25 July 2005
The days of local authority lawyers viewing their oppos in private practice with envy and little more than suspicion may not be entirely over, but they are numbered.
"The fundamental change in the last few years has been the relationship between local authorities and the private sector," says Mark Hynes, director of legal and democratic services at Lambeth Borough Council. "It used to be us and them, competitive and combative. Now it's all about partnering."
The rise of partnering arrangements between a local authority and a preferred legal services supplier - ie a law firm - has been a notable feature of recent years. But the latest development for local authority legal teams, and the one that won Kent County Council's legal services division the Public Sector Team of the Year Award at The Lawyer Awards last month, is the growth of the in-house team as external legal adviser. It is a trend that has revolutionised the image of local authority lawyers, and one that private practice firms focused on the sector would be foolish to ignore.
The public sector legal profession, for decades seen by many as arcane, overly bureaucratic and staid, could not survive if it stood still in the current litigious and legislation-heavy environment. Over the last few years, and certainly since the arrival of the Blair government, the ever-increasing volume of legislation, coupled with a growing demand for legal specialism, has placed legal teams under enormous pressure.
"The work used to come in peaks and troughs," says Luis Andrade, senior solicitor at Hertfordshire County Council. "In the summer there would be a bit of a lull. Increasingly, though, it's a constant peak of work. It certainly feels at the coal face as if it's increased."
Andrade's feeling is echoed by one of the most eminent lawyers involved in public sector work, Richard Mawrey QC of Henderson Chambers. "There's no doubt at all that, over the last five to seven years, local authorities have had to deal with a much-increased load of work," Mawrey says. "It's happened in two ways: they're required to do a good deal more by central government; and there's a great deal less money to do it with."
Not only has the level of work increased, but the breadth of matters a local government lawyer is expected to handle has widened enormously. Child issues, education, roads and transport, the environment and water pollution, immigration, licensing and the homeless - the law impinges on a bewildering range of areas that affect local government lawyers. "The amount of work they have to do is a huge burden," says Roger Henderson QC, head of Henderson Chambers. "And the truth is, they're very stretched."
Added to the rising work levels is new legislation, which inevitably means more work. The introduction of the Freedom of Information (FOI) Act in January has left many local authorities facing a huge number of FOI requests - an unlooked for development that falls to the legal department to handle. Similarly, data subject access requests under the Data Protection Act and the general trend for the public to be more aware of their rights (and more vocal about asserting them) is leading to a heavier workload for in-house lawyers.
As Hertfordshire's Andrade points out, the increase in work is not necessarily a negative thing. "We've managed the data and FOI requests within the team," he says. "It's given us an opportunity to develop our lawyers in new areas. But it's a complex area, so we have to gain those skills very quickly."
Nevertheless, the pressures on local government lawyers to look after their communities are greater than they have ever been.
One method of dealing with those pressures is to partner with a private practice firm. It is a growing trend that has seen firms such as Eversheds, Nabarro Nathanson, Pinsent Masons, Trowers & Hamlins and Wragge & Co lead the way in close cooperation deals with local authorities. "Lots of law firms have now targeted local authorities as sources of work and a fairly well-defined group have formal partnering arrangements," says Lambeth's Hynes.
There are two drivers that are leading local authorities to engage with law firms. Capacity is the first. "I don't know how some of the smaller boroughs, with only two or three lawyers, manage," says Hynes. "Lambeth has about 30 lawyers, but also has 14 firms providing extensive legal services. For example, all social services are handled by Sternberg Reed [Taylor & Gill], while all property work is handled by Steeles."
The second driver is expertise. Simply put, local authorities do not have it in many of the areas they need. "PFI is the classic," continues Hynes. "Lambeth is currently running four PFI projects. Very few authorities can run one of these projects in-house."
There are other resources for local authority lawyers to draw on. The sector is well organised in terms of networks, with the Law Society-linked Solicitors in Local Government group and Access, an organisation that represents chief legal officers, being two of the major organisations providing services. "We're also learning from other authorities and special interest groups [SIGs]," says Hertfordshire's Andrade. "The community care SIG and the childcare SIG and so on are good resources."
And then there is the bar. Henderson's set, one of several with a longstanding county council focus (among them are Blackstone Chambers, 39 Essex Street and 11 King's Bench Walk), began sending its barristers in to help directly with the legal department around four years ago. The benefit works both ways. The extra hands help lighten the load, while the barristers gain an invaluable insight into the workings of a local authority. "Local authorities need lawyers with local government knowledge if they're going to give helpful advice," insists Henderson.
Measuring the increase
The above resources are invaluable, but for most local government legal heads, covering the workload remains a constant battle. Ironically, the biggest threats are the very same law firms with which they are partnering. Several firms have actively recruited for their local authority teams from the public sectors, giving them a real understanding of the issues while at the same time draining the potential client of resources.
"Recruitment is a massive problem," says the borough solicitor at Brent Borough Council Terry Osborne. "There are two problems: money and image. In certain areas of the law, it's virtually impossible to get recruits."
Osborne says it is often the same group of firms that work with local government which prove most attractive to the public sector's lawyers. "We're competing with firms in the City who can offer more attractive packages," she admits.
Brent offers a £5,000 market supplement on top of the normal salary range. That, for example, takes the head of the contracts team up to £60,000, which obviously compares unfavourably with what City firms can offer. But there is very little else that Osborne and others like her can do about it. "We're in a borough that offers equal opportunities and we apply that to our own employment," she says. "It's difficult to reconcile that when certain staff get additional money in order to stay."
Recruitment is less of a problem for local government lawyers at the newly-qualified level, but at the more senior level, for example three to five years' post-qualification experience (PQE), it can be significant. Consequently, authorities sell more on quality of work. Brent, for example, has been closely involved in the multimillion-pound development of Wembley Stadium and the surrounding area. "In local government there are massive opportunities to do good work, gain experience and lead interesting and challenging projects," says Osborne. "We invest time in training and developing our lawyers. We just have to try very hard to hang on to them."
Making a profit
The reason behind the deserved recognition of Kent County Council's (KCC) legal team at last month's The Lawyer Awards may add another lever to retain the best talent. KCC's commercial nous, which has seen it transformed from a local authority legal services department into a virtual in-house private practice firm, has led it to advise on some of the largest and technically demanding projects - and without the need to instruct external lawyers.
"We spotted a niche," claims Geoff Wild, county secretary at KCC Legal Services, who says there is still resistance from public sector lawyers to trust and work with private sector lawyers. "They still perceive private practice firms as having a different approach to work," he explains. "The public sector tends to trust the public sector more than the private sector, so it makes sense for them to use a group of lawyers like us when they have resourcing issues. It's cheaper and they're less wary of us. They're far more comfortable coming to us than the City."
From a standing start three years ago, KCC Legal Services now has around 150 organisations that it counts as clients. They include police and fire forces, schools, district councils, parish councils and even some London boroughs that come to Wild and his team when they are facing peak work pressures. Wild says the work is not bread and butter matters such as debt recovery or housing issues, as local authority teams tend to do that themselves. "It tends to be more specialised," he says. "Major company and commercial work, major contracts and PFI particularly, where we'll handle the major negotiations, terms and conditions, Tupe [Transfer of Undertakings (Protection of Employment) Regulations 1981] transfers and so on. PFI is certainly a growth area."
KCC Legal Services is currently on the fourth PFI project that it has handled in-house. In the process it has reversed the traditional relationship between local government lawyers and private practice by handling most of the complex aspects itself and using external lawyers as back-room advisers. The projects include the £80m Kent Grouped Schools deal, the West View & Victoria House Social Care project and the Gravesham Hospital and Social Care Centre NHS PFI. "Building Schools for the Future is the next big one that all authorities will be involved in," says Wild.
The transformation in the legal team since the start of the scheme has been dramatic. Two years ago, 98 per cent of its work was for KCC. Now, 25 per cent of its income comes from external clients. The turnover of the 50-lawyer team is now touching £8m, the same as a decent-sized top 150 firm.
And KCC is not alone. Brent's Osborne says her team "already does what KCC is doing", while over at Essex County Council, which has had a partnering relationship with Nabarros since 2002, some 25 per cent of the in-house team's budget is derived from private client work. "It's a significant source of revenue," says Philip Thomson, head of law and administration. "It's a key part of the strategy to supplement the budget in this way."
Wild is keen to stress that his team is not looking to poach work. But the leading firms in the sector will want to tread very carefully. "There's a question as to whether they'll still maintain their 'monopoly' as this gathers momentum," he admits.
In the meantime, KCC continues to work closely with a number of firms, including Eversheds, the firm that blazed a trail in the sector five years ago by launching a local authority benchmarking group. The innovative group that the national firm launched in 1999 with KCC, Essex, Lancashire, Hampshire and Hertfordshire County Council allows the members to share comparative data, such as the cost of staffing jobs, in a confidential setting. As an illustration of how receptive local authorities have been to the idea, there are now 48 individual members of the group representing more than 20 of the 34 county councils nationwide.
"The whole thing's done in the spirit of collaboration, which is something we're keen to engender," says Wild. "It's a good example of where public and private sectors can cooperate to mutual benefit and it means we can take good ideas and share them, and vice-versa. We genuinely want to start building bridges with private practice."
They also want to build schools, but they might just do that themselves.