Kent in-housers seek to cut £3m of legal costs by 2014

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  • Funny this.
    I'm sure that County Councils are supposed to do stuff like road-sweeping, education, care etc. for their own local population.
    Since when was a County Council's Legal Department supposed to actively want to ditch their own legal work, in favour presumably of doing work for other councils...?
    Any chance of Kent CC's snow clearers giving up on the Kent roads but making a pitch for clearing Yorkshire's roads? Is this the much vaunted 'new paradigm' perhaps?
    Total and utter madness - the lunatics have truly taken charge of the asylum...

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  • Wanting to know what"salami-slicing exercise or a corporate comb over" is to those who don't speak corporatese.

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  • Like many others, I harbour doubts about how Kent County Council's offer of external legal services complies with the EC rules on state aids.
    In this article it is clear that the same workforce is providing both the internal and external legal work. The problem with that approach, as cases like Hofner demonstrate, is that the council is operating within a market (the provision of legal services) whilst using public money. That the profits are recycled is irrelevant.
    I'm sure that the council is acting in a compliant manner, but its far from obvious exactly how they are managing that .

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  • My council also sells microwaves and groceries.
    It doesn't of course, but it's as bizarre as this situation.
    Surely this is state aid.

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  • Firms bidding for public sector work must have recognised that this is state aids by KCC. I can only imagine these rivals are holding off so the interest on the aid that will become repayable is greater.

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  • I pity the firm that has signed off on the state aids approach.

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  • Anon 2.26pm, no law firm would. It would be madness to take such a high risk.

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  • The state aid question is a reasonable one, but Marshall Hall's position is odd: KCC aren't doing external legal work for free instead of doing work for Kent residents, but rather to raise revenue, which improves the service the council is able to offer.
    Also, it isn't 'ditching' Kent legal work, but instead trying to move to a position where there isn't as much unncecessary work to do -- something that all councils should learn from. The assumption that all longwinded processes and painful bureaucracy are essential is why so many public sector staff are so bad at efficiency saving.

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  • Anyone who crticises this entrepreneurial and inspiring initiative either misses the point entirely, is overcome by envy or is happy to have flaccid, sedentary bureaucrats as their local authority employees (possibly all three). As for state "aids", as I understand it, Kent's lawyers don't receive a penny from their council in either corporate funding, subsidy or provision of overheads. They are not guaranteed Kent's work and, other than in fees earned, all other expenses and overheads are shown above the line. They are net contributors to the public purse, not a drain on public funds. They are saving their council money and keeping other public sector bodies' legal costs down. In fact, the only ones to lose out are us in the private sector. More power to Wild and Co!

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  • As a local authority, Kent County Council had special dispensation for the purposes of state aids, but the moment they entered the legal services market, that cover disappeared. Therefore it does look like KCC did fall foul of state aids.
    Of course, they could clear all this up by putting a statement on their webpage explaining how they achieved compliance with the European Regulations on state aids.
    I'm surprised their rivals don't complain.

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  • Anon 2 May, 8:35pm - I disagree and believe your argument is flawed.
    The best way to drive down the costs of the public sector is to out-source its functions to cheaper alternatives. This model, though well meaning is the state extending its functions and deliberately distorting the market.
    The perception is that KCC operating on a nod-wink basis with this spin out. It not only is a breach of the state aids rules, but violates the procurement principles.

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  • The way state aids (sic) is rferred to makes it sound like an illness. If state aid is defined as an advantage conferred on a selective basis to undertakings by public authorities to ensure that government interventions do not distort competition and trade inside the EU, then it is hard to see what state aid is being given or conferred here. Also, as nothing is being procured, then it is difficult to see what procurement principles are violated.

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  • In addition to the state aid issue KLS also appear to be in breach of the Teckal exemption. Have they ever furnished a satisfactory explanation of how they meet the Teckal criteria?

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  • Teckal is not engaged since KCC is not using the ABS for any of its legal services and not procuring anything from it. Those will continue to be supplied by the in-house team.

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  • Paul,
    I suggest you read this article on Kent County Council's legal strategy from March 2011, http://www.thelawyer.com/competition-kent-county-council/1007295.article.
    Not only does Geoff Wild confirm that Kent does apply Teckal for some of its external services he also undermines his best state aids argument (that there is no distortion on trade in other member states) by listing several international law firms that will be disadvantaged by this measure.
    I hope everything has been done correctly, but I fear that Kent County Council could learn from the story of Icarus.

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  • So how do Geldards fit into all this? It looks like they're on a promise to deliver legal services for Kent.

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  • Interesting reference to an earlier article on Wild. This talks about Teckal in the context of other KCC companies (Kent Top Travel and Kent Top Temps), but not its legal services. Presumably this is because neither Geldards nor the new ABS will be selling their services to Kent, but will target other external clients. No state aid, no procurement, no Teckal. Clever.

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  • Of course state aid doesn't require the sale of any services. Simply the initial transfer of funding and the Council deciding to act as an undertaking is enough. It doesn't look that clever to me.

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  • Let's hope that before setting up Kent Top Temps they had read cases C41/90 and C55/95 very very carefully.

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  • Sadly this situation underlines just how little expertise there is in state aid within UK law firms.
    I'm convinced that if this was a breach of any other kind of EU competition law, several law firms would have already taken action.
    As it stands, it is the law firms who are being disadvantaged but it appears they don't have the expertise to resolve the problem. Is it any wonder that public sector organisations are so unwilling to instruct law firms for state aid advice?

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