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Finally, there is a class of remedies which include the possibility of the Legal Ombudsman ordering significant financial compensation from a lawyer.- Contact us
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Some of these are the result of complaints which may have been the subject of claims for negligence but which the complainant has chosen to raise with us as an alternative way of resolving the matter. Relatively few complaints thus far have threatened to reach or breach the £30,000 limit for remedies that is embodied in our rules. But some have posed interesting issues nonetheless:
Mr P is a trustee of a social club. He and his fellow trustees employed a firm of lawyers to sell the club's premises and to distribute the payment of the proceeds of sale to all the members of the club – about 180 people. The club found buyers, the sale went through and the proceeds were paid to the law firm, as is normal practice. Part of the money was used to pay off the club's final bills and some loans, which the firm handled, leaving a substantial amount of around £180,000 to go to members. The firm also advised that there would be a delay in distributing the money to members for various administrative reasons. Not being an expert in conveyancing, Mr P was satisfied with this. After six months the firm got in contact to begin to sort out the payment to members... and then went silent.
Mr P tried to raise his concerns with the firm. He then came to the Ombudsman, as the firm had not explained what had happened to the money from the sale and the members had not yet received any cash. He also asked that the firm refund the fees the trustees had already paid them, as the work had not been carried out properly.
We found that the firm had been a sole practice – but that the lawyer was no longer practising. This seemed to be why Mr P hadn't heard about the money from the sale of the club, though it was confusing as the solicitor occasionally got in touch. Mr P didn't know what to do, so had sought advice from a second firm of solicitors. They also tried to contact the first firm but had no reply. Mr P heard again briefly from his first lawyer to say that members would get their money soon... and then heard nothing again.
When we looked into this case, there was very little written down about what had happened. There was no client care letter, no written details about how the cash from the sale had been handled, or even about what money had been paid to clear debts and loans. What was clear was that there was some sort of problem in the law firm, and that the lawyer had tried to delay this matter. It was also clear that most of the money from the club was still in the solicitor's client account, even though the firm's records were very poor.
There had been no attempt to pay this money to the club members – but the money was the club's and should not have been kept for so long by the solicitor. It had been three years since Mr P and the other trustees put the club up for sale.
Our Ombudsman decided that there was around £180,000 outstanding and required the firm to re-pay this, with interest, to the club and its members. A formal Ombudsman's decision was required as the solicitor did not cooperate throughout our investigation. We also referred this and the outcome of this case to the regulator, the Solicitors Regulation Authority, for their help in getting the club's cash out of the solicitor's client account and returned to Mr P and the other members.
Since we have only been in operation for six months, and have therefore managed relatively few cases through the entire Ombudsman process, we don't yet have much experience of the difficulties of enforcing our decisions. However, given the fact that a significant proportion of complaints so far have been against firms which have been intervened in, are now closed or are in bankruptcy, this may be an issue which will become increasingly important in the coming year.
Happily, for some complainants, there are alternative routes to redress which we can help with by better understanding what the regulators can provide:
Mrs Q employed a firm of solicitors to deal with the purchase of a property on her behalf in 2009. She paid them a stamp duty fee of £2,360, but later discovered that the money had never been forwarded to the Land Registry. Meanwhile, the solicitors wrote to her confirming that there were no outstanding balances. Blissfully unaware of the true situation, Mrs Q thought that was the end of it and that the purchase had gone ahead as planned. It wasn't until she realised that the stamp duty hadn't been paid that she asked for her money back. But it was too late. The funds had been frozen and the firm closed down by the Solicitors Regulation Authority (SRA), following a spate of complaints from a host of other disgruntled customers. Adding insult to injury, HM Revenue and Customs started chasing Mrs Q for the stamp duty, which she thought she'd already paid.
Mrs Q took advice and complained to us, hoping to get her money back. She was not alone. We also took advice from the SRA about the best way for Mrs Q to seek to recover her money. The result of this was that we suggested that Mrs Q apply to the SRA Compensation Fund online – a client protection measure designed to help in this kind of situation and not dependent on the firm still being open. We explained that the SRA are very familiar with this problem. As long as her supporting documentation was in order, it should be a relatively straightforward process. We also encouraged her to contact HM Revenue and Customs straight away to explain what had happened to her (and so many others) and to let them know that she was applying to the SRA to recover her funds. Mrs Q agreed that we could formally close her complaint and that the SRA Compensation Fund was the best route for her to take.