C acted for D in a long-running dispute with a former business partner, E. While that dispute was in progress, E entered into a unilateral agreement to sell a property belonging to the former partnership. D regarded this as unacceptable and sought C's advice.

Although D was legally aided, C said that his legal aid certificate would not cover the work required to put a stop to the sale - and, importantly, they regarded it as essential to instruct leading and junior counsel, with all the expense that that would involve. It was agreed that D's brother-in-law would put up the money needed to pay counsel. C then applied to the court for an injunction.


That application was successful, but the court declined to make any order for costs. D then complained to the Law Society that, among other things, C had breached regulation 64 of the Civil Legal Aid (General) Regulations 1989, which says: 'Where a certificate has been issued in connection with any proceedings, the assisted person's solicitor or counsel shall not receive or be party to the making of any payment for work done in those proceedings during the currency of that certificate (whether within the scope of the certificate or otherwise) except such payments as may be made out of the fund'.


Following a thorough investigation, in the course of which the Legal Services Commission confirmed that it supported D's complaint, the Law Society agreed that C had breached regulation 64. Crucially, it did not direct that the solicitors should repay the money they had received for counsel's fees - having been side-tracked into considering the issue in terms only of whether D could be said to have suffered any loss (which he could not).


The ombudsman noted that, if it had been a breach of regulation 64 for C to accept money from D or his brother-in-law, then it must follow that, in the Society's view, no private costs of any kind should have been charged.


Therefore, it seemed to the ombudsman that the logic of the Law Society's own position was that there were compelling grounds to reduce C's private bill, including disbursements paid to counsel, to zero. Accordingly, the ombudsman recommended that the Society reconsider the complaint.