Aina Khan Law Ltd v The Legal Ombudsman

A legal ombudsman may decide what is fair and reasonable through a broad and informal jurisdiction, but it must not apply fundamental legal concepts irrationally. Mental illness, psychiatric treatment, ADHD, medication or alleged psychosis do not, without more, establish a lack of litigation capacity. Capacity is issue-specific and time-specific, and must be assessed by reference to the relevant decision and the statutory criteria. A decision-maker must distinguish mental health conditions from incapacity, address obviously relevant contextual evidence, and avoid hindsight. A costs finding based on late and inadequate updates may remain valid even where a separate capacity finding is quashed. Relief should therefore be tailored to the unlawful reasoning and its financial consequences.

The claimant solicitor firm sought judicial review of a Legal Ombudsman decision upholding a client complaint and requiring repayment of £51,192.60. The decision found that the firm had failed adequately to assess the client's litigation capacity from the outset and had provided inadequate costs updates.

Permission was granted on irrationality, remit and discrimination or proportionality grounds. The central issues were whether the Ombudsman had irrationally conflated mental illness with lack of capacity, used hindsight, failed to consider relevant evidence, exceeded its statutory remit, or made an irrationally disproportionate award.

1. The claim succeeded in part. The finding that the claimant had failed adequately to assess the client's capacity was irrational. The Ombudsman had not sufficiently distinguished mental health issues from incapacity or explained why those issues required a reasonable solicitor to doubt capacity.
2. Referral to a psychiatrist, taking amphetamines for ADHD, and an allegation of psychosis made by the client's husband did not, without more, rationally establish a need for a capacity assessment. The decision failed to grapple with the urgent family-law context, the client's allegations, her distress, the solicitor's own assessment, and the consultation with counsel and the client's psychiatrist.
3. The Ombudsman had a broad jurisdiction under section 137(1) of the Legal Services Act 2007 to determine what was fair and reasonable. It was not required to decide the complaint according to common-law liability. That latitude did not permit basic errors about capacity or irrational reasoning.
4. The conclusion that the client may have lacked capacity since August 2020 was a permissible interpretation of the later capacity certificate. It did not cure the irrational assessment of what the solicitor should reasonably have done in September and October 2020, since hindsight could not be used to assess the earlier conduct.
5. The separate finding that costs updates were provided too late was rational. The claimant had exceeded the original £43,500 estimate by October 2020 but did not inform the client that costs exceeded £65,000 until 19 November 2020, and did not report costs exceeding £89,000 until 22 December 2020.
6. The Ombudsman had not exceeded its remit by considering capacity and costs complaints, nor had it irrationally reversed the statutory assumption of capacity. The discrimination or proportionality ground also failed.
7. The decision was quashed only insofar as it found inadequate capacity assessment and awarded £15,692.60 on that basis. The separate £35,500 award for inadequate costs updates remained. The claimant received £19,036 in costs, and permission to appeal was refused.

The judgment itself describes no earlier appellate decision in the same litigation. Permission for judicial review was granted on three grounds by a Deputy Judge of the High Court on 25 November 2024. The Administrative Court quashed part of the Ombudsman's decision and refused permission to appeal.