So, Ashfords, Bevan Brittan, Browne Jacobson, DMH Stallard, Eversheds, Nabarro, Pinsent Masons, Sharpe Pritchard, TLT, Trowers & Hamlins, Wragge & Co: where do you think your local government clients are heading?
It’s not a rhetorical question. Those private practice firms are just a small selection of external advisers that have local government clients. But public sector legal teams are undergoing massive change involving an extraordinary level of cuts to their funding. This is leading to a radical rethink of their relationships with private practice.
The good news for the government legal teams is that the wider shake-up of the legal industry means that they too can take advantage of new vehicles such as the ABS.
Local authority ABS applications have been few in number; the preferred option up to now has been shared services. It has certainly been
the favoured political solution, since council chief execs can get an easy win and look like they’re getting to grips with back-office costs. However, you have to question whether the softer version of the shared service model is delivering savings; there is a suspicion with some that there has been precious little rethinking of legal services.
The big thing local government lawyers have to deal with is the rise of the outsourcers. As our cover story explores, Capita and others have come to dominate council services, and Capita has now entered the ABS arena. Furthermore, when a third party is running services council lawyers cannot advise them as they are not employed by them. That’s the rationale behind the Harrow/Barnet ABS application, since a gigantic amount of Barnet’s services are now run by Capita.
So ABSs can open up a market beyond the local authority and allow teams to be profit-making. Government lawyers have some experience of advising other clients such as certain types of healthcare bodies, but now they’re looking at expanding their client base to charities and the third sector, plus ‘blue light’ stakeholders – Buckinghamshire’s proposed joint ABS with the fire service being one example.
I strongly suspect that the consolidation we’ve seen in private practice will be mimicked in local government. District council legal teams will shrink as the larger players reach critical mass and run themselves as pan-regional businesses. If the more forward-thinking local government legal teams play it right they could end up handling work on a national level from different sources. After all, if you can provide a commercial service in the face of savage budget cuts, you’re going to be savvy about how to turn a profit.