LeO ‘cost per complaint’ too high, benchmarking survey finds

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Sampson: LeO costs half of predecessor bodies

The Legal Ombudsman (LeO) compares well with similar schemes on case resolution speeds, client satisfaction and perceptions of fairness, but many complainants reject its findings and the cost per complaint is high, according to a study.

The benchmarking study, carried out by the Legal Service Consumer Panel (LSCP) at the request of Legal Services Board, looked at 10 dispute resolution schemes altogether – including seven other ombudsmen – and found “quick and cheap” types of alternative redress compared well against LeO in some respects.

LeO welcomed the positive findings but hit back at the findings over cost and criticised the study for going beyond its benchmarking brief.

On the issue of LeO’s quality, the panel found perceptions among complainants of its fairness were “relatively high”, especially when the fact the ombudsman upheld fewer complaints than other schemes was borne in mind.

But less positively it found that “in 70% of cases where an ombudsman made a decision, the complainant rejected it”. LeO was also less likely to be recommended than other schemes, and received “a relatively high proportion of complaints about its own service”.

The study found that LeO’s ‘unit cost’ of £2,168 per complaint was higher than similar schemes. The panel accepted that both complexity and the fact that more cases (39%) went to the ombudsman for decision – rather than being resolved before a formal decision – helped “to explain why legal services complaints are costly to deal with”. But in its view, “the service’s current unit cost has implications for plans to widen its jurisdiction” and the cost needs to come down.

LeO is currently considering whether to push for activation of powers under the Legal Services Act to introduce a voluntary jurisdiction to cover unregulated legal services providers – a move already broadly welcomed by the LSCP.

The panel ended its study with a broad-ranging ‘wider reflections’ section, which concluded that an ombudsman scheme was appropriate in the public interest for legal services, because of its strengths “when there is a need to equalise a power imbalance between the parties”.

However, it noted other alternative dispute resolution schemes that achieved “quick and cheap redress” scored comparably well on perceptions of fairness “despite their less inquisitorial approach”, and were often recommended by complainants to others.

The panel complained about the lack of transparency of some of the schemes it included in the benchmarking exercise, saying they had “declined to share data beyond that already published… [or] refused on the grounds that we found less convincing, for example, that it had not been audited or was commercially confidential”. By contrast, LeO was open with its data.

In a statement, Adam Sampson, the chief legal ombudsman, said: “We cost just half of the £32.5m spent by our predecessor bodies. We are already cutting that cost still further; for instance, while the report acknowledges that our unit cost in 2012/13 was 5% lower than in the previous financial year, our projections show that restructuring undertaken in July 2013 will reduce unit cost for 2013-14 by a further 10%.”

He added that a strategy and budget consultation, scheduled to be launched later this week, included an “ambition to further reduce unit cost for 2014/15 by around 5%”.

Concluding on the study overall, Mr Sampson said it was “useful” and raised points he would consider carefully, but added: “Some of the points made go beyond its benchmarking brief. Moreover, some of its conclusions are drawn based on incomplete data sets or where operational differences make comparison difficult.”

Elisabeth Davies, the LSCP’s chair, said: “Many consumers are nervous about using legal services and think law firms will not consider their complaint properly, so people need to know whether [LeO] is resolving complaints fairly and effectively.

“Since consumers end up paying for the cost of regulation we want to see [LeO’s] unit cost… come down significantly. At the same time as making its current service more efficient, this would be necessary for the viability of a voluntary scheme for unregulated lawyers.

“Options for handling complaints in a different and far cheaper way therefore need to be seriously explored, enabling many more legal services consumers to access redress.

“The overall picture is that of a relatively new scheme seeking to improve the service it provides as complaint patterns settle down. Given recent history it is positive that complaint backlogs which beset the previous regime have been avoided.”