Review of the CLC Compensation Fund Rules

This consultation will run for 8 weeks, from 20^th December, 2024 to 14^th February 2025

Background
1. As set out in the Administration of Justice Act 1985, the Courts and Legal Services Act 1990 and the Legal Services Act 2007, we, the CLC, must make rules for the making of grants or other payments for the purpose of relieving or mitigating losses arising from certain wrongs committed by CLC Practices. The types of losses are explained in our Rules

2. In order to do so, we have established a discretionary Compensation Fund (‘the Fund’) of last resort from which we may make grants. This means that we can decide to offer grants however we expect consumers to first pursue all other reasonable remedies and/or taken all other reasonable measures to avoid or to mitigate their losses and/or to obtain compensation elsewhere

3. The fund is financed by contributions from CLC Practices who are required to pay into the Fund annually, and their contributions are calculated as a percentage of the practice’s turnover. Every year, we carefully consider (and consult on) the annual Compensation Funds contributions and then submit an application to the LSB, which contains our analysis and rationale behind the fee.

4. Our Compensation Fund Rules outline the operation of the fund, eligibility of claims and claimants, and how we assess those Applications and make determinations. Our supplementary guidance aims to support consumers to understand the policy and process.

5. We want consumers to be aware that the Compensation Fund exists. All Practices are expected to include references to the CLC’s Compensation Fund in their standard documentation (which is reviewed during our inspections), that others, such as intervention agents, the Office of Legal Complaints and Insurers signpost consumers to us.

Why this consultation is important
6. Consumers who suffer financial losses due to the negligence or poor conduct of CLC Practices deserve to be compensated.

7. We want to ensure that our Rules are clear for consumers, helping them to determine whether their claim is eligible, and that it is accessible enough to enable them to use it without the need of legal support.

The Consultation Materials

Draft New Rules of the CLC's Compensation Fund

Comparison of the Existing and Draft New Rules

CLC Compensation Fund Proposed Rule changes – Impact Assessment December 2024

CLC Compensation Fund Rules Consultation Document

Online Consultation Response Form