Natural selection

The decision by the legal team at Kent County Council and law firm Geldards to launch their Law:Public offering is set to herald a period of rapid change in the provision of legal services to local authorities and the public sector. Philip Hoult hears why they went down this route.

There must be few lawyers working in local government who are under any illusions about what the future holds. Just “doing more with less” is unlikely to be enough, with demand for legal services rising at a time when local authorities face prospective cuts of anywhere between 20% and 40% to their budgets. With the pressure to protect frontline services intense, “back office” services are under threat and more radical solutions are needed.

This environment will become more challenging still for legal departments in October 2011, when the introduction of alternative business structures will allow the major outsourcing providers – amongst others – to own legal businesses for the first time.

For Geoff Wild, the high-profile Director of Law & Governance at Kent County Council, this is a ‘Darwinian’ prospect – and local authority lawyers need to adapt if they are to survive.

The response that, together with law firm Geldards, Wild has come up with is Law:Public, a brand under which the two organisations aim to provide a cost-effective service and a viable alternative to the panel system.

Unveiled last month, the new offering could well have fired the gun on a period of dramatic change in the provision of legal services to local authorities and other public sector bodies.

The beginnings of Law:Public date back 12 months, when Geldards’ chairman, David Williams, heard Wild speak at a conference.

“We were pursuing parallel tracks without realising it,” explains Williams. “The various local government speakers were all talking about the same things, which were the need to save costs and the need to provide even more legal services but still with quality and efficiency.”

Having seen various panels set up and also arrangements such as the Lincolnshire model (where local authority lawyers have transferred to the county council, which provides legal services back to the districts), Williams felt that there was scope for another model of provision.

“I was getting a lot of comment from heads of legal and chief executives in local government I know that the large panels were all very well, but they weren’t providing one of the things that everybody wants, which is personal relationships and personal contacts.”

Wild claims the Law:Public link could provide “the best of both worlds” in terms of what the public and private sectors have to offer, with more than a combined roster of more than 100 lawyers.

“There are a lot of extremely valuable assets that the private sector can bring to the table in delivering public sector work,” he recognises. “There are things where they are streets ahead of the public sector and that’s what we should be looking at and learning from.”

The problem is the prohibitive price tag that goes with this – something that, Wild argues, local government simply will not be able to afford as belts are tightened.

By combining under the one brand, so the theory goes, Geldards and Kent can offer a much more complete package than they would as individual organisations, and at an affordable price. Their target is a maximum hourly rate of £150, taken as an average of the two organisations’ rates.

“Hopefully clients who might have thought twice about going to Geldards before because they may have lacked some of the areas they wanted in a law firm, will now go to them because they know we’re associated with them,” adds Wild. “And people who might have thought twice about going to Kent, because they may have had some reservations about its abilities and capacities, will.”

Although acknowledging that Law:Public will – where appropriate – pitch for a place on panels, Wild is trenchant in his criticism of these arrangements, describing them as “an appalling model” for clients and providers.

He points out that external providers – whether they are law firms or chambers – have to invest heavily in preparing and pitching without any guarantee of work. They also have to commit to providing a significant amount of (often free) training.

“The single commodity which is prized above everything else is price and, of course, the providers are having to drive their prices down,” Wild adds. “When you drive prices down, you drive out extras such as the quality of the service.”

As a result, you get a commoditised legal service. “It’s stack ‘em high and sell ‘em cheap and it can only be a short-term fix,” insists Wild. “Panels have a short-term life which will allow some people to claim success in driving down prices, but in the long run everyone will suffer. The clients will get a lesser service and the suppliers won’t be able to sustain it, I suspect, even if they do get any work out from it.”

Wild claims that the Law:Public offering “is hopefully something which has a little more soul to it” and has a longer shelf life.

Geldards’ Williams insists the geographical distance between the two organisations – his firm has offices in Derby, Nottingham and Cardiff – is a strength, rather than a weakness.

“We are well used to working across the country,” he argues. “It was put to me the other day that we have worked in every single employment tribunal in the country, apart from Shrewsbury. And by the nature of the firm, we have worked in two parts of the UK, 150 miles apart, very successfully for the last 20-odd years, so we know that the diversity of the operation is not a challenge.”

The initial focus for Law:Public is likely to be where the two organisations are geographically strongest. “If you look at a map of the country and you draw lines between Nottinghamshire, South Wales and Kent, you’ve got a very nice triangle there and it provides some pretty broad coverage of the main bulk of the country south of the Scottish border,” Wild says.

“Geldard’s positioning geographically was a key factor in allowing us to be able to stretch beyond what would be our geographical limit. We’ll have that spread of cover which will allow us to reach pretty much most parts of the country without too much trouble.”

The two organisations insist they are not entering into this blind. A pilot with an unnamed local authority before the launch was sufficiently successful for them to press ahead.

In terms of structuring, Williams admits that the arrangements have “necessarily [been] kept fairly informal”. This is because they want to “allow flex in the process for each other but also to see how it develops”.

Whether, of course, this loose arrangement will affect the level of service (in terms of how joined-up it feels to the client), only time will tell. It does, however, help Kent and Geldards to remain within the Solicitors Regulation Authority’s regulations on joint marketing and charging for their services. Wild says meeting the ban on fee-sharing is quite simple – “we don’t fee-share,” he insists.

The two organisations plan to proactively offer the service to potential clients, by going out and explaining to them how it will operate. Williams says it would be “jumping ahead” to say Law:Public could take on all of a council’s legal services needs, but adds that it has “the ability to do single jobs right through to the majority of jobs”.

One thing that appears to raise Wild’s hackles is the suggestion that the setting up of Law:Public is “predatory” and that legal departments of smaller district councils could be significantly downsized or even shut down as a result.

“This implies we’re out to ambush or leap upon some unsuspecting local authority legal department and snatch away their work from them,” he says. “I can’t see how that conclusion can be arrived at when what we’re offering is a helpful alternative to hard-pressed departments at a time when they most need it. I know that this [the ‘predatory’ allegation] has been used by some people who perhaps feel threatened by this. But we’re not in any way a threatening enterprise here. We’re really trying to offer a lifeline to those who need it most.”

Law:Public will not go behind people’s backs “surreptitiously plotting”, he says, but “if we’re approached and asked to assist, then of course we will and that’s absolutely fair, I think, and proper”. If initiatives are made at the finance director or chief executive level, then that will not be of Kent or Geldards’ doing.

Wild rejects in a similarly forthright manner claims in some quarters that Kent should have gone out to tender for its ‘joint venture’ partner. “I don’t consider there’s been any procurement here at all,” he says. “There’s been no contract, there’s no procurement and the council isn’t buying anything.”

If people assumed there was a much more formal legal structure to Law:Public, “they would be wrong”.

The prospect of Law:Public becoming an alternative business structure is presumably a possibility, but Wild and Williams say they have not discussed this in any detail yet. In any event, they want to see how the service develops ahead of October 2011 before committing to any such move.

“I’m looking forward to the new regime coming in because it offers a whole wealth of opportunities, one of which (ABSs) may be absolutely right in time for us to explore,” says Wild.

Throwing down the gauntlet to other local authority legal teams to think about their strategies for the future, he points out that – in this brave new world – the likes of Capita could soon be significant players in legal services provision to local authorities.

After all, management consultants have been itching to add legal services to the bundle of services such as IT, finance and payroll that have already been outsourced. The introduction of ABSs will sweep away the legal obstacles to this happening.

Wild believes local authorities legal teams should be less blinkered. “The opportunities are there for them to take but what frustrates me is so few do,” he argues.

But there is going to be blood on the floor in the next few years, he warns. “There will be victims of the financial crisis as local authority budgets are slashed. You’ve really got to look at your means of survival.”

Philip Hoult is editor of Local Government Lawyer.