One in five legal teams reel from 20-30% budget cuts

One in five local authority legal departments are facing reductions of 20-30% in their overall group budgets at a time when demand for legal advice is growing significantly, research by Local Government Lawyer and DMH Stallard has found.

The in-depth survey of 50 heads of legal also found that the cuts are set to impact on all practice areas, putting pressure on departments' ability to deliver in employment, children’s services and commercial and contracts in particular.

Jenny Thorp, Head of the Public Sector Group at DMH Stallard, commented: “The reality of deep budget cuts will not come as a shock for most. What is interesting about the survey results is that whilst many legal teams are thinking about innovative ways to deliver value for their authorities, most have yet to actually start implementing initiatives to address the challenge of doing more for less.”

Other key findings from the research include:

• Half of the respondents report a budget cut of 10-20% and a quarter expect a reduction of up to 10%. Just one in seven have managed to retain their budget in full
• Two-thirds of heads of legal expect overall demand for legal services to grow over the next 12 to 18 months. Just 8% suggest that there will be a net reduction, while a quarter expect no change
• Asked in which three areas they would be under most pressure to deliver legal services, respondents mentioned employment, children’s services, and commercial and contracts most frequently
• One third of respondents chose children’s services as the number one area under pressure, suggesting that the aftermath of the Baby Peter case continues to be felt.

The survey also reveals a recognition among the vast majority of heads of legal that their existing strategies will not be enough to cope in this environment – just 11% of respondents say they will continue with their current approach.

Some two-thirds of heads of legal reveal that they are looking to join services with other local authority teams, as the trend towards shared legal services gathers pace.

This rises to 91% if less formal methods of collaboration are included. Collaboration with other public bodies in a Total Place-style solution has been considered but rejected by many departments, although the research suggests this may be premature as heads of legal who have implemented such an approach report that it can deliver savings.

The next most popular strategy – being considered by 37% of heads of legal – is a cross-function approach that allows teams to specialise in more than one area. Other strategies being considered include enabling client departments to handle more routine legal matters themselves and using external provision to deal with specialist services.

A third of respondents nevertheless admit that they will be forced to deliver a reduced level of service.

The research also reveals that many legal departments are failing to exploit fully strategies available for protecting and generating their authorities’ revenues. The results and analysis of this part of the survey will appear on Local Government Lawyer next week.

Commenting on the survey, Susan Tovey, Head of Legal Services and Monitoring Officer at Test Valley Borough Council and President of the Association of Council Secretaries and Solicitors, said: “Pretty much all of us are going to have to do more with less.”

However, she questioned how much leaner legal departments could become before the quality of service is adversely affected.

Tovey said: “The problem is that people have been having to make cuts even before the current round. But only in odd areas – such as conveyancing – have I seen any reduction in work levels. And it is the difficult, more complex work as well which is increasing or staying the same.”

Philip Hoult

Click here to see the full results and read our in-depth analysis.