Central Bedfordshire to pursue plans for fully integrated shared legal service

The Executive at Central Bedfordshire Council has approved in principle the establishment of a shared legal services arrangement with another local authority, as it seeks to deliver £240,000 in savings in 2016/17.

The model recommended in a report to the Executive earlier this month was a formal shared service through joint ownership of a ‘Teckal’ company. It was claimed that this was “the most likely approach to deliver the necessary financial results without impacting upon service levels”.

The plan, if implemented, could involve a potential TUPE transfer of council staff to a separate legal vehicle, subject to staff consultation. The legal team at Central Bedfordshire has 39 employees across three main teams: People, Commercial Services and Business Support.

The council’s Director of Improvement and Corporate Services, in consultation with the Executive Member for Corporate Resources (Cllr Richard Wenham), has been authorised, amongst other things, to devise and undertake a process for selection of a suitable partner, and agree the terms on which the council will enter into the shared service arrangement with that partner.

The council told Local Government Lawyer that its evaluation model would be looking “at a balance of three factors; to make savings, maintain quality and client care and ensure that our existing staff are well taken care of”.

Cllr Wenham said: “Sharing legal services would bring significant benefits and savings of around £240,000 to the council, and this is money which can be invested in other essential services for residents.

“We have a high-quality legal team at the council and these staff would be protected as part of any move. However, it would give us access to a larger pool of legal staff.

“This will give us even greater expertise and it will also reduce costs both through staff doing work at the appropriate level and reducing the need to hire barristers and solicitors when the need arises.”

The report prepared for the meeting of the Executive sought to map out the existing provision at the council and the various options for legal services.

It said the Director of Improvement and Corporate Services had been looking at possible approaches after the council’s Head of Legal and Democratic Services and Monitoring Officer, Melanie Clay, left the local authority in the summer to become Corporate Director for Law, Probity and Governance at the London Borough of Tower Hamlets.

The report said the approaches fell in to three (not mutually exclusive) headings:

  • Outsourcing to the private sector;
  • Shared/collaborative service provision with other public bodies; or
  • Commercialisation, including traded provision of services and better exploitation of assets.

The Director of ICS met with partners from three firms Bevan Brittan, Wragge Lawrence Graham & Co, and Trowers & Hamlins as part of the project.

The report said all had expressed interest in partnering with the council and were confident that they could bring a more business like and commercial approach.

“It was however difficult to see how they could do that and make cashable savings for the council whilst maintaining quality,” it added. “The (partial) exception was Bevan Brittan who have an exclusive arrangement with a public legal partnership founded by Harrow and Barnet Council (HB Public Law). It is intended to invite HB Public Law to be one of the bidders for the partnership option described in this report.”

The option of a direct partnership exclusively with a private sector firm was rejected “on the basis that it is highly unlikely to make any savings and in all probability would prove more expensive”.

On the commercialisation and trading option, the report said it was an expressed view of a proportion of existing legal services staff that this would be a viable option to generate savings.

“Unfortunately this does not appear to be the case, given the need to generate savings of around £240k next financial year – assuming a surplus of around 10% this would require a turnover of about £2.5m next financial year from almost a standing start. This does not seem to be a realistic proposition,” it claimed.

The report suggested that the trading environment for councils who were starting out was not easy. “Clients are careful who they choose to be their lawyers and to attract clients one needs to have an established reputation and track record. In addition the team must be highly cost effective and in order to offer a full service, you need lawyers who specialise.”

The report added that regulation was “complex – if a local authority trades to make a surplus it must do so via a company and the competition is fierce”.

The option of the council’s own legal services function trading directly and raising revenue was therefore rejected as “unlikely to succeed”.

The report argued that shared service models offered the opportunity to combine the strategies of reducing the budget and subsidising the cost of the service through generating a surplus on trading activities. This made it a “compelling offer for exploration”.

The pros and cons of a number of models for a ‘shared service’ were discussed in the report in addition to the recommended formal shared service through joint ownership of a ‘Teckal’ company. These were:

  • Informal collaborations between two or more local authorities;
  • A lead authority providing services to other local authorities;
  • A formal shared service ‘arrangement’ with other local authority(ies) provided under a partnership and delegation agreement. This was often under the auspices of a joint committee.

The report noted that because the current Monitoring Officer and Assistant Director for Legal Services at Central Bedfordshire, Quentin Baker, was also the manager of one of the potential bidders, LGSS Law, the council had sought independent legal advice on the way forward from an external lawyer.

This lawyer is advising the group of officers, led by the Director of Improvement and Corporate Services, who are putting together the proposal.

Speaking at the Executive meeting earlier this month (the webcast can be watched here), Independent Cllr Adam Zerny expressed reservations about the plans.

“The first relates to risk – we can all remember a significant recent example of us finding ourselves in litigation with other local authorities not far away from us. I am concerned that if we were to find ourselves in legal dispute with co-partners within such an agreement, that the promised ‘Chinese walls’ may not necessarily be thick enough to protect us,” he said.

Cllr Zerny said he was also worried “about the way this is being done”. He noted that the Executive would be given a briefing before any decision was made, but said he was not convinced that a sufficient amount of information had been seen about the proposed chosen option.

“Before any decision is made, before anything is signed, the decision should come back to Executive to rubber-stamp it,” he argued. “Before that happens, it would be nice to be able to see a little bit more in terms of not only what the full costs of such a decision would be, but also what the potential drawbacks would be if we found ourselves needing to withdraw from such shared ownership….until we have a firm proposal, until we fully understand who it is with and what it involves, we won’t know that.”

In response, Cllr Wenham said risks had been identified in the report and these would be covered in service level agreements. He added that three potential partners had been identified and these were large enough to be able to deal with potential conflicts of interest.

Cllr Wenham said the proposal for joint ownership of a Teckal company was the right one for the council, adding that Central Bedfordshire would become a part-owner and therefore have influence over management.

He added that the arrangements would give additional capacity to manage peaks and troughs in demand for legal advice.

A progress report will be brought back to Cabinet in early January, Cllr Wenham said.