Where a finding is made that an inadequate professional service (IPS) has been provided by a solicitor to a client, the Law Society's Consumer Complaints Service (CCS) must decide whether it is appropriate to take any of the steps provided for in schedule 1A of the Solicitors Act 1974. One of the most important of those steps is to direct the solicitor to pay such compensation to the client as it sees fit to specify.

In practice, awards of compensation are divided into two categories: firstly, compensation for financial losses flowing from the inadequate service; and secondly, compensation for distress and inconvenience caused.


The limit for awards of compensation has recently been increased by statutory instrument to £15,000 in respect of any decisions made by the CCS after 1 January 2006. The effect of this is to make it possible for awards to be made to clients who have incurred costs or suffered losses as a result of their solicitor's inadequate service in a much wider range of cases than before.


It must be emphasised that the jurisdiction of the CCS to award compensation in any case derives solely from the statutory provisions of the Solicitors Act and is not the same as a court awarding damages in a claim for negligence.


Many complaints contain elements of both negligence and poor service. However, the fact that a client may have a claim in negligence does not preclude the CCS in appropriate cases dealing with the financial losses arising.


One of the most difficult aspects in determining what compensation is appropriate is deciding whether an expense that has been incurred by a client does derive directly from the solicitor's poor service. Simple examples arise where the solicitor has failed to register a title or pay stamp duty on a transfer.


Additional costs incurred by the client in rectifying the position, such as paying any penalty or additional legal costs, will be considered and where appropriate a direction made to refund this.


Sometimes the loss alleged to have been incurred by a client is more difficult to quantify. However, the CCS will consider unexpected losses, provided they can be shown to derive directly from the poor service complained of.


Solicitors should be aware that with the financial limit in relation to awards of compensation raised to £15,000, many more cases where the client alleges that they have incurred costs as a result of the solicitor's poor service will be dealt with by the Law Society under its section 37A inadequate professional service powers rather than the matter becoming a negligence claim. It may be prudent to notify professional indemnity insurers of any complaint that might give rise to a claim for compensation at an early stage.


This column is written by a Law Society adjudicator




Lawyerline

Solicitors needing advice on how to handle a service complaint can contact the Law Society's LAWYERLINE support service, tel: 0870 606 2588.