LeO not set up to handle solicitor/client costs disputes – for now

The Legal Ombudsman (LeO) has indicated its openness to assuming responsibility for solicitor/client costs disputes, potentially replacing the current court-based system for lower-value claims. This follows a proposal from the Civil Justice Council (CJC) suggesting LeO handle disputes up to £50,000. However, LeO's leadership has clarified that it is not currently equipped to take on this expanded role, citing significant challenges related to capacity, specialist expertise, and the need for legislative reform. While the existing court process for detailed assessment under the Solicitors Act 1974 remains the primary mechanism for resolving such disputes, the ongoing discussions highlight a desire for a more accessible and less formal avenue for consumers to challenge legal fees.

The landscape of legal services regulation in England and Wales is continually evolving, with a persistent focus on enhancing consumer access to justice and streamlining dispute resolution mechanisms. A significant recent development in this ongoing reform agenda concerns the handling of costs disputes between solicitors and their clients. Traditionally, such disagreements have been resolved through the formal and often complex process of detailed assessment in the courts. However, an interim report by the Civil Justice Council (CJC) working party on reform of Part III of the Solicitors Act 1974 has proposed a notable shift: that the Legal Ombudsman (LeO) should take on disputes concerning solicitors' fees valued at up to £50,000.

While this proposal signals a potential move towards a more accessible and less adversarial system for consumers, the Legal Ombudsman has responded with a pragmatic assessment of its current capabilities. LeO's leadership has acknowledged a willingness to engage in discussions about such an expanded remit but has unequivocally stated that it is not presently in a position to absorb this responsibility. This article delves into the existing framework for solicitor/client costs disputes, examines the rationale behind the proposed transfer of jurisdiction to LeO, and critically analyses the significant practical and statutory hurdles that must be overcome before such a change could realistically be implemented.

The current framework for resolving disputes over solicitor/client costs in England and Wales is primarily governed by the Solicitors Act 1974 and the Civil Procedure Rules (CPR) Part 47. Where a client disputes a solicitor's bill, they can apply to the court, typically the Senior Courts Costs Office (SCCO) or a District Registry, for a 'detailed assessment' of the costs. This is a highly technical process that involves the solicitor delivering a 'statute bill' and the client raising 'points of dispute', often requiring specialist costs lawyers and judges to interpret complex legislation, case law, and procedural rules.

In contrast, the Legal Ombudsman, established under the Legal Services Act 2007, operates as an independent complaints handling service for consumers of legal services. LeO's remit is to resolve disputes over poor service, not professional misconduct (which falls under the Solicitors Regulation Authority). While LeO frequently receives complaints related to legal costs, particularly concerning a lack of clarity or unfairness in how fees were communicated or charged, its current powers allow it to direct remedies such as apologies, additional work, or a refund/reduction of fees as a consequence of poor service. However, this is distinct from undertaking a full, technical assessment of the reasonableness of costs akin to a court-based detailed assessment. LeO's jurisdiction is generally limited to individuals, micro-enterprises, charities, or clubs below specific income thresholds, and it has a maximum redress limit of £30,000 for compensation.

The Civil Justice Council's proposal to transfer lower-value solicitor/client costs disputes (up to £50,000) to LeO stems from a recognition that the existing court-based detailed assessment process is often perceived as cumbersome, expensive, and difficult for consumers to navigate. Proponents of the change argue that LeO's informal, inquisitorial approach, which does not expose complainants to adverse costs orders, could offer a more accessible and proportionate route to redress for many clients. This would align with LeO's broader mandate to improve access to justice and protect consumer interests.

However, LeO itself has highlighted significant practical and statutory impediments to immediately adopting this expanded role. The organisation is currently grappling with substantial backlogs and increasing complaint volumes, with its own leadership acknowledging that it is not presently equipped with the necessary additional funding, specialist personnel, technical training, or operational processes to handle a new category of complex costs disputes. Costs disputes often involve highly technical legal arguments concerning the validity of statute bills, assessment rights, time limits, retainer compliance, and the proper incurrence and recoverability of fees, which require a different level of expertise than typical service complaints.

Furthermore, any fundamental transfer of jurisdiction would necessitate legislative reform of the Legal Services Act 2007, a process LeO's leadership views as a medium-term requirement, unlikely to occur within the current parliamentary term. While LeO has recently published guidance on complaints about legal costs to help prevent them and clarify its existing approach to service-related cost issues, and a High Court ruling in *Aina Khan Law Ltd v The Legal Ombudsman* [2025] EWHC 1319 (Admin) upheld a significant LeO award for poor service related to costs, these actions operate within its current service complaint remit rather than a full costs assessment. The ongoing debate also touches upon the existing confusion for consumers in distinguishing between service complaints (LeO) and conduct complaints (SRA), suggesting that a clearer delineation or integration of roles might be beneficial.

For the foreseeable future, the resolution of formal solicitor/client costs disputes in England and Wales will continue to primarily rest with the courts through the detailed assessment process under the Solicitors Act 1974 and CPR Part 47. While the Legal Ombudsman is open to discussions about a future role in handling lower-value costs disputes, it is clear that significant structural, resourcing, and legislative changes would be required before such a transition could occur. Practitioners should therefore continue to advise clients on the existing court-based mechanisms for challenging legal fees.

Looking ahead, legal professionals should closely monitor developments from the Civil Justice Council and the Legal Services Board regarding potential reforms to the Solicitors Act 1974. Moreover, firms are encouraged to proactively enhance their internal complaint handling procedures and ensure transparent communication regarding costs with clients, as this remains a significant source of complaints to LeO. The Legal Ombudsman's recent guidance on costs complaints and its proposed changes to case fees, aimed at incentivising better first-tier resolution, underscore the ongoing regulatory pressure to improve client experience and reduce avoidable disputes.