The Council for Licensed Conveyancers (CLC) is planning to start recharging the cost of the Legal Ombudsman (LeO) based on how many complaints each law firm generates, rather than spread the cost across the profession.

The cost of LeO (£14.5m this year) is recovered from all of the legal regulators in proportion to the number of cases arising from their regulated communities.

In the first move of its kind, the CLC has proposed that the cost of the levy be separated into two parts: a basic availability fee that all firms will pay in recognition of the importance of the ombudsman, and a usage fee based on the number of cases from a firm that have been accepted for review by the organisation. 

According to the CLC, splitting the levy will reduce practice fees by an average of 23% across all its firms, but firms with larger numbers of complaints would see their costs rise. 

Sheila Kumar, the CLC’s chief executive, said proportionate regulation of the fee collected from law firms is “vital” and that the CLC’s proposed changes would achieve this in “their own ways”. 

“Placing more of the cost of LeO on those who generate it will encourage those firms to address service issues and improve their complaints-handling procedures, both of which are vital to the client in the relatively small proportion of cases where issues occur,” she said. 

Kumar added that the changes would make it clearer to firms what they are paying to the CLC for the oversight it provides as a regulator and what is needed to fund the ombudsman’s complaint handling activities. 

Firms regulated by the CLC account for only 4% of the total cases handled by the ombudsman, while nearly half of its firms do not generate any complaints which are referred at all. 

The regulator consulted on separating the cost of the levy from the practice fee, which led to some expressing concerns that the change would lead to firms to settle disputes rather than address underlying issues. This is already an issue, the CLC pointed out, as the ombudsman also charges firms case fees for complaints it handles. It also argued that the ‘user pays’ approach would encourage firms to deal with complaints ‘swiftly and appropriately’. 

The proposed change is subject to approval by the Legal Services Board. In addition to the rule change, the CLC has asked the oversight regulator to approve a new clause in the minimum terms and conditions for regulated firms’ professional indemnity insurance to clarify the extent to which cyber-related losses are covered. 

The Solicitors Regulatory Authority said it has no plans to ask those who generate more complaints to pay a larger share of the levy, according to a report by The Law Society Gazette.