Layard Horsfall Ltd v The Legal Ombudsman

The Legal Ombudsman may consider complaints relating to the amount charged for legal services, including whether fees are contractually due. Its jurisdiction is not confined to complaints about service quality. In assessing what is fair and reasonable, the Ombudsman may consider the solicitor’s advice about charging, the client’s understanding of liability, and delay in invoicing. A complaint concerning ongoing charging conduct may arise, or crystallise, when the relevant fee is invoiced. The court will not intervene for irrationality where the Ombudsman has acted within the statutory discretion and reached a conclusion reasonably open on the evidence.

The claimant, formerly a firm of solicitors, sought judicial review of the Legal Ombudsman’s decision limiting to £1,500 plus VAT the fees chargeable to a former client under a conditional fee arrangement. The claimant argued that the Ombudsman lacked jurisdiction to determine a contractual fee dispute, that the complaint was out of time, and that the decision was irrational and procedurally unfair. Permission for judicial review had been granted on 20 November 2012. The central issues were the scope of the Ombudsman’s jurisdiction, the applicable time limit, and the legality of the fee reduction.

1. Jurisdiction. The claim was dismissed. Section 113 of the Legal Services Act 2007 provides for complaints relating to an act or omission of a person carrying on a relevant activity. Rule 2.8 of the Legal Ombudsman Scheme Rules refers to complaints which relate to services provided. That expression has a wide ambit and does not exclude complaints about the amount charged or whether the amount is contractually due. A contrary distinction between service quality and wrongful or excessive charging would be artificial and unworkable. Section 137(2) also contemplates a direction limiting the fees to which a respondent is entitled.
2. The Ombudsman’s decision was in any event based on the level of service provided, including the advice given about liability for fees and the consequences of discontinuing proceedings, together with the delay in invoicing. The claimant had ample opportunities to make representations under rule 5.4 and after the provisional decision, but chose not to do so.
3. Time limits. Charging-related conduct may form part of a continuing course of conduct which continues until the relevant fee note is submitted. A client cannot reasonably know that there is a definite cause for complaint about ongoing fees until the solicitor invoices for them. The complaint was therefore not out of time under rule 4.5. In any event, the circumstances would have justified an extension under rule 4.7.
4. Rationality. The Ombudsman accepted, or substantially accepted, the claimant’s contractual analysis but separately exercised the broad discretion under section 137 and rule 5.36 to determine what was fair and reasonable. The unclear retainer documents, the apparent absence of adequate advice about the financial consequences of discontinuance, and the delay in invoicing were matters the Ombudsman was entitled to consider. The reduction of fees was not irrational. The claim was dismissed with costs.

First-instance judicial review. Permission to bring the claim was granted by Elizabeth Laing QC, sitting as a Deputy High Court Judge, on 20 November 2012.