Family practice twice only told client about busting budget after it had happened
The Legal Ombudsman (LeO) was justified in finding that a London law firm should repay its client £35,500 for failing to update her on the escalating costs of her divorce proceedings, the High Court has ruled.
It was not enough that another part of the decision by LeO was struck down, said David Pievsky KC, sitting as a deputy High Court judge in Aina Khan Law Ltd v The Legal Ombudsman [2025] EWHC 1319 (Admin).
Family law firm Aina Khan Law (AKL) acted for ‘CXV’ in sensitive proceedings from September 2020 and the following year the client complained to LeO about poor service.
Though the initial investigator concluded that the firm’s service had been of “a reasonable standard”, on review an ombudsman decided that it was not. She said the firm had not adequately assessed CXV’s litigation capacity and the costs were excessive.
The ombudsman set the compensation at £51,200, made up of a £35,500 refund of the costs paid – “as a remedy for the impact of the firm’s poor service relating to costs” – and a further fee reduction of £15,700, 20% of the net fees paid by CXV, over the capacity issue.
AKL sought a judicial review. Judge Pievsky found that the ombudsman conflated indications of mental health conditions with those of a lack of capacity, “or at best failed to keep the critical distinction between those concepts in mind”.
Notwithstanding “the wide latitude” Parliament had given LeO to decide what was fair and reasonable in all the circumstances of a particular case, “I am unable to accept that the conclusions about capacity in the decision were rational”.
On costs, a budget of £43,500 plus VAT was originally discussed and agreed. In a letter on 24 November, referring to a conversation the previous week, AKL said its fees were now in excess of £65,000; that the client had not been surprised at this; and that the solicitors needed to revise the original estimate in relation to costs to be incurred up to a hearing in December. The new estimate was £75,000. On 22 December, AKL informed the client that its costs had reached £89,000.
In her decision, the ombudsman said the solicitors “knew or should have known” by November that the client lacked capacity; similarly they could not fairly rely on an instruction from CXV the following month to “keep working” when they “clearly could not make decisions on [the] costs implications of what they were instructing”.
LeO found no evidence that AKL kept the client (or suitable litigation friend) fully informed of the costs incurred and future costs; there were no attendance notes to prove the weekly telephone updates about costs AKL said had occurred.
It also refused to accept AKL’s further contention that the client had repeatedly told them not to discuss costs with her at such a sensitive time.
LeO concluded that costs reviews were carried out too late and too infrequently, with the first carried out six weeks after the original estimate had been exceeded.
But Judge Pievsky said LeO’s finding about costs updates was “highly specific” – namely the failure on two occasions to tell the client in a timely fashion that the budget had been exceeded.
“[LeO’s] view was, in essence, that failing to keep [CVX] informed of the fact that the initial budget for fees had been exceeded until long after the event amounted to poor service.
“Other than by arguing that the entire decision was infected by the defendant’s unlawful approach to capacity, the claimant has not specifically provided the court with any reason to think that those particular findings were in themselves irrational. I do not consider that they were.”
While the £15,700 award had to be quashed along with the finding on capacity, the award of £35,500 was not “infected”, the judge concluded.
“It is a stand-alone finding, in the final analysis squarely based on the defendant’s view that the claimant did not provide [CXV] with timely costs updates.”
AWL sought £47,590 for its costs of the judicial review. Judge Pievsky said he would have awarded 60% of this on the basis that it was the overall winner, but reduced this to 40%, or £19,036, “to reflect the court’s disapproval of the claimant’s failure to have filed the relevant evidence in this case at the appropriate time”, a failure which led to the substantive hearing being adjourned.
He also refused AWL permission to appeal.
Gemma Lindfield (instructed by Aina Khan Law) for the claimant. Stephen Kosmin and Leo Davidson (instructed by Tobias Haynes, in-house solicitor for the Legal Ombudsman) for the defendant. The interested party (the client) was present but not represented and made no submissions.