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13 January 2014
I was surprised to read the comments of Ashurst Morris Crisp's head of real estate Simon Cookson about his firm in The Lawyer (16 April).In commenting on the firm's decision to refocus the planning group's direction away from the public sector, he described private sector work as "more interesting in many ways".
My surprise was not only at the proposed new strategy - the firm has had an enviable track record during the last couple of decades in advising the public sector on some of the country's largest and trickiest urban regeneration schemes - it was the implication that acting for local authorities is somehow boring that most caught my attention. As someone who regularly acts on both sides of the divide, I was forced to ask myself whether acting for the private sector really is all that more exciting.
Is it dull, for example, to advise the party who takes the lead role in putting together joint venture schemes to regenerate town centres and derelict sites, using compulsory purchase powers where necessary? Is it boring tackling congestion in our city centres and beauty spots through helping to introduce new mechanisms, such as road-user pricing and workplace charging schemes? Is trying to make PFI an affordable and workable way of replacing worn out schools, libraries and other facilities unrewarding? And does helping councils achieve best value across their entire range of services really lack challenge? For my part at least, the answer to each question is a resounding "no".
So why this change of direction? Is it symptomatic of a more general trend across legal firms? Two thoughts occur to me. First, might the answer lie partly in best value? While local authorities have always had financial standing orders to comply with when outsourcing legal work, in the past their decisions have not generally been open to external scrutiny. Unlike compulsory competitive tendering, which for most authorities was a non-issue in respect of legal services, best value may be having an impact. Now all legal departments must carry out or be subject to a best value review every five years. That review will involve a degree of scrutiny of all decisions to outsource work on a general or specific basis. Any review may be subject to external audit. So local authority decisions to appoint law firms will be under scrutiny far more than ever before. This does not mean that contracts must always be given to the cheapest bidder - but where one firm genuinely has the same experience as another, it will be much harder for the authority to justify favouring the more expensive one.
While it once might have been true that only City firms had the skills to undertake major property schemes, that is no longer the case. Right across the country there are firms with these skills that are very competitive on price. With the assistance of best value they are now beating City rivals to the work. There was a furore earlier this year regarding Manchester City Council's decision to continue using Slaughter and May for its major property work. The outrage shown by many Manchester firms was only partly tribal - they do have the same legal skills and expertise, probably at a fraction of the cost.
I suspect the second reason for the change is because the pressures of law firm globalisation are adding to the squeeze. The corporate and banking trend of City firms towards global work is undoubtedly motivated by an ability to generate larger fees. Unless real estate departments in these firms are going to become poor relations, they need to find work that matches the profitability of their corporate colleges. Almost without exception this is not going to be from public sector clients.
This may explain why some of the City firms are steering away from acting for the public sector. To explain this on the basis that the work is dull is just a little disingenuous. Fortunately, there are many capable firms in the regions that still find this area of work rewarding in every sense of the word.
John Bosworth is a partner in Bevan Ashford's built environment group