The Legal Ombudsman has issued guidance on lawyer fee deductions under conditional fee agreements (CFAs).
- Lawyers must clearly explain any success fees or deductions to their clients to avoid complaints.
- Consumer awareness of unfair charges is triggered by legal advice, according to the Ombudsman.
- Solicitors are urged to supply bills even if clients have misplaced originals, potentially for a fee.
- A significant portion of complaints centre around the costs and communication from legal service providers.
The Legal Ombudsman has recently addressed the ongoing concerns regarding fee deductions under conditional fee agreements (CFAs), emphasising the necessity for transparency from legal professionals in communicating costs to their clients. In a new set of guidelines, the Ombudsman insists that while fee deductions are not inherently improper, the rationale behind any success fee, especially one calculated based on risk, must be diligently explained to clients.
Paul McFadden, chief ombudsman, highlighted the discontent among lawyers due to a minority of firms aiming to recover fees on behalf of consumers and stressed the importance of maintaining professionalism in line with regulatory expectations. Lawyers are reminded of their duty to provide a reasonable standard of service by ensuring clients are well-informed about potential cost implications.
Of particular note is the Ombudsman’s stance that a consumer’s awareness of an unjust fee begins when they receive legal advice, rather than merely the receipt of a bill. This means law firms must be prepared to justify their cost arrangements if a complaint is lodged. The Ombudsman also advocates for clients’ rights to receive a bill copy, even if the original has been lost, albeit with potential reimbursement for the duplication costs.
Despite a formal legal setting, the issue of legal fees is not trivialised, as evidenced by legal disputes such as the Belsner case in the Court of Appeal. This case, involving deductions from damages in road traffic accident claims, affirmed the legitimacy of the firm’s deductions, underscoring the need for clarity and fairness in fee structures.
Approximately ten per cent of complaints received by the Ombudsman involve disputes over legal costs, reflecting a broader dissatisfaction with the communication standards of legal service providers. This statistic reinforces the necessity for greater clarity and customer service in the legal industry, pursuant to the Ombudsman’s guidance.
The Legal Ombudsman’s guidance aims to ensure that consumers are well-informed and protected against unexpected legal fee deductions.
