Ejiofor (t/a Mitchell And Co Solicitors) v Legal Ombudsman

The Legal Ombudsman has jurisdiction under the Legal Services Act 2007 to consider complaints about a solicitor’s advice concerning the terms and consequences of a client-care or contingency-fee agreement. The jurisdiction extends to complaints relating to the amount charged and the circumstances in which the client entered the agreement, where those matters relate to legal activity and services. Once jurisdiction exists, the Ombudsman may determine the complaint by reference to what is fair and reasonable in all the circumstances, including the fairness or practical effect of the agreement. A specialist decision may be quashed for irrationality, but the court will ordinarily exercise considerable caution before interfering.

A sole-practitioner solicitor sought judicial review of a decision by the Legal Ombudsman requiring him to refund £34,000 to a former client. The complaint concerned the advice given before the client entered a contingency-fee agreement and the resulting fee deducted from her share of estate-sale proceeds.

The claimant argued that the Ombudsman lacked jurisdiction to interfere with the contractual fee arrangement or had acted for an improper purpose. Alternatively, he argued that the decision was irrational because the advice was adequate, the agreement was not induced by pressure, and substantial work had been undertaken. The court determined the jurisdictional and rationality challenges.

1. Jurisdiction. The claim was dismissed. The word “activity” in section 113 of the Legal Services Act 2007 must at least include “reserved legal activity” and “legal activity” as defined by section 12. The complaints about advice on the contingency-fee agreement related to legal activity and to services within rule 2.8 of the Scheme Rules.
2. The court followed Layard Horsfall Limited v The Legal Ombudsman [2013] EWHC 4137 (Admin). The expression “relate to services” has a wide ambit. It does not exclude complaints concerning the amount charged, whether a fee is contractually due, or the quality of advice about fees. The statutory scheme would otherwise make section 137(2)(b) difficult to operate.
3. The statutory language was clear and sufficiently wide to confer jurisdiction over complaints about the circumstances in which a solicitor’s client entered a services contract and the advice received about its terms and consequences. The existence of other possible remedies, including under the Solicitors Act 1974, did not exclude that jurisdiction. The court rejected the submission that clear words were needed before the statute could affect contractual rights.
4. Under section 137, a complaint must be determined by reference to what the Ombudsman considered fair and reasonable in all the circumstances. Having found the advice inadequate, the Ombudsman was entitled to assess the fairness and reasonableness of the agreement’s practical effect. His decision was therefore not made for an improper purpose.
5. The rationality challenge failed. It was open to the Ombudsman to find that the advice was inadequate, that the client was under pressure to enter the agreement, and that little substantial work had been evidenced. The reference to pressure bordering on duress was not a finding of duress in its strict legal sense. The court was particularly cautious because the decision-maker was a specialist exercising a broad statutory discretion.
6. The claim was dismissed. The judgment was confined to the pleaded grounds of challenge.