Cabinet at Kent backs plans for creation of legal services company

The Cabinet at Kent County Council has backed plans for the creation of a council-owned, stand-alone legal services company, to which the vast majority of staff at Kent Legal Services (KLS) will transfer.

The local authority had previously been conducting a procurement exercise to find an external partner for a £100m joint venture with KLS that would deliver legal services to the council and the broader market.

The Cabinet at Kent had been scheduled last September to make a decision on that project. However, the exercise was then put on hold and has now been concluded.

Under the proposals approved today, all legal services staff at KLS are expected to transfer across to the alternative business structure, with the exception of those who will be part of the council’s client side commissioning team.

KLS employs more than 125 specialist lawyers and has provided legal assistance to more than 600 public sector bodies. In December last year it was one of three local authority legal teams to be awarded places by HealthTrust Europe, a purchasing body for the health sector, on legal services panels worth an estimated £30-90m.

Kent County Council said a key priority for the new company was to deliver a significantly increased and sustainable income stream for the taxpayer.

Geoff Wild, Director of Governance and Law at Kent, said: “This proposal will allow the council to remain at the forefront of innovative service delivery and fill in the current gaps in service provision within Kent and across the country.

“The company will be able to operate in the wider market without the regulatory restrictions imposed on in-house lawyers and an increase in use of technology and new business systems will lead to more efficient and better working.

“This new contract and investment will significantly increase the contribution KLS can make to the funding of frontline services for the benefit of both our clients and the wider Kent community.”

A report prepared for the Cabinet meeting said the project team believed there was "a compelling financial and service case to create a stand-alone ABS as a viable and realistic alternative to the original joint venture proposal, which is different to existing models in the market and which can support KCC's legal needs in the short, medium and long term".

It noted how since KLS had begun trading in the wider public sector market, it had generated more than £15m for the council without any capital investment. 

"To continue to deliver an outstanding service and build its income-generating capacity even further, as well as meet the forthcoming legal, regulatory and financial challenges facing the public sector and the legal services market generally, investment – particularly in technology, business development and marketing – is now needed," the report said.

"Without a step change at this point, Kent Legal Services will struggle to maintain, let alone increase, its return to the council and will find it increasingly difficult to compete in a highly competitive and rapidly-evolving market."

Establishing the proposed ABS would allow KLS to make the transition to becoming a fully traded vehicle. In addition to obtaining an ABS licence from the Solicitors Regulatory Authority, a range of preparatory arrangements are to be put in place before the company begins operations, including the purchase and installation of ICT infrastructure and software, the transitioning of staff, the commissioning of external skills and services and the recruitment of key personnel.

There are also plans to acquire new premises for the company, with staff transferring from their current office locations in Maidstone and Canterbury to a single new address.

The report for the Cabinet meeting said it was assumed that the ABS would be wholly owned by the county council at the outset and for a 10-year period. "Clearly, the council is able to consider a downstream partner if it is in the interests of the company or the council to do so," it added.

As part of the proposals, a Corporate Law and Assurance Team will be created at the county council to provide an intelligent client function. The post of Director of Governance and Law will also be replaced by a General Counsel post. The General Counsel's in-house team would, amongst other things, manage the contract with the ABS, ensure the functions of the council are lawfully discharged, and provide legal support to members, senior officers, Cabinet, committees and full council.