting investigation, which reached a high of 5,862 in 2021/22, that has been LeO’s greatest problem for years.
Though reforms – particularly the focus on early resolution – have helped bring it down, it has not fallen anything like as quickly as first forecast (the original goal was to get it down to a workable level of 500-1,000 by 31 March 2024).
LeO forecast it to be 2,906 as at 31 March 2025 and projects that it will be 1,929 a year on.
Ms Davies said 38% of the increased budget would be spent on increasing the number of investigators, with the aim of cutting waiting times by a third, instead of 16% without the investment, and ending the year with a queue 17% lower than it would otherwise have been.
Setting out the context for the budget increase, the OLC said that, in 2023/24, LeO found evidence of poor first-tier complaints handling in 46% of the complaints it investigated.
“Persistently high demand, and persistent findings of service and complaint-handling failings, are clear indicators that consumers are being let down.”
In addition to 20 more investigators, 29% of the extra money would go on a 4% pay award for staff (nearly £600,000) and a further 17% (£348,000) on increased employer National Insurance contributions, which had not been factored into the consultation version of the budget.
Included in “unavoidable costs” are £90,000 in bad debts from firm closures, which was not provided for in previous budgets.
There has been pressure on LeO to improve transparency and publish more about the decisions it makes and the consultation suggested decisions could be published in full with redactions.
While responses from consumers and those representing them were “strongly supportive”, other submissions raised concerns about the impact on LeO’s efficiency, legal considerations around privilege and “associated redaction risks”.
As a result, LeO said it had “concluded that a realistic pathway to fulfil its commitment to transparency was to pursue the delivery of summaries of all ombudsman decisions in their current form – while continuing to assess options for publishing decisions in full in the longer term”.
However, the LSB refused to approve this part of the budget, with a paper before last month’s meeting of its board saying the link between the additional resources sought and the expected benefits “has not been sufficiently demonstrated”.
It added: “We also have concerns about the potential negative impacts of OLC/LeO embarking on such a costly and significant project while simultaneously upscaling its investigative and insight capabilities – while also still carrying a large casework backlog and facing higher demand.”
Instead, LeO will now publish 30-50 “high impact public interest decisions” over the year, as well as more case studies and data, and in time resume talks about the LSB about publishing summaries.
The consultation had also canvassed doubling the case fee charged for complaints resolved in the consumer’s favour where the service provider fails to take reasonable steps to resolve them.
The OLC said “some stakeholders” regarded this as “too large” and so LeO will consult in the next year to identify “a level of increase that strikes an appropriate balance between competing priorities”.
Meanwhile, Mr McFadden will be leaving LeO in October to become the next Scottish Public Services Ombudsman. He joined LeO in January 2021.
Ms Davies said she planned to recruit an interim chief ombudsman so that the new chair of the OLC “has as many options open to them as possible, given that my own second term is due to come to an end in 2026”.
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