Kent legal chief highlights opinion from top QC to question SRA view on trading

The head of Kent Legal Services, Geoff Wild, has highlighted a May 2013 opinion obtained from one of the leading local government QCs, James Goudie, as support for the view that council legal teams are able to provide reserved legal services to other public bodies beyond their local area without having to do so through an alternative business structure.

Wild’s comments came after a senior official at the Solicitors Regulation Authority – Executive Director for Policy Crispin Passmore – earlier this month expressed the view that legal departments did need an ABS to carry out work such as litigation and court advocacy beyond their area.

Central to whether an ABS is needed is the issue of whether client public bodies of local government legal departments are members of ‘the public or a section of the public’, for the purposes of section 15(4) of the Legal Services Act 2007.

(For a full explanation of the regulatory background, read Local Government Lawyer’s article from 2 December, Councils must have ABS to trade reserved services beyond local area: SRA)

The SRA’s Passmore said at the time: ““There are lots of grey areas with this sort of definition and it will always be very fact sensitive, but examples might be a council saying ‘We want to do a deal with the local health authority and the local fire authority, where we pool resources in lots of different ways because we are all under budget pressure and one of the things the council does is deliver legal services to all in this little group'. To me, that probably isn’t delivering services ‘to the public or a section of a public’, it's to a closed group.

“If on the other hand, the local authority in question decided to market their services to all public bodies around England and Wales, that may well be beyond the small club and that might be you are trying to deliver to a segment of the market, a segment ‘of the public’ and ‘the public’ is institutions as well as individuals. That has gone beyond the sharing of in-house function and that’s where it’s trying to sell services for profit as part of its revenue-raising as a local authority.”

If the SRA is right and that, in carrying out work under, say, the Local Authorities (Goods and Services) Act 1970 for other public bodies outside the local group in Passmore's example, local authorities are carrying out reserved legal activities for ‘the public or a section of the public’, section 15(4) LSA effectively means local authorities can undertake this ‘reserved’ legal work only if they do so through an authorised entity such as an ABS. Local government legal departments are not authorised entities.

Wild, Director of Governance and Law at Kent County Council, said in response: “Whilst Crispin Passmore admits that this is a ‘grey area’ and that the issue of what the legislation means when it says delivering services ‘to the public or section of the public’ is ultimately a decision for the courts, he has made his view very clear, and it is gaining currency as a result.

“However, it is only his opinion and, as he readily admits, ‘I don’t think we can write a rule that definitively states what the public is, and what the public isn't’.”

Wild pointed to the opinion from James Goudie, who examined the issue two years ago, with the 11KBW silk reportedly concluding:

“Local authorities and other ‘public bodies’ for the purposes of the Local Authorities (Goods and Services) Act 1970 are manifestly not ‘the public’ nor ‘a section of the public’, and that therefore Section 15 of the LSA does not prevent [local authority solicitors] from providing services to such bodies.
 
The short reason is that:
(1) Another local authority cannot be described as ‘the public’ or a ‘section of the public’;
(2) The same applies to other ‘public bodies’.
 
A local authority has its own corporate existence. So too does another public body. They are each distinct from ‘the public’. Neither is a ‘section’ of ‘the public’.
 
The ‘public’ or a ‘section’ thereof means:
(1) The entirety of the community;
(2) Members of the community; or
(3) A section of the community sharing a common status or interest.
 
The limits and extent of ‘the public’ for the purposes of Section 15 of the LSA essentially means:
(1) Private individuals; or
(2) Unincorporated associations of such individuals.”
 
Kent’s Wild said Goudie had also confirmed that the source of vires for local government solicitors was not limited to the Local Authorities (Goods and Services) Act 1970, but extended also to the General Power of Competence contained in Part I of the Localism Act 2011, which provided a source of vires for both public and private bodies.

Wild added: “Since Chapter 8 of the SRA Code of Conduct states that, for its purposes, ‘Members of the Public’ does not include:
 
(a) A current or former client;
(b) Another firm or its manager;
(c) An existing or potential professional or business connection; or
(d) A commercial organisation or public body.
 
“Then it follows that a commercial organisation could constitute a ‘potential business connection’ and a ‘commercial organisation’ for whom a local government solicitor could work.”