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Legal Services Review



Review Report cover

© Crown Copyright 2004

Report of the Review of the Regulatory Framework for Legal Services in England and Wales

Chapter C

Complaints and Discipline


1. The Consultation Paper set out the broad arrangements of the two main legal front-line regulatory bodies in England and Wales (the Law Society and the Bar Council) to deal with complaints and disciplinary matters. It argued that, in respect of complaints, the high level choice rests between (i) taking responsibility away from the front-line bodies to a single independent consumer complaints body; or (ii) leaving consumer complaints with the frontline regulatory bodies subject to oversight, akin to the system which exists at present. Similarly, in respect of discipline, the high level choice lies between having a single disciplinary system covering all lawyers, or leaving the disciplinary arrangements largely as they are, with front-line bodies dealing separately with their own members. From responses to the Consultation Paper, the major focus of attention, particularly in the case of those representing consumers, was on the manner in which lawyers deal with complaints and provide redress to consumers, not on the manner in which lawyers deal with disciplinary issues.

2. This Chapter takes the issues in respect of complaints in the following order:-

  • paragraphs 4 to 15 summarise the existing complaints handling arrangements;
  • paragraphs 16 to 33 set out issues with the existing complaints handling and oversight arrangements;
  • paragraphs 34 to 46 deal with possible reforms to the complaints handling and oversight arrangements;
  • paragraphs 47 to 56 set out the duties and powers of the Office for Legal Complaints (OLC) and the protocol for delegating matters to the front-line bodies;
  • paragraphs 57 and 58 deal with issues around the classification of complaints;
  • paragraphs 59 to 63 deal with practitioners' 'in-house' complaints handling arrangements;
  • paragraphs 64 to 66 consider possible governance arrangements for the OLC and its relationship with the LSB;
  • paragraphs 67 to 69 set out the costs associated with complaints systems; and
  • paragraphs 70 and 71 deal with the funding of the complaints systems.

3. The Chapter then turns to disciplinary issues and deals with them in the following order:-

  • paragraphs 72 to 78 describe the existing disciplinary arrangements;
  • paragraphs 79 to 82 set out issues with the current system;
  • paragraphs 83 and 84 deal with possible changes to the system; and
  • paragraphs 85 to 87 deal with costs and funding associated with disciplinary arrangements.

Finally, paragraphs 88 and 89 set out the broad conclusions of this Chapter.


Existing complaints handling and oversight arrangements

4. The Law Society is responsible for regulating the conduct of solicitors and for handling consumer complaints. Until recently both functions were carried out by the Society's Office for the Supervision of Solicitors (OSS). However, following a recent reorganisation the OSS has ceased to exist. It has been replaced by a new Consumer Complaints Service (CCS) which deals with all consumer complaints, and by the Compliance Directorate which deals with disciplinary matters.

5. The CCS is independent of the rest of the Society in the handling of individual complaints. However, it is funded and managed by the Law Society, and the Law Society Council has historically been involved in policy issues around classification of complaints, organisation and funding.

6. Solicitors are required by Rule 15 of the Solicitors' Practice Rules [Endnote 19] and by the Law Society's Guide to Professional Conduct of Solicitors to have in place 'in-house' complaints handling procedures [Endnote 20] which must be followed before a complaint is made to the CCS. These require solicitors to advise their clients how to make known any concerns they have about the service provided. Solicitors are then required to investigate the complaint within the practice, and at the conclusion of the review to provide a response to the client in writing. A client who is not satisfied must be provided with information about the CCS and its role.

7. There are three broad categories into which complaints may be divided. These categories remain, but the new Law Society operational system leans towards a functional split in case management, between cases where redress may be due and those which relate to conduct matters. The three categories are:-

  • Inadequate professional service (IPS) - e.g. not carrying out a client's instructions, or allowing unreasonable delays. If the CCS upholds a complaint, it can provide redress by reducing a solicitor's bill, ordering a solicitor to pay compensation to a client of up to £5,000, or telling a solicitor to correct a mistake and pay the costs involved.
  • Professional misconduct - e.g. not keeping a client's business confidential or failing to pay money over to a client when due. These issues may often amount to IPS and so redress may be provided where appropriate. If a complaint does not contain an element of IPS, redress cannot be awarded. Wherever professional misconduct is found, whether or not it amounts to IPS, the Law Society can discipline a solicitor by issuing a reprimand. The Law Society can place conditions on a solicitor's practising certificate. Serious cases may be referred to the Solicitors Disciplinary Tribunal.
  • Negligence is a legal concept and cases of negligence are likely to include instances of either inadequate service and/or misconduct. The Law Society will not usually become involved in claims of negligence made against a solicitor, unless there are also elements of IPS (and the loss is within the CCS's redress limit of £5,000) or professional misconduct. Instead, a client who considers his solicitor has been negligent will be advised to make a claim against the solicitor. Advice may be offered through a panel of solicitors' firms willing to act on behalf of claimants. Claims will normally be dealt with by the solicitor's professional indemnity insurer. In cases where any claim is rejected, a client will normally have to go to court in order to pursue the claim.

8. The Bar Council is responsible for handling complaints against barristers and requires chambers to have a formal complaints procedure. Barristers are required to deal with complaints promptly, courteously and in a way which addresses the issues raised, and Heads of Chambers have a duty to ensure compliance with these rules.

9. If a complaint is not resolved at practitioner level, complainants may make a formal complaint to the Bar's Complaints Commissioner, who is not a lawyer. The Commissioner may dismiss a matter where he considers it outside the Bar's remit (in which case it is not counted as a formal complaint), or where he considers it to be unfounded. The Commissioner may also attempt to broker a conciliation.

10. The Bar Council categorises elements of complaints into the same three broad headings:-

  • Inadequate professional service - the Bar can require a barrister to apologise to a client, to repay fees and/or to pay compensation of up to £5,000.
  • Professional misconduct - e.g. a serious error or misbehaviour which may well involve some element of dishonesty or serious incompetence. The Bar Council cannot award compensation to the client but it can take disciplinary action against the barrister concerned.
  • Negligence - like the Law Society, the Bar Council will not generally consider negligence claims, except in some cases containing an element of inadequate professional service. For claims of over £5,000 the Bar may advise complainants to pursue their claim through the courts.

11. The Bar can deal with a barrister for both misconduct and inadequate professional service in respect of the same complaint.

12. If the Bar's Complaints Commissioner considers a complaint may be justified, he will refer it to the Professional Conduct and Complaints Committee (PCC) of the Bar Council. The Bar Council itself also raises a number of complaints against barristers for breach of practising rules (e.g. failure to comply with continuing education or insurance requirements). Such complaints are referred direct to the PCC and are not considered by the Commissioner. When sitting, the PCC comprises around 18 barristers and two members of the Bar Council's panel of lay representatives. The PCC cannot dismiss a complaint unless the lay members agree.

13. If the complaint involves only inadequate professional service, the PCC will refer the case to an Adjudication Panel (chaired by the Commissioner, with two barristers and one lay member). The Panel determines whether the complaint is founded and decides what the penalty should be, including any compensation to the complainant.

14. Other professional/regulatory bodies - the Consultation Paper also explained that other providers of legal services, such as legal executives and licensed conveyancers, have complaints procedures which follow broadly similar principles.

15. Oversight - there are two important oversight arrangements:-

  • The Legal Services Ombudsman (LSO), established by the Government in 1990, cannot be a qualified lawyer and is completely independent of the legal profession. The function of the LSO is to investigate the handling of individual complaints about solicitors, barristers, patent agents, legal executives and licensed conveyancers by their respective front-line bodies where a referral is made to her. The LSO has the power to recommend or order that compensation for loss, distress or inconvenience is paid to the complainant by the practitioner and/or by the front-line body. There is no maximum limit on the compensation the LSO can award. The LSO may also recommend that the front-line body reconsider the complaint, or that it exercise its powers in relation to the lawyer complained about - for example, the power to discipline a lawyer. The LSO has the power to investigate the original complaint but to date this has been used infrequently. The LSO can also make recommendations to the front-line body about its arrangements for handling complaints. The services of the LSO are free to consumers.
  • In February 2004, the Secretary of State for Constitutional Affairs formally appointed the existing LSO to act also as independent Legal Services Complaints Commissioner (LSCC) [Endnote 21]. For the present, the LSCC's powers have been limited to oversight of the handling of complaints about solicitors by the Law Society. However, it is open to the Secretary of State to extend the powers of the LSCC to include other bodies should he consider them to be handling complaints unsatisfactorily. The LSCC has the power to set targets for the handling of complaints, make recommendations about the complaints system, and require the Law Society to submit a plan for improved complaints handling. The LSCC can impose a penalty on the Law Society for failure to perform in respect of complaints handling.

Issues in connection with the existing complaints handling and oversight arrangements

16. There are a number of issues which arise from the manner in which complaints are dealt with by the existing front-line and oversight bodies.

These issues concern:-

  1. the record of complaints handling by the front-line bodies;
  2. the level of confidence in the independence of the current system;
  3. the consistency and clarity of redress arrangements for consumers in respect of front-line bodies with overlapping activities; and
  4. the overlaps in the current oversight regime.

Each is dealt with in turn.

17. The record of complaints handling against solicitors has been the subject of much criticism over recent years. In particular, several recent annual reports of the LSO have been critical of deficiencies in the system. In the main, concerns have centred around the issues of substantial delay in dealing with complaints, and questionable quality in terms of the outcome. This was initially attributed to poor management of the complaints handling process, and inadequate resourcing.

18. The Law Society was set various complaints handling targets by the Department for Constitutional Affairs. Between January 2003 and November 2004 these included a range of targets: 60% of its investigations to be closed within 3 months, 75% within 6 months, 85% within 12 months, 97% within 18 months and the remaining 3% within 21 months. It was also set a target linked to the quality of case handling. However, there were concerns that it was failing to achieve these targets. In particular, the LSO's Report April- September 2003 stated:-

"The targets for the speed and quality with which the OSS is expected to complete its work have been established by the Department for Constitutional Affairs and were reduced for the current year to reflect serious problems that the OSS was experiencing in recruiting staff and delivering new IT systems. Even with these reductions, the statistics..... show that the OSS is currently falling well short of its agreed targets." [Endnote 22]

19. In her most recent report [Endnote 23] the LSO noted that, with the reorganisation of the CCS, there has been some improvement in terms of quantity of the cases dealt with, although concerns about the quality of handling remain.

20. In November 2004, the LSCC set a range of new targets for the Law Society requiring them to close at least 55% of complaints within 3 months, 75% of complaints within 6 months, 85% of complaints within 9 months, 92% of complaints within 12 months, and 98% of complaints within 18 months. The LSCC also required that all complaints over 18 months should be referred to the Law Society's Compliance Board. In addition, the LSCC has set targets aimed at improving customer satisfaction and the quality of decisions made by the CCS.

21. It is difficult to draw a direct comparison between the Bar Council and the Law Society in terms of volume of complaints, predominantly because of the nature of the services provided, and because the Bar is primarily a 'referral' branch of the profession, so that the majority of consumers access their barrister through a solicitor. Of those who do complain to the Bar Council, over 1 in 3, and an increasing number over the last 4 years, argue that their complaint has been dealt with unfairly and appeal to the LSO. This is a much higher level of appeal from the front-line body up to the oversight body than is the case for solicitors. It raises general issues about how the complaint is dealt with and how the decision is communicated to the complainant. Against this it should be recognised that, given the adversarial nature of much of the Bar's business, there will be winners and losers. Further, the Bar Council fairly makes the point that most appeals are without success.

22. The Kentridge Report [Endnote 24] acknowledged that as the Bar moves towards permitting a wider level of direct access (with clients accessing barristers' services without first instructing a solicitor) this is likely to have an impact on the number of complaints and the complexity of case handling:-

"We also think it likely that there would be an increase in the number of complaints made against barristers, whether justified or not, not least because lay clients who instruct barristers directly will not have the assistance of a solicitor to help them judge whether a barrister's conduct has been appropriate. There is also a risk that they may not have understood the limitations of the services which barristers are able to provide."

23. The introduction of new forms of legal practices (e.g. Legal Disciplinary Practices dealt with in Chapter F) may also add to the complexity of complaints handling if barristers join these entities in significant numbers.

24. There are also concerns about the independence of complaints handling systems operated by the front-line regulatory bodies. Many of the responses to the Consultation Paper from members of the public or organisations representing them indicated that this was contributing to a lack of public confidence in the legal professions:-

"We believe that consumer confidence in lawyers' ability to deal with complaints against their fellow professionals has been irreversibly undermined". Legal Action Group.

25. The lack of independence adds to the feeling held by many consumers that they are at a particular disadvantage in raising a complaint against a lawyer. While a clear split between the regulatory and representative functions of the front-line bodies, as envisaged in Chapter B, might reduce public concerns about the lack of independence in complaints handling by those bodies, it is unlikely to remove those concerns completely. The LSO's response to the Consultation Paper commented:-

"It is clear from the contact that the Ombudsman's Office has had with many thousands of customers of legal services, that very many continue to feel disenfranchised by the legal process itself and disadvantaged in any attempt that they might make to pursue a complaint about a lawyer. In an age in which it is often claimed that consumers are more confident and better informed than ever, I suspect that (despite anecdotes to the contrary) this is much less the case in the area of legal services than in other service sectors. I therefore urge the development of new systems and structures that are characterised by a commitment to transparency, accessibility and inclusivity."

26. Whilst the introduction of the CCS appears to have made some initial improvement in the speed of handling of complaints, it is no more independent than its predecessor, the OSS, and appears unlikely to command any greater public confidence in the independence of its decisions.

27. There is a further issue which results from the existing arrangements and it is that they have the potential to create inconsistency and a lack of clarity about the avenues for redress in the mind of the consumer, most noticeably where a complaint is made about both a solicitor and a barrister, or where there is uncertainty in the mind of the consumer as to where a fault actually lies:-

"...there is a confusion in the mind of the user of service between the responsibility of the barrister and the solicitor in any individual matter..." Immigration Services Commissioner.

"It can be extremely difficult for consumers who are not regular users of legal services to know exactly where things have gone wrong. For example in a court, the circumstances giving rise to the complaint may be the result of acts or omissions by the barrister or instructing solicitors. Consumers are not generally well equipped to decide where duties of one professional end and another begin." Consumers' Association.

28. The LSO sees significantly fewer complaints generated by members of the other front-line bodies. In part this is a reflection of the smaller size of these other bodies within the legal services sector. Nevertheless these other bodies do give rise to issues that need to be addressed. One of these is the overlap which exists between complaints systems for providers of legal services, such as ILEX members, and the CCS system where the work is being carried out by an individual under the supervision of a solicitor. There is a potential confusion for the consumer in that complaints may be handled either by the individual's own front-line body, or by the CCS, with different processes and the possibility of a different outcome.

29. The picture is further complicated because the extent to which other frontline bodies fall within the jurisdiction of the LSO is not consistent. In some cases, the LSO is empowered to consider complaints generated as a result of only some of the services that may be provided by a practitioner. For example, in the case of patent agents, the LSO only deals with complaints about advocacy services provided by members of CIPA.

30. With respect to the oversight bodies for complaints that are outlined in paragraph 15, the overlaps and fragmented oversight arrangements which are discussed in relation to the other regulatory functions in Chapter B are also a feature of the arrangements in this area.

31. The recent appointment of the LSCC with powers over a particular body impacts on the pre-existing powers of the LSO. The LSCC is taking over the target setting and monitoring/analysis of the CCS currently done within the Department for Constitutional Affairs, but with the new power to fine for failure. It is difficult from the outside to understand why it was considered that the LSCC's powers could not be given to the LSO, but that a new post could be held concurrently by the same person. In the enabling legislation for each, in many places the wording for the LSO and the LSCC is identical and the two offices are mirror images in many respects. The Explanatory Notes to the Access to Justice Act 1999 [Endnote 25] in respect of the LSCC explain that the sections "largely mirror the provisions for the post of Legal Services Ombudsman... so that the two posts could be combined, if considered appropriate". However, the two offices are not being combined or even co-located - the LSO operates from Manchester and the LSCC's office is in Leeds. In September 2003, when announcing the appointment of the LSCC, the Secretary of State for Constitutional Affairs said that the current LSO would be appointed as an interim measure to act as LSCC for the Law Society pending consideration of this Review's findings [Endnote 26].

32. In addition to the LSO and the LSCC, the Secretary of State at the Department for Constitutional Affairs, the Master of the Rolls, the Financial Services Authority, the Patent Office and the Immigration Services Commissioner are all providers of varying degrees of external oversight of complaints. But the landscape also includes the Law Society's Independent Commissioner, appointed by the Master of the Rolls, who acts as auditor of the Law Society's complaints handling operation with no front-line case investigation role. The Bar's Complaints Commissioner is not an oversight regulator but a front-line complaints handler, appointed by the Bar Council.

33. Having regard to my Terms of Reference, I do not believe that the current system delivers sufficient independence from the legal practitioner, nor that it provides appropriate levels of consistency and clarity. The current system is not well suited to offer flexibility, either to accommodate new legal providers being brought within the net (as discussed in Chapter E) or to permit alternative business structures where lawyers from different backgrounds may work together (as discussed in Chapter F). The present oversight arrangements are confused.

Possible reforms to the complaints handling and oversightarrangements

34. In respect of roles of front-line and oversight regulators there are a number of solutions. As noted in paragraph 1, the high level choice rests between (i) taking responsibility away from the front-line bodies to a single independent consumer complaints body; or (ii) leaving consumer complaints with the front-line bodies subject to oversight, a system similar to that which exists at present. There is a third option (iii) of having a single point of entry, with all consumer complaints being passed down to the front-line bodies to deal with them. This would essentially be a 'post office' role, although there is a possible variant under which complaints may be sifted into different categories or types of complaints.

35. I do not favour either variant of option (iii) as I see a 'post office' role for consumer complaints, with no power to deal with the substance of complaints, as adding an additional layer to the process, and delivering little added value.

36. In terms of option (ii), if this were to be followed there would be a benefit in bringing some rationalisation to the oversight function. But this would, in my view, not deal sufficiently with the issues of independence and consumer confidence that come from leaving complaints handling with front-line bodies, or with the issues of simplicity and consistency.

37. I conclude that a single independent complaints handling body for all consumer complaints is the best way forward. It would sweep up the complaints handling units of the front-line bodies and the main oversight bodies. Such an arrangement would have the benefit of:-

  • providing a system which is independent of the legal profession;
  • providing a single system with one point of entry for all consumer complaints, making the system simpler for consumers;
  • bringing greater consistency and clarity of process; and
  • bringing greater flexibility, in particular making it easier to accommodate alternative business structures.

It would also enable the collection of data which could be used as a valuable source of information on which to make informed decisions about where to target efforts to improve service delivery across front-line bodies.

38. The argument for an independent complaints handling body is supported by the LSO who commented in her response to the Consultation Paper:-

"Whatever the balance of the arguments surrounding the retention by the professional bodies of complaints handling, the idea itself has lost any legitimacy - consumer culture has moved on. I am convinced that an independent overarching regulator and an independent complaintshandling office would be the minimum acceptable outcome of any reform following the present review."

39. The National Consumer Council also agrees that a single system for complaints is the best way to provide a fair and consistent complaints handling system:-

"We have a strong preference for a uniform complaints organisation, independent of the professional bodies... having a single gateway would improve access to the complaints system."

40. The Consumers' Association also prefers a single complaints handling body and comments in its response to the Consultation Paper that:-

"The attraction of a uniform complaint-handling organisation is the simplicity for consumers of a one-stop shop."

41. It is important that the creation of a single complaints handling authority is not seen as an opportunity for front-line bodies to wash their hands of complaints. It is to be expected that the new arrangements will involve frontline bodies and create mechanisms to enable the regulator and practitioners themselves to learn from complaints, so that they can act as an upward driver on quality standards. In addition practitioners will have an incentive to take a close interest since the system will be funded, as it is primarily at present, by practitioners.

42. Some have argued that any change from the existing arrangements should be made only where an existing system can be demonstrated to have failed and where there is evidence that any new system would result in complaints being handled more efficiently, speedily or satisfactorily. In terms of existing arrangements, the Bar Council in particular has argued that it should not have change imposed on it because of the failure of others.

43. But the arguments for a single independent complaints system made by the LSO, the National Consumer Council and the Consumers' Association go well beyond the failures of the Law Society. I believe that the single complaints system should cover complaints against all lawyers and conclude that it would be wrong that an exception should be made for the Bar.

44. If an exception were to be made it would create an exception to:-

  • the objective that a consumer complaints system should have a high degree of independence from the relevant front-line body;
  • the objective of simplicity, important for consumers who seek clarity of system and particularly where there is uncertainty about whether the complaint is against an instructing solicitor or a barrister;
  • the objective of consistency, important at a time when the Bar is taking some steps towards permitting greater direct access; and
  • the objective of flexibility, in making it easier to provide for new forms of business structure where, for example, barristers and solicitors may work together.

45. The Legal Services Ombudsman in her response comments on the issue of exceptions as follows:-

"The removal of complaints handling from the professional bodies is likely to generate a measure of resentment from those whose record of complaints handling is satisfactory. There now exists an understandable feeling that the 'good' are in danger of being penalised for the failures of the relatively poor. Whilst I can appreciate this reaction, I consider it misconceived. For reasons of accessibility and consistency, it would be inappropriate to create a system in which some complainants were able to approach a new independent complaints-handling organisation, whilst others were required to complain to the appropriate professional body. As importantly, any new regime should not be perceived as a penalty for failure but rather as an attempt to bring regulation (including complaints handling) into line with prevailing assumptions about consumer redress..."

46. I conclude that a single independent complaints organisation, covering all the front-line regulatory bodies, should be formed. Provisionally I refer to it as the Office for Legal Complaints (OLC). While independent in handling complaints, the OLC should come under the general supervision of the LSB, with the LSB having the power of appointment to, and dismissal from, the complaints body (see paragraphs 64 to 66 below). The OLC should ensure that front-line regulatory bodies are engaged in the complaints handling process by developing feedback loops to enable the profession to learn from complaints, so that they can act as an upward driver on quality standards.

Duties and powers of the Office for Legal Complaints and protocol for delegating matters to the front-line bodies

47. The creation of the OLC would provide a single system, which is free to consumers. The system would cover all consumer complaints against providers of legal services regulated by the Legal Services Board.

48. Whilst the OLC should have responsibility for dealing with individual complaints, it should also have a more strategic role (in conjunction with the Legal Services Board) for example in the setting of targets for the handling of 'in-house' complaints by practitioners. It should also have the responsibility of overseeing the appropriateness of the indemnity insurance schemes and compensation fund arrangements operated by the front-line bodies, with particular emphasis on ensuring these provide satisfactory protection for consumers.

49. The aim of the OLC should be to provide quick and fair redress to consumers in whatever form may be appropriate, without undue reference to classification issues discussed further in paragraphs 57 and 58. I therefore propose that once a complaint has been received, the OLC should first attempt to mediate the complaint between the complainant and the practitioner. Where this fails the OLC should have the power to investigate a complaint further. In doing this, the OLC should have the power to require the practitioner complained about to provide any information or documents that may be required to assist the OLC in its investigation of the complaint.

50. The OLC will determine a complaint by reference to what is, in its opinion, fair and reasonable in all the circumstances of the case. It should have the power to award redress to the consumer, and this might include the power to:-

  • require a lawyer to make an apology to a complainant;
  • order a reduction in fees;
  • require that work be re-done and faults remedied; and
  • make an order for redress up to a limit to be prescribed by the LSB.

51. Subject to any right of appeal available, orders made by the OLC and accepted by the complainant should be binding on the practitioner. In circumstances where the practitioner refuses to meet the terms of a binding order issued by the OLC, it may be appropriate for a financial award made by the OLC to be capable of enforcement, as if it were a court judgment, and to report the matter to the front-line body concerned.

52. When considering a complaint, should the OLC reach the view that there may have been some element of professional misconduct by the practitioner, it should refer that aspect of the complaint to the front-line body concerned. The handing-down by the OLC of conduct matters to the front-line body will require close liaison between the parties. As is discussed later in this Chapter, the prosecution of conduct matters relating to practitioners will rest with the relevant front-line body. But, where there were novel or contentious considerations or matters which raised issues about the wider public interest, I consider there should be a reserve right to prosecute the conduct complaint in front of the appropriate tribunal of the front-line body. It is for consideration whether this reserve right should be exercised by the OLC, who would already be familiar with the case, or with the LSB, who would have oversight responsibility in respect of matters of policy.

53. In general it is unsatisfactory to delay the provision of redress to a complainant (where the OLC considers such redress may be warranted) pending the outcome of any disciplinary hearing, which may take considerable time. I therefore consider that the OLC should, where it considers the circumstances of the case merit, provide appropriate redress to the complainant in parallel with its referral of the matter to the front-line body concerned for further investigation of the conduct issue and possible disciplinary action. The granting of redress should not be permitted to prejudice the determination of any related misconduct case.

54. In relation to the possibility of appeals against a decision of the OLC, there are various options, including a right of review by a panel, full rights of appeal or no rights of appeal. I do not express a recommendation as to which should be selected. I recognise that, overall, the system of complaints handling and appeal would have to safeguard the rights of both complainants and practitioners to a fair process. However, given that an objective in creating the OLC is to provide quick and appropriate redress from an independent body with the minimum of formality, I hope that a fair process can be achieved without the introduction of elaborate appeals mechanisms, which may prolong the uncertainty of outcome for all parties.

55. The OLC should also maintain regular dialogue with the front-line bodies and the LSB in relation to the passing down of general statistical information on the profile of complaints. This will help to highlight important learning messages which need to be passed down to practitioners.

56. The OLC should also engage with other major stakeholders (e.g. consumer groups), in order to ensure that consumers are appropriately informed about the complaints handling process. The OLC should publish an Annual Report, setting out its performance in terms of complaints handling and that of the front-line bodies.

Classification of complaints

57. As explained earlier in the Chapter, front-line bodies make a distinction between different elements of complaints and classify them into the three main headings:-

  1. inadequate professional service;
  2. professional misconduct; and
  3. negligence.

However, consumers generally make no such distinction and simply seek redress for what they see as injustice. The previous section set out a system designed to provide quick and fair redress to consumers, in whatever form may be appropriate without undue reference to classification issues. The fact that current complaints handling systems cannot generally provide this redress in cases of professional misconduct or negligence is frustrating to many consumers. For example, many consumers are likely to find it hard to understand that a complaints handling authority could not provide compensation for a serious case of professional misconduct, but does have powers to award up to £5,000 for the less serious matter of inadequate professional service. To advise a complainant that they need to pursue their case for redress in the courts, with the associated need to engage another solicitor, is unsatisfactory.

58. Whilst the consumer may not be concerned with the classification of the complaint, the system proposed cannot wholly by-pass the issue since the practitioner is likely to be concerned. Negligence is a legal concept and the practitioner has rights, including under the European Convention on Human Rights and the Human Rights Act 1998. So whilst it might be appropriate for the OLC to be in a position to make an award against the practitioner without undue reference to matters of classification, it should not be able to do so without limit. Further, the level of award that could be imposed by the OLC without reference to the courts would be of concern to insurers. The level would need to be set in a proportionate manner, with regard to the conflicting pressures; and it is proposed that it should be set from time to time by the LSB, after due consultation with the OLC and other interested parties, such as the front-line bodies and insurers. High value cases will still have to go in front of the courts, if they cannot be resolved by other means (e.g. mediation).

In-house complaints handling

59. There are also questions about the way in which rules that govern the complaints handling process are interpreted prior to formal referral of a complaint to the OLC. For example, Rule 15 of the Solicitors' Practice Rules [Endnote 27] requires that solicitors should have in-house complaints handling arrangements. However, there is some evidence that this rule has not been applied in a consistent way by members of the profession:-

"This Rule passed by the Law Society required firms to have their own complaints mechanisms and improve the information that they provide to clients on accepting instructions. The rule was either derided or misunderstood by a sizeable proportion of the profession. Resistance took various forms including non-compliance and a grudging compliance, through prolix and incomprehensible client care letters which perverted the aims of clarity and good communication." [Endnote 28]

60. There has been much debate about the current requirement for lawyers to have in-house complaints arrangements which clients must exhaust before they take their case to the various existing complaints authorities.

61. On the one hand it is right that lawyers should have the opportunity to resolve a complaint before the matter escalates, creating unnecessary stress and cost for all concerned. In their response to the Consultation Paper, the Better Regulation Task Force underlined the desirability of an effective inhouse complaints handling procedure at practitioner level. Many responsible lawyers will not only want to do this, but they will also want to learn from complaints and regard them as a valuable means of gathering consumer information which might help them to improve their service delivery. Conversely, there are accounts of consumers who are deterred from making a complaint because currently they have little choice but to pursue their complaint with a lawyer, who may have been the cause of considerable distress to them. This situation may be exacerbated in the case of sole practitioners or smaller firms where a distinct complaints handling wing does not, because of their small size, exist.

62. Taking these considerations into account, and because resolution of a complaint at the local level is likely to be quicker, cheaper, and less onerous for all concerned, I favour an approach under which lawyers would be required to have an 'in-house' complaints handling system which conforms to clear standards prescribed by the Regulator, and that consumers should be required to complain to their lawyer in the first instance. However, I consider there are two instances in which a consumer should be able to take their complaint to the OLC before conclusion of the in-house procedure:-

  • if they do not receive an initial acknowledgement within a short period of making a complaint (the period to be specified by the OLC); or
  • if it has not been possible to resolve the complaint with their lawyer after a reasonable period from the complaint being made (again the period to be specified by the OLC).

63. In addition, I am sympathetic to the argument that in cases where there is evidence of a difficult and possibly acrimonious relationship between a consumer and a lawyer over an extended period, the complainant should be permitted to take their complaint direct to the OLC. However, I would not wish to see this as 'opening the gates' in relation to any more general direct access to the complaints authority.

Possible governance arrangements for the OLC and its relationship with the LSB

64. The primary issue to be addressed is whether the single complaints body should be a self-standing body with its own statutory objectives or, although separately staffed and branded, part of the LSB framework. The argument in favour of it being self-standing is that its focus would be, and clearly seen to be, on resolving complaints in the public interest. The argument against is that this objective is plainly encompassed within the objectives of the LSB itself, discussed in Chapter A. If the LSB had no level of oversight over how complaints were handled, it could not meet the regulatory objectives set for it. In meeting the objective of 'Protection and promotion of consumer interests' set out in Chapter A there would be two regulatory bodies; and whilst it might be clear that the handling of individual complaints fell to the OLC, systemic failures by lawyers or their front-line regulatory bodies which generated consumer complaints might fall to both the LSB and the OLC.

65. My view is that it would be better to develop one regulatory system: a framework with the LSB at its head which incorporates the OLC. The LSB would have oversight powers over the OLC in respect of systemic and policy issues, but would have no rights in respect of individual complaints. The Financial Ombudsman Service (FOS) represents a precedent in this regard. Whilst it has a separate board, its overall functions and its budget are subject to oversight by the FSA, which appoints the members of the FOS board. This degree of oversight should aid co-operation and avoid duplication. Nevertheless, I am aware that the Government, in its N2+2 Review within the financial services industry, is looking at the relationship between regulator and complaints body, and there may be lessons from that review which should inform the debate in respect of the legal services industry.

66. Subject to any lessons learned from the N2+2 Review, I consider that the OLC should have a board structure, the chair of which should be a nonlawyer. The board should have a lay majority, but should include members of the legal professions regulated by the LSB. All appointments should be based on merit following a 'Nolan' procedure.

Costs associated with the various complaints systems

67. The costs relating to complaints systems are set out in the Ernst & Young Report in Appendix 3. The current system costs approximately £29 million to run. The main cost rests with the Law Society's complaints handling body. However, the figure also picks up the relevant costs of the other front-line regulators and of the oversight regulators.

68. The Ernst & Young Report estimates that the cost of a new single complaints body, the OLC, would be approximately £23 million. Whilst there would be costs of transition to the new body, there would be significant savings from the elimination of the complaints handling activities of a considerable number of bodies.

69. Notwithstanding these potential savings, the decision to recommend a single independent complaints handling system is not driven by costs but by the other advantages, for example in demonstrable independence and clarity, that the OLC would introduce.

Funding the complaints system

70. It is usual for the cost of a complaints system to be borne by the providers of the service (and not the public purse). A regulatory framework will have to be funded sufficiently to enable it to function properly, but without imposing an undue burden on those required to fund it. The cost of dealing with complaints about providers of services is likely to be passed back to the consumer by the provider by way of increased fees or charges. In the legal services sector, the cost is collected through the practising certificate or annual fees. The CCS has partially introduced a 'polluter pays' system, in which costs are charged at the end of the complaints process if fault is found. The cost of the LSO is currently funded by the Government through the Department for Constitutional Affairs' budget. The LSCC will be paid for primarily by the professions over which it has oversight.

71. I take the view that the cost of any new complaints handling system for the legal sector should not be borne by the taxpayer. The cost should be funded in part by means of a general levy across the front-line regulatory bodies, and in part by payments from those against whom a complaint has been upheld - the 'polluter pays' principle. The precise levels will need to be determined by the OLC, in discussion with the LSB, and following proper consultation.


Existing disciplinary arrangements

72. Law Society - The Solicitors Disciplinary Tribunal (SDT) is constituted under Section 46 of the Solicitors Act 1974. It is independent of, but funded by, the Law Society (with the exception of lay members who are paid for by the Department for Constitutional Affairs). The Master of the Rolls appoints the SDT members.

73. The SDT's principal function is to hear allegations against solicitors of unbefitting conduct or other breaches of their conduct rules. It is open to anyone to make an application to the SDT, although most applications are made by the Law Society, usually following investigation by its Compliance Directorate. Other than in exceptional circumstances, hearings of the SDT are held in public and take place before three members - two solicitors and one lay person. The Tribunal usually pronounces its order immediately. Its findings are published about eight weeks later, and these are documents of public record. The SDT can suspend a solicitor for a fixed or indefinite period, reprimand a solicitor, fine a solicitor (fines are payable to HM Treasury), and ban a solicitor's employee from working in a law practice without the consent of the Law Society. Appeal from a decision of the SDT lies to the High Court.

74. The Master of the Rolls - As noted in Chapter B, the Master of the Rolls has a wide variety of functions pertaining to the legal profession, and the Law Society in particular. In relation to disciplinary matters he hears appeals from practitioners on the imposition by the Law Society of conditions on their practising certificates. Such conditions may be that the solicitor cannot practise a certain area of law, or only in supervised practice.

75. Bar Council - If a complaint about a barrister involves professional misconduct, the Professional Conduct Committee can refer the complaint to:-

  • an informal hearing;
  • a summary procedure panel; or
  • a disciplinary tribunal of the four Inns of Court.

76. Each of the above has a mixture of barrister and lay representation. For the most serious disciplinary cases barristers will appear before a disciplinary tribunal of the four Inns of Court. This Tribunal is chaired by a judge with two barristers and two members of a panel of lay representatives. Barristers can appeal from the Disciplinary Tribunal to the 'visitors' [Endnote 29], who are High Court Judges appointed by the Lord Chief Justice.

77. Other legal service providers - There are similar disciplinary tribunals in place to hear and determine cases against other authorised legal practitioners, e.g. legal executives and licensed conveyancers. While there is some variation in the way these tribunals are structured and operate, each nevertheless acts in a similar way to the SDT and the Inns of Court disciplinary tribunals, by seeking to maintain the principles of independence, impartiality and fairness.

78. In general, the tribunals established to hear and determine cases against members of the legal professional bodies are directly funded by the bodies concerned.

Issues with the current system

79. Most responses to the Consultation Paper emphasised the need for continued independence in the various systems, both from the front-line bodies and the Government. Most took the view that such a degree of independence was vital in order to command the confidence in the system of both the professions and the public. Although many felt satisfied with the existing arrangements, there were some concerns about funding arrangements. It was felt by some that the various disciplinary tribunals should not be funded directly by the professional bodies in respect of whose members they are making a determination, in order to achieve both real and perceived independence.

80. There are also issues about the degree of transparency in respect of some of the systems in operation, and about the absence of consistency. Concern was expressed about both the constitution of, and final outcome from, the spectrum of tribunals:-

"There should be coherence on penalties and enforcement as well as standards and consistency of investigations..." Immigration Services Commissioner.

81. One further area for consideration lies in the system operated by the Inns of Court, in which the judiciary plays an important role in the disciplinary process for those barristers who appear before them. The argument put to me for the involvement of the judiciary is the experience judges bring in determining matters relating to advocacy. But no similar arrangement in respect of matters of court work exists for members of the Law Society, or other legal professional bodies whose members are entitled to exercise a right of audience.

82. A further issue relates to the role of the Master of the Rolls. Notwithstanding his judicial seniority, the appeals by solicitors he is required to hear, referred to in paragraph 74, are often of relatively minor significance.

Possible changes to the system

83. Some respondents suggested there should be a single disciplinary authority for all lawyers, and argued that this might reduce costs and bring more consistency. Others have argued that the existing arrangements operate efficiently and effectively and that no changes should be made.

84. While the creation of a single disciplinary tribunal for all lawyers would encourage consistency and mean that over time greater efficiency in determination of disciplinary cases might result, the benefits would largely be at the margin. There were few major concerns raised in respect of the existing disciplinary arrangements. This is, perhaps, unsurprising given that arrangements need to be subject to ECHR considerations; and that if there were material deficiencies these would already have been subject to legal challenge. My view is that it would be reasonable to maintain the existing disciplinary arrangements, but to consider modest changes intended to address some of the issues raised above:-

  • Involvement of the judiciary in disciplinary arrangements - At paragraph 81 above, I noted that members of the judiciary do sit on disciplinary tribunals convened by the Inns of Court, but not on tribunals in respect of other legal professional bodies dealing with matters of court work. The extent to which the judiciary is involved in such matters, and the application of the principle that judicial involvement should be evenhanded in respect of lawyers where their work impacts on the operation of the courts, is an issue for the judiciary to consider.
  • Appeals to the Master of the Rolls - In order to remove the anomaly of the Master of the Rolls considering cases against disciplinary decisions taken by the Law Society, referred to in paragraph 82, I propose that any such appeals should be made instead to the High Court.
  • Review of tribunal powers - In order to ensure the consistency and continued appropriateness of their powers, each disciplinary tribunal should be required to review its powers and to provide a report annually to the LSB, including statistical information on the number of cases dealt with and the outcomes. It should be open to the LSB or the Tribunal concerned to recommend to the Secretary of State for Constitutional Affairs any variation in the powers of any Tribunal, or the modification of any other arrangements or procedures they may consider appropriate. The Secretary of State should have the ability to amend such powers or arrangements of any of the disciplinary tribunals, by means of secondary legislation.

Cost and funding of the disciplinary system

85. The changes to the existing disciplinary arrangements proposed above should have no material effect on the costs of these arrangements, the total cost of which as set out in the Ernst & Young Report amounts to approximately £6 million.

86. Questions have arisen about whether the current system of funding the SDT should change, in order to establish its administrative as well as its decision making independence from the Law Society. One possibility would be that SDT costs could be covered by a direct charge by the SDT on Law Society members, rather than through the Law Society itself. Under the proposed arrangements in this Review, one further suggestion to ensure appropriate funding and enhance independence is that the LSB should fund the disciplinary tribunals from the amounts it levies on the front-line regulators for the cost of regulation.

87. I am not, however, convinced that such changes are necessary. The funding of tribunals would come from the regulatory arm of the front-line body. The LSB would have powers of oversight over the disciplinary arrangements made by the front-line bodies. Where it was not satisfied that sufficient arrangements had been put in place, or that sufficient resources had been made available, by the respective bodies to ensure propriety and independence, it would have powers to call for changes.


88. This Chapter has covered the working of the complaints systems within the legal services sector. For reasons of independence, simplicity, consistency and flexibility, I conclude that a single independent complaints handling body for all consumer complaints is the best way forward. This should be no more expensive than the current system and might be cheaper. The proposed Office for Legal Complaints would form part of the single LSB framework, and would cover all front-line regulatory bodies covered by the LSB.

89. Issues about professional conduct, including possible disciplinary action, would be handed down to the front-line bodies. There is a case for dealing with such disciplinary matters in a uniform manner, with a single disciplinary tribunal system. But the Chapter's overall conclusion is that the existing disciplinary system works reasonably well and should, subject to only a few changes, be left broadly as it is.

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  1. Solicitors' Practice Rules 1990
  2. Law Society Guide to Professional Conduct of Solicitors, section 13.07
  3. Section 51 of the Access to Justice Act 1999 provided for the appointment of a Legal Services Complaints Commissioner.
  4. Breaking the Cycle, The Office of the Legal Services Ombudsman, Interim Report, April to September 2003, published in November 2003
  5. In Whose Interest? - Annual Report of the Legal Services Ombudsman for England and Wales 2003/2004
  6. op. cit.
  7. Paragraph 197
  8. DCA press release, Friday 26th September 2003
  9. op. cit.
  10. Self-regulation and the market for legal services, Professor Moorhead, Cardiff Centre for Ethics, Law and Society, Cardiff University, 2004
  11. Hearings Before the Visitors Rules 2002

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