East spenders

A trio of East London boroughs has created an innovative shared legal panel to exploit economies of scale and avoid replicating their work. Is this the future of public sector lawyering? Jon Parker investigates

Public sector legal teams are changing. Once seen as the sleepy equivalents of their slicker private counterparts, the leading public sector in-house teams are getting leaner and hungrier. Now three East London boroughs have taken that evolutionary process a step further by launching London’s first-ever tri-borough legal panel. “We want to make ourselves a little bit less like a local corner shop and a little bit more like Tesco,” says Satish Mistry, head of legal and democratic services at the London Borough of Waltham Forest.

The groundbreaking initiative of which Mistry’s team is a part was launched in February 2006. Waltham Forest has pooled its external legal spend with neighbouring London boroughs Tower Hamlets and Newham. And, as Mistry argues, they did so with the key objective of saving taxpayers’ money.

“Put simply, it was about trying to reduce cost,” he says. “It made good business sense.” Mistry’s approach reflects a new attitude among leading public sector teams, which are increasingly bold in breaking with tradition. With external legal spends of between £500,000 and £1.5m each, the boroughs’ legal heads know their combined spend could leverage economies of scale. They are looking at beating down the bottom line as aggressively as any corporate client.

Innovation

Yet as important as cost is, the innovation does not begin and end there. The three boroughs have also formed an alliance with three external firms – Sharpe Pritchard, Mills & Reeve and Trowers & Hamlins – that looks set to blur the traditional boundary between public and private sector working.

Graham White, the interim chief legal officer who represented Tower Hamlets in the initiative, says firms were assessed not only on their fee rates, but on factors including experience, capacity and added value.

The latter is key to the success of the project. It refers to a firm’s willingness to become more than just the recipient of legal instructions. In exchange for the possibility, but not a guarantee, of overflow work, the selected firms were those prepared to open up their practices, allowing the authorities’ professionals to experience life on both sides of the public-private divide. Or, as Sharpe Pritchard partner John Sharland puts it, “to share the collective wisdom” of the three firms.

Sharpe Pritchard’s added value offering includes shadowing arrangements for council staff to accompany the firm’s lawyers to project meetings with other public sector players. All three firms will give and receive secondees.

Borough legal staff will also take part in joint training and seminars with those at the firms and have access to the firms’ researchers, legal libraries and meeting rooms.

Invitation

Although the three boroughs had talked of combining their legal efforts for some time, the ball began rolling in April last year when an invitation for tender was placed in the press.

Thirty-five firms submitted expressions of interest. These were whittled down to a shortlist of nine, which were then invited to tender to a panel consisting of the three heads of legal services, Waltham Forest’s senior contracts lawyer and a consultant contracts solicitor employed by Newham.

And although the combined legal spend is a first for London, as Mistry explains, the borough legal heads are no strangers to each others’ businesses. Mistry himself, who grew up in the East End, worked in five other London boroughs, including

Newham, before taking up his present job in October 2001. (He told The Lawyer at the time that it would be his last legal job in local government because “there’s nowhere else for me to go”.)

In Brent, where Mistry spent seven years as a corporate solicitor, Mistry saw “almost half ” of the legal work being externalised. Helen Sidwell’s experience of local government has been less nomadic, but equally lengthy. Before joining as head of legal at Newham in 2002, she spent 21 years working at Tower Hamlets, which she joined as a trainee in 1983. She then worked her way up to become acting head of legal.

“Working in the public sector is different,” she says. “There’s no selfishness with information or solutions between boroughs, and I assume it’s not like that in the private sector. It’s not about maximising profits, it’s about seeing tangible benefits to people’s lives.”

During her two decades at Tower Hamlets, Sidwell witnessed the transformation of the borough’s Docklands area from a derelict port to an international commercial centre, and observes that Newham is experiencing its own period of regeneration now, a process set to be boosted by London’s Olympics win.

She adds that Newham has a history of embracing innovation. “We were already part of a benchmarking club of about 14 local authorities agreeing barrister fees and so on, but the group was too large to always do everything together,” she explains.

Closer collaboration began when Sidwell and White realised that they would be providing a lot of similar advice in the run-up to the Olympics in 2012.

The two heads talked about appointing someone to procure jointly, and the conversation soon progressed to include Mistry.

Like Sidwell, Mistry has noticed major changes in the way local government operates. “The view I have is that the days of local government being able to do all legal work in-house are gone,” he says. “Over a period of time, the private sector has had to be utilised. There’s now a greater opportunity for private sector firms to be involved in public sector work.”

Mistry argues that the biggest change came with the Local Government Act (LGA) in 2000, which changed radically the nature of local government decision-making, allowing local authorities far greater freedom to innovate and experiment.

Before the act, local authorities were obliged to find specific powers to enable them to undertake any major activity, be that building a school, a leisure centre or anything else.

Yet as Tower Hamlets’ White puts it, the act changed everything.

“When the act was passed, the power we had was much wider than before,” he says. “We had much more capacity to innovate.”

Russell Power, head of legal services at the London Borough of Greenwich, also to the east of the capital, concurs. “The LGA gave local authorities the freedom to do anything legal that will promote the economic, social or environmental wellbeing of their boroughs,” he says. “It meant lawyers no longer had to spend hours poring over statutes and were freed up to do other things.”

Initiative

Now these London boroughs have taken the initiative and pooled their spend, will others follow?

White is ambivalent. “It all depends on their need for top-up services,” he says. “Not all of them will have that need and be interested, but other London boroughs will be in the same position as us, in which case it should make sense for them.”

Louise Round, director of law and public services at the London Borough of Islington, likes the idea. “There’s an efficiency agenda [among local authorities] these days, and local authorities are working together on procurement in lots of different ways,” she says. “As well as the saving in cost, [under the combined legal panel] the opportunities for secondments, free seminars, correlating information and learning are much greater. It’s something we’re always thinking about, as I can’t see a downside or any real risks in it.”

Power at Greenwich is cautious, however. He says the borough does not have an external legal panel “but is always reviewing arrangements, and will be very interested to see how those three boroughs get on”.

Mohammed Saleem, solicitor to the council and monitoring officer at the London Borough of Barking and Dagenham, confirms that he is happy to talk to Newham’s Sidwell about rates and efficiencies.

“It’s definitely a good idea to work together to deliver better services, particularly with the greater pressures on resources we all face these days,” says Saleem. “I’m excited about this opportunity. We [at Barking and Dagenham] just have to make sure that the arrangement is delivering and that it’s not just being done for its own sake.”

Whether other London boroughs will do as Tower Hamlets, Newham and Waltham Forest have done remains to be seen. But it is clear that local authorities are now negotiating just as hard as their corporate client equivalents.

“When the public sector dealt with the private sector in the past, there was always a gap,” says Mistry. “That gap has now closed.”