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ADR Regulations for Solicitors from 1 October 2015

View profile for Fiona Dumolo
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The Alternative Dispute Resolution for Consumer Disputes (Amendment) Regulations 2015, implementing the EU Directive on Consumer Alternative Dispute Resolution, will come into force on 1 October 2015.  From this date, there will be new requirements in relation to the information solicitors are required to provide to clients at the end of a solicitor's internal complaints process.

Initially, the Legal Ombudsman applied to the Legal Services Board to become certified as an ADR approved body for the purposes of the Directive.  However, this application has since been withdrawn.  The Office for Legal Complaints has confirmed that the withdrawal of the application is to enable a fuller consultation to take place. 

Although the Legal Ombudsman's application has been withdrawn, solicitors must still comply with the government Regulations.  Solicitors must, at the end of the first-tier complaints process, provide information on the Legal Ombudsman as the statutory complaints scheme for solicitors and inform the client, on a durable medium: (1) that they cannot settle the complaint with the client (2) of the name and web address of an ADR approved body which would be competent to deal with the complaint, should both parties wish to use the scheme (3) whether they intend to use that ADR approved body. 

It is important to note that the ADR Directive and Regulations require solicitors to provide information about an ADR approved body.  However, solicitors are not required to submit complaints to that body.  The obligation in the ADR Directive and Regulations is to give information (only) and not to agree the use of the approved ADR.  If a solicitor does choose to have complaints submitted to an ADR approved body, it should have regard to the SRA Code of Conduct.

A number of ADR entities have been approved and a list of approved providers can be found on the Chartered Trading Standards Institute's (CTSI) website.  The Law Society has provided suggested text on their website, which solicitors may wish to use in their correspondence to clients, once the first-tier complaints process has been concluded.  The suggested text is as follows:-

We have been unable to settle your complaint using our internal complaints process. You have a right to complain to the Legal Ombudsman, an independent complaints body, established under the Legal Services Act 2007, that deals with legal services complaints.

You have six months from the date of this (our final) letter in which to complain to the Legal Ombudsman.

Legal Ombudsman

 PO Box 6806

 Wolverhampton

 WV1 9WJ

Telephone: 0300 555 0333

 Email address: enquiries@legalombudsman.org.uk

 Website: www.legalombudsman.org.uk 

Alternative complaints bodies (such as [include one of the following: Ombudsman Services, ProMediate and Small Claims Mediation and the website]) exist which are competent to deal with complaints about legal services should both you and our firm wish to use such a scheme.

We [state whether you do or do not] agree to use [include name of scheme].

It is important to note that if the Legal Ombudsman resubmits its application to the Legal Services Board and becomes certified, solicitors will be required to amend the information provided to clients in client care letters, general terms and conditions and on the relevant website for that organisation. If the Legal Ombudsman is certified it will be necessary for the Scheme Rules to be amended to comply with the Directive.  This will include changes to the Legal Ombudsman's time limits.  Therefore, client information would need to reflect this.

ADR will now be an option in resolving client’s complaints regarding solicitor's bills.  Complaints relating to the same must first go through the solicitor’s internal complaints process.  Following this, the client may submit their complaint to the Legal Ombudsman or ADR approved body.  However, further to s70 of the Solicitors Act 1974, the client is also entitled to apply to the Court for a detailed assessment of the bill.  If the client has applied to the Court for assessment, the Legal Ombudsman/ADR approved body may not deal with a complaint relating to the bill.

Under s70(1) of the Solicitors Act 1974 the Court must order a  detailed assessment if the client makes an application within one month of receiving the solicitor's bill.  If the client applies to the Court later than one month, but less than one year after receipt, s70(2) applies.  This means that the Court may order the bill to be subject to detailed assessment; however certain conditions may be imposed.  This may include the Court ordering that all or part of the costs claimed within the bill be paid into Court to abide the event.  S70(3) states that if a client applies to the Court after one year of receiving the bill; or if judgment has been made for recovery of the costs included in the bill; or if the bill has been paid by the client within the previous 12 months, no order for detailed assessment shall be made except in special circumstances and, if an order is made, it may contain terms, decided by the Court, in relation to the costs of the assessment. Should a client apply 12 months after payment of the bill, the Court will have no power to order a detailed assessment in any circumstance.

The CPR does not define special circumstances under s70(3), so the application can be supported by a witness statement highlighting the specific details of that case which may convince the Court to apply the discretion in their favour. Case law has provided some examples of special circumstances which can be cited in support of an application under s70(3). Evidence that the charges in the bill are excessive and the Solicitor has exerted pressure on the client to make payment may be a special circumstance; as will evidence that the sums included are an overcharge compared to the work done by the Solicitor even without any evidence of dishonesty when calculating the bill. Likewise, an unusually high bill that lacks information so that it requires a further explanation to be justified has allowed for a detailed assessment under the special circumstances provision. Conversely, the Court will often take payment of the bill as a starting assumption that the client considered the fees to be reasonable at the time; therefore they may struggle to prove special circumstances.

There are further requirements to be implemented in January 2016, as a result of the EU Regulation on Consumer Online Dispute Resolution (ODR).   An ODR platform will be established by the European Commission and will allow consumers who have a complaint about a product or device bought online to submit a complaint via an online complaint form to a trader based in another EU member state.

An online trader is defined as ‘a trader who intends to enter into online sales contracts or online service contracts with consumers’.  This is likely to capture many solicitors who would not normally consider themselves to be online traders. 

The Department for Business, Innovation and Skills has confirmed that this is likely to include solicitors who send and receive contracts and customer information (etc) to clients via email.  The information to be provided to clients is dependent on whether the Legal Ombudsman resubmits its application and is certified.  The Law Society has provided guidance in this regard on their website, under the FAQ section of the updated guidance on how to comply with the EU Directive on Consumer ADR.

For the meantime, from 1 October 2015, it will be necessary to consider and comply with the Alternative Dispute Resolution for Consumer Disputes (Amendment) Regulations 2015.  The Office for Legal Complaints will decide how to proceed with regards to its application in the week commencing 7 December 2015.

In the event a complaint is made regarding a solicitor's bill, Paragon Costs Solutions will be able to assist by considering and advising upon the reasonableness of the costs charged by a solicitor to his client.  Furthermore, parties may be able to agree that the decision made by Paragon Costs Solutions will be binding upon them.

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