The Legal Ombudsman (LeO) has announced that it is to update its Scheme Rules in April 2023. The changes, which follow a consultation process that ended in April 2022, will relate to:
- Time limits;
- LeO’s discretion to decline to issue a formal Ombudsman decision where no substantive comments provided by way of response to investigator’s case decision;
- Changes to the Ombudsman’s discretion to dismiss or discontinue a complaint in certain circumstances; and
- Various other minor drafting changes.
The time limits, which apply to referring a complaint to the LeO, will undoubtedly have the greatest impact upon law firms in the short term since the changes will require that firms amend many of their materials and information sources to reflect the change – both for future clients and some existing ones.
The change, which can be found in the rule 4.5 of the LeO Scheme Rules and which come into force on 1st April, amends the time limit within which a complainant must refer a complaint to the LeO to either:
- one year from the act/omission; or
- one year from when the complainant should reasonably have known there was cause for complaint.
Currently, a complainant has up to six years of the act or omission complained about or up to three years of realising that there was a concern and must have occurred after 5th October 2010.
Undoubtedly the changes have come about as part of the LeO’s attempts to deal with their current backlog of cases. As has been reported elsewhere in the legal press, although the LeO has improved its performance in terms of the number of cases closed nevertheless it is still behind in its schedule to reduce the outstanding backlog of complaints. By reducing the period in which complaints can be brought, they will be ensuring that numbers of cases do not continue to rise.
In their summary of the changes, the LeO has stated that the main reasons for changing the time limits was that “our experience with older cases being more challenging to investigate due to factors such as difficulties with gathering evidence, faded recollection of events, closed service providers, and lawyers having moved on or retired since the complained about events took place”. This therefore represents a return to the position to be found in the October 2010 rules which also imposed a time limit of one year from the actor omission or when the complainant should reasonably have known there was a cause for complaint.
It should be noted that the LeO is not proposing to change its other time limits. Thus, a firm still has eight weeks in which to resolve a matter and complaints must bring their complaint to the LeO within 6 months pf the date of the final complaint response.
In addition to changing the time limits, however, Rule 4.7 of the new rules provides that the Ombudsman can extend the time limits if they believe that it is “fair and reasonable in all the circumstances”. This is a more liberal discretion than currently exists which requires that there be “exceptional circumstances”. Thus, the time limit may be extended if the complainant is prevented from meeting the time limit due to serious illness or where the time limit had not expired when the matter was raised with the firm.
So what are the practical implications for firms of these changes. The main implication is that firms will need to change their materials, client care letters/terms of business, complaints policies, complaint policy statements on websites, complaint handling letters and their office procedures manuals. Infolegal will be updating its templates accordingly so that firms can if they wish use these.
The advice from LeO is that firms should start to inform their clients now of the changes. Thus letters and signposting materials MUST be updated with the new time limits by the 1 April 2023. Prior to the 1st April, existing clients must be informed of the changes that will be coming into effect and client care letters/TOBs and complaint responses sent to new clients prior to the 1st April must be amended to cover the current rules and the forthcoming rules. After the 1st April, those communications will need to deal ONLY with the new rules.
Note that this means that if your complaints policy on your website refers to the time limits then these must be changed. Thus, if you follow the SRA suggested complaint policy in their explanatory guidance for the Transparency Rules, then this contains a reference to the six year and three year limits and will need to be changed. If, however, like many firms you merely mention the time limit of 6 months, then changes may not be needed.
It is understood that materials will be published by the LeO for you to use in connection with informing clients.
Discretion to Dismiss Where No Substantive Comments
The next change, which may impact complainants more than law firms, and normally have no direct impact upon the processes within your firm or the materials you use, is to be found in Rule 5.20 of the revised rules. This provides that:
- “if neither party, in their response to the investigator’s findings, indicates disagreement” within the prescribed time limit, or
- “no new facts or evidence” are provided in response to the investigator’s findings, or
- Any “disagreement is not based on a challenge of the facts or evidence on which the investigator’s findings rely”,
then the LeO may treat the complaint as resolved in accordance with the investigator’s findings.
This differs from the situation that currently applies in so far that the current provision merely provides that if neither party disagrees within that time limit, then the LeO may treat the complaint as resolved by the case decision.
Where the LeO’s recommendation is that a remedy is payable, then the firm would be expected to honour that recommendation, and if they fail to do so within a defined period of time, then the complainant could then request that the case be passed to an Ombudsman for a decision which can then be enforced through the courts if necessary.
Discretion to Dismiss or Discontinue Complaints
The third main area of changes is in relation to those circumstances where the LeO has a discretion to dismiss or discontinue a case where there are compelling reasons to do so. The current rules already provide a number circumstances in which this can be done. The revised rules extend those circumstances and recast the order in which some of them appear.
- The addition of the word “significant” to rule 5.7(b). This means that, if the complainant has suffered a loss, but that loss is so small as to be not worth pursuing in the general scheme of things, that the LeO can now elect not to investigate the matter at all. Previously, provided there had been a quantifiable loss, however, small, the LeO was required to undertake an investigation.
- In rule 5.7 (c), the addition of the words “which has either already been accepted by the complainant” in relation to cases where the law firm has offered fair and reasonable redress. Previously it was only where the offer was still “open for acceptance”.
- Rule 5.7 (o) grants “frivolous or vexatious” complaints its own sub-paragraph rather than being included in 5.7(a) as is currently the case;
- Another provision designed to help reduce the LeO’s workload. Rule 5.7 (p) provides that a claim may be discontinued or dismissed if “it would not be a proportionate use of the ombudsman’s time to investigate the complaint, due to the likely impact or due to its complexity, the amount of evidence provided, or due to the conduct of the complainant during the investigation”. It is likely that this provision would not be widely used although as yet no clear guidelines have been issued.
- Finally, rule 5.7 (q) provides that a complaint may be dismissed if the LeO “considers that there has been undue delay in the complainant raising the complaint”. This is different from the provision in relation to the time limits. To understand more fully what the LeO is seeking to achieve with this revision you need to look at the explanation. Given on the February 2022 consultation. There, the LeO explained that:
“Under existing time limits there is a significant window of opportunity for complainants to raise new /additional issues of complaint even though they may have been aware of those issues some years previously but, at that point, elected not to raise them. The Legal Ombudsman believes that it is in both parties’ interests for all known complaints to be raised and reviewed at the same time. If new issues come to light at a later point it is right and proper that they should be investigated; this proposed change would not restrict that right.”
In other words, it is designed to stop complainants from introducing new issues into a matter that has already begun where the complainant knew, or should have known, about the matter when the complaint was first made.
Miscellaneous Other Matters
Finally, LeO has taken the opportunity to review and refresh existing rules. These include:
- Formalising the position on complaints by beneficiaries of a will or trust.
- Addressing how and when an Ombudsman can direct that a face-to-face hearing is required, and
- A slip rule included to allow the Ombudsman to rectify clear and obvious errors without needing to set aside the final decision and re-issue it.
It can seem at times that the only rule changes that occur are those that impose greater burdens on law firms or make the position from which they operate more onerous. Not so the proposals from the LeO.
Whilst the LeO’s proposed changes will require firms to take some steps to update their materials and processes, in the longer term it can only be a good thing for firms to have the certainty of knowing that claims must be brought within a reasonable period of a matter coming to an end.
Being a hostage to fortune of a disgruntled client for 6 years is not an enviable position to be in for anyone. Moreover, from the perspective of both clients and law firms, the length of time taken before matters are considered by the LeO can be a blight on firm and complainant alike, so any steps that will move things towards a speedier conclusion are to be welcomed. What is more, matters that are approaching 6 years old are inevitably going to fall into the hazy depths of memory – and we all know that what is written in files cannot be relied on!