Richmond gives green light to first shared legal service in London

The Cabinet at the London Borough of Richmond last night approved the creation of a shared legal service with Merton Council. It will be the first such structure to be put in place in London when it becomes operational in October this year.

The two local authorities have had an interim joint head of legal in place since August 2010, when Merton’s head of civic and legal services Helen White was appointed to the role on the retirement of her Richmond counterpart. The councils also agreed to conduct a feasibility exercise for merging the two legal services departments.

Under the plans, which had already been approved by Merton and were first revealed by Local Government Lawyer yesterday, the shared service will:

• Be a new service with a new identity, distinct from the existing legal services, “which is customer focussed, innovative and with a high performance culture”
• Be physically hosted in the London Borough of Merton
• See all staff employed by Merton, with Richmond’s staff transferred across. There will also be a “new flatter management structure”
• Use a shared IT case management system
• Use hot desks in Richmond “so that when staff are needed for meetings they can undertake other work without the need for additional travel”
• Have a joint governance board which will monitor the performance of the service and be responsible for directing the strategy and development
• See lawyers work on cases for either authority depending on their expertise and the needs of the clients. “There will no longer be a distinction between a LBM or LRBuT lawyer”
• Have a joint head of service to “allow for clear and certain leadership through the implementation of the new legal service”. The two authorities’ chief executives will consider the process for this appointment.

Helen White said: "By merging the two teams, Merton and Richmond will have a more cost effective and resilient service. There will also be opportunities for the current legal staff to obtain different skills by working with a larger client base within the new legal service."

Staff in the two legal departments will now be invited to take part in a formal consulation on the proposed structure.

According to the background report, “the shared service should be sustainable in light of any future budget reductions and have the potential for expansion with other local authorities who may in the future look to share legal services”.

The initial plan is for each authority to meet the cost of the shared service in proportion to their existing costs. However, the view is to move later to a direct charging model to each authority based on the amount of time spent.

The cost of the shared legal service has been estimated at approximately £2.2m a year, with savings of £100,000 in 2011/12. Legal costs are expected to be reduced by 20% by the end of the second year of operation. Further one-off savings of £20,000 are likely to be made in relation to books and resources, while Richmond will see lower costs for IT support.

The report said these savings would be delivered “by implementing a flatter structure, driving through further efficiencies through the economies of scale and creating a more resilient structure minimising the increase of external legal spend”. External legal spend is also expected to fall as a result of increased physical capacity.

The set-up costs have been estimated at £90,000 on top of costs associated with redundancies and pay protection. “It is anticipated that the costs of redundancies will be met by the originating authority,” the report said. “However, in the spirit of the underlying principle of mutual benefit, if one authority bears a disproportionate share of the set-up costs then the chief executives in consideration with the leaders will reconsider the apportionment of funding.”

The report did not set out how many redundancies are expected to be made as a result of implementing the service.

Alternative options to a shared legal service were considered but ruled out. They were:

• Hosting of the service by Richmond or in a third party location. However, Richmond had insufficient space and Merton had enough to rule out the need for a separate location
• Seconding staff into the service rather than transferring to Merton. The report suggested that the benefits obtained by a restructure and relocation of staff would not have been realised under this model.
• Creating satellite offices in each authority with a central business support team. This would have reduced the ability to achieve maximum savings and resilience, the report said.

Richmond’s Cabinet has now authorised its chief executive to sign the formal documentation that will govern the relationship with Merton.

Commenting on the deal, Cllr Mark Allison, Merton’s cabinet member for finance, said: “As part of our drive to reduce costs and improve services for local residents, the council will take an innovative approach and explore all opportunities to ensure the best results.

“Merton has already successfully merged our HR with Sutton, and by joining legal teams with Richmond we can get economies of scale. Because there will be more in-house expertise we won’t need to hire as many expensive external lawyers, and so we will have a better service and make some of the savings we need to make in one of the most financially difficult times ever seen in local government.”

Richmond Council’s Deputy Leader, Councillor Geoffrey Samuel, said:  “We have said before we will be doing things differently in Richmond upon Thames and we are determined to drive home the best value for money from all our operations that we can. Bringing our lawyers together with Merton’s is an example of how we can protect our frontline services by taking a critical look at how our back office works.

“Cutting 20% out of the costs of running the two services is a very good start – we expect to see savings of £100,000 in the next financial year. Like all councils we have savings targets to meet over the next four years and where we can do it by sharing functions like these, it will avoid cuts in other areas.”

Philip Hoult