First mover advantage

While authorities up and down the country begin to set up shared services arrangements for their legal teams, Legal Services Lincolnshire, the biggest shared legal services initiative implemented to date, is fast-approaching its third birthday. Derek Bedlow asks Eleanor Hoggart, assistant practice director of Legal Services Lincolnshire, what lessons Lincolnshire's experience might provide for councils looking to go down the same path.

Why has Legal Services Lincolnshire been successful so far?

What made it work, in my view, was that there was a great flexibility about the approach. So whilst all of the Lincolnshire authorities entered into a collaboration agreement to say ‘this is how we will do shared services’, it didn’t matter if people didn’t come in at the outset. So for legal, South Kesteven and Lincoln City did not join in, although they did for procurement [the other function that became a shared service at the same time as legal].

The other thing that made it work was that all of the participating councils didn’t join for the same reason. For some it was cost – the need to reduce what they were spending on external lawyers, while for a lot of the districts it was about resilience. For others, it was as much about recruitment and retention. Meanwhile, for North Kesteven, for example, – which already had an excellent legal team – it was about commitment to the idea of shared services.

It didn’t matter why you came in because the model wasn’t posited around one particular goal.  It has hung together because everybody could see what they were getting out of it.

The shared legal service was effectively set up in 18 months, which is an incredibly fast time for doing something like this, particularly when you consider the committee meetings and democratic processes required to get it though.

But there really was a great deal of will to make it work amongst the leaders and chief executives of the councils involved. We, being typical lawyers, were being very cautious and some were, understandably, worrying about their positions. But the leaders and chief execs said, no, you’re going to do it, so we did it. It is important to emphasise that this is not leading to a unitary council by the back door, this is just about delivery of services, particularly a back office service like law.

What was the model chosen and why?

We went for a 'fully hosted' model in which the lawyers in Legal Services Lincolnshire are employed by the county. Less formal arrangements can fall apart as staff change and I felt strongly that we needed our own identity.

We did also have a look at the idea of setting ourselves up as a separate legal entity, but decided not to do that, in part because of the complications and cost that go with that.

Most of the districts didn’t have very many, if any, legal staff, so the obvious thing to do was to move the district staff to the county where an increase of about 20 people was negligible. The county could bear the increases in its core services costs without it having a cataclysmic effect on their budget.

How does it work financially between the county council and districts?

Because of the need for simplicity and speed, there was not a lot of time to do anything complicated. All of the participating councils put in an identified sum in year one, based on the average of their previous three years’ spend on law.

The County, in addition, took the view that it would accommodate all of the extra corporate costs of taking the people on, because it had the size and ability to take that on without having an adverse effect on its base budget.  

In year two, the service level agreement said that the respective councils would pay that amount again, with an uplift of 5%. However, by the time the recession had started and everybody was starting to clamp down on costs and we already in a position to massively reduce that. By year three, which began on 1 April this year,we had moved to ‘real-time’ charging with no fixed Client budgets. Now, if we don’t get work, we don’t get paid.

A common concern about the creation of shared services amongst local authority lawyers is that by physically removing them from the corridors of power, they become too far removed from the decision making process. Is that a concern shared by you or your team?

It is a fascinating debate which I haven’t really got an answer to. My gut feeling, having been the Head of Law, the District Solicitor and Borough Solicitor in two local authorities, one of which I wasn’t sitting in, is that I think that case is overstated.

Some of the departments of local authorities in Lincolnshire were procuring legal services from external solicitors because they didn’t have faith in their own teams, whether in terms of ability, experience, or work rate. Yet when we spoke to them ahead of the creation of the shared service, they were worried that they wouldn't be able to pop in and see the lawyer. We made the point that they were using private practice firms in other counties that they couldn't pop in see them. When we nailed it down it was all about confidence. It was about them feeling that the team that you’d got could sort out whatever it was you were looking for.  And once you’ve achieved that, it actually doesn’t matter where you are.

I always say we could be providing law, to a large extent - courts notwithstanding and meetings notwithstanding - from a tin shed outside Arbroath. You don’t always - and this is the really interesting point for Lincolnshire because the county is so large – need your lawyer to be at meetings. I’m not suggesting we are going to decamp to Scotland – of course we do need a presence here, but there are different ways of looking at it.  

We do, however, also have a branch structure with some of our lawyers still sitting in their original districts, in part because some of the district councils want somebody on site. In fact, the retention of the branch structure is another of the reasons it worked, It meant that on 30 March 2008, our branch lawyers were sitting in an office at a desk doing legal work.  On 1 April 2008 they were doing exactly the same thing with a different letter-headed paper. That’s quite important for people, because too much change can often be too unsettling.

By retaining the branch structure and assimilating people in this way, we were able to grow this thing much more easily because we didn’t have to go through any of those real difficulties. Yet while people may be sitting in North Kesteven or South Holland, they’re not just doing that council’s work. It also helped that there were no redundancies as a result of the creation of a shared legal service.

Interestingly the councils involved in Lincolnshire Legal Services are not so bothered as they were about having lawyers on site. In 2008, many were very insistent that they had to have somebody on site. Now, some are happy if send somebody over once a week or once a fortnight for a day so that they have got a 'drop in'.  It’s interesting how perceptions move.

How does the shared services arrangement add value?

In terms of cashable efficiency savings, we paid for our set up costs in year one and we’ve driven £246,000 a year efficiency savings out of this organisation in the nearly three years we’ve been running.

The obvious efficiencies are things like a combined IT system, a single case management time accruing system and we have also gone for a single electronic library system. There are massive savings to be made out of that, especially in a buyer’s market like this.

In terms of the way work is allocated, what we’ve done is look at ourselves as a set of functional delivery vehicles. Culturally, the biggest issue between the districts and the county was that county lawyers tended to be specialists in a particular area, while the district lawyers tended to be generalists. That is a function of size as much as anything.

What we are moving to – and I wouldn’t say we’ve solved it yet, because this is evolving as we go along - is to a bit of a split between the two.

Lawyers are still line-managed by their supervisors and line manager, who are responsible, for example, for ensuring that their teams are meeting their chargeable hours targets and for the delivery of a particular legal function. But the legal services managers are not just responsible for the delivery of legal services to a particular district or the county, but they have a responsibility for delivery of a functional area of work to the whole practice.

For example, we have advocates who have been working in specific areas. Whilst it helps to know the basics and a lot of the law behind the cases you’re handling, advocates have a set of skills that are transferable into other areas. So we’re using people far more for cross-area working as well as providing the opportunity for some lawyers who have specialised in a particular area for a while to look at other areas.  

This is actually becoming increasingly important as a result of the economic situation that local government finds itself in. We have, in effect, a recruitment freeze, so we have to be able to develop people to a situation where they are more flexible so that we can mobilise our resources to meet  whatever work comes in. It’s a lot like private practice, but it’s quite different from the way local authorities have been working until recently. Lawyers are now working in teams much more than they were and developing portfolios of skills that they are able to deploy at any time.

There was a bit of scepticism at the start, but people are coming out of their comfort zones and the whole team is much more fluid now. It has really pulled us together as a team and it’s also driven out a large amount of efficiency just by thinking about what you’ve got and using it a bit more intelligently really.

This is important because in the present environment, we do have to keep horizon scanning to make sure that we’re ready for whatever happens next.

Do you have a formal monitoring system in terms of turnaround times and quality of work?

Yes we do. Another of the things that has made this work is that our governance arrangements are relatively relaxed. It’s interesting that when I go and talk to other local authorities who are thinking about this,one of the things they worry about is the governance arrangements. It matters to members and they want to know that they’ve got elements of control.  

We have a Client Liaison Group that meets quarterly and each of the partner authorities has a client officer who is our main liaison. We did also have a member management board to whom we reported, again on a quarterly basis, but now report on an exceptions basis to the regular meetings of the leaders and Chief Executives for the Lincolnshire authorities They meet regularly, so if there is an issue that needs to be resolved, that’s where we would put it. But the Client Liaison Group deals with the liaison with the local authorities and we go direct to individual council’s scrutiny committees, individual council’s executives – however, they want us to report we go direct and do it. Principally  they want to know is that they getting a fit for purpose, value for money legal service. As long as they are, they’re happy.  

What is the future for Lincolnshire Legal Services? Would you consider extending the shared legal service further or to develop a trading model along the used by Kent, for example?

We haven’t ruled anything in and we haven’t ruled anything out really. A number of authorities have spoken to us about the principle of joining our shared service. Equally a number of authorities have decided to use us to pick up work  ‘overflow’ work. Clearly if a party joins a shared service it’s about what they can bring to the table, taking on their share of the risk. There are up-front costs to that. But we haven’t ruled it out for anybody.

On the trading side of things, we already handle a variety of work for a range of local authorities as well as doing property work for the local PCT.

The original SLA between the participating councils is only three years long, so we’re looking at revamping it at the moment. The targets were that we needed to get to a stage where we were getting £200,000 worth of external income a year. Year one target was zero and we made £25,000; year two was £75,000 and we’ve met that. Year three target is £200,000; which we’re on target to reach despite many people being very cautious about engaging lawyers. We want to develop that as the SLA goes through.

How can you convince other authorities that you have the capacity to handle their work and that it won’t be prioritised after Lincolnshire’s own work?

Those are questions that get raised, and my response to them is this: would you be asking a law firm, which may have 150 clients, the same question? No you wouldn’t  If you want to set me an SLA that says I’ll do this within set timescales, please do so and we’ll do it. You’ll be paying us at the end of the day and we rather hope that you’ll come back.

We were also asked similar questions by some of the districts when we were putting the shared services operation together. Our answer is that you know we will: we have a service level agreement, we have  delivery targets and we will deliver them for you.

We went for a big framework agreement recently, which we didn’t get because of concerns they had about capacity. We are asked questions that I do sometimes wonder whether we would be if we were private practice. If I was Lincs Law plc, would they even be thinking about asking me that question!

The other issue that people often raise is conflict of interest. That is an interesting point, because, at implementation, we sat round the table and thought, well, how often do we actually sue each other? Lincolnshire councils have a very healthy approach to getting on with each other but I know that in other places the relationships between councils, unfortunately, aren’t that cordial.  

We have a conflict protocol in place, which says that these issues need to be sorted out on a member to member level, or chief executive to chief executive level. Really Councils should never be suing each other: where is the value for money for the rate payer in the delivery of front line services out of that?

Because of the amount of external work we now do, all of the files now have a conflict check - it’s no different to private practice. There is a conflict protocol and guidance, and if we get to the situation where we can’t act, we would probably be saying to the parties, we can’t act for either of you, but we know a person who can and assist them with that. We have also put reciprocal arrangements in place with other councils.

How confident are you that your model is on the right side of the law?

The law allows the county to provide legal services to other public bodies. Consequently it is insurable and we are, of course, insured for the external advice that we give

There is no legal reason why a local authority legal department, whether it’s working for one client or a lot of clients, cannot operate as part of a shared service; that was the advice we received.

We did take external advice  about the whole principle of the thing, the structure, where we could go, what we could do and we continue to do that. We have to clearly think about who we act for. We can’t go out and act for private practice, in the private sector –even if we could, we’re not in that kind of market. There would be some serious issues about doing that.

We are audited regularly; the Audit Commission are happy it's lawful.

The other issue that is raised with us a lot is the lawfulness of the Monitoring Officer role in a shared services team. Again, it is perfectly lawful. The county’s monitoring officer services aren’t provided by Legal Services Lincolnshire, but we provide monitoring officer facilities for three of our partner councils. The others provide their own monitoring officer services but we give them legal support for that.

Does the Legal Services Act offer additional opportunities for Legal Services Lincolnshire?

As I understand it at present, I don’t think we could go for an alternative business structure (ABS) because I think the structure is aimed at private practice models. We are looking at how it would fit with us if the councils wanted to ‘float us off’, but there’s no real interest from the local authorities’ point of view at the moment. For them, there would be a large element of risk about losing too much control. If we’re able to set ourselves up and charge whatever we want already, what’s the benefit for particularly the founding fathers, as I call them, the six councils who started us off?

But we are looking at the options. It’s about access to other markets from our point of view. We’re not actively seeking to go out and trade in , say, the normal residential conveyancing market; it’s not our USP.  We want to concentrate on what we do best, which is local government law and that’s such a multifaceted beast, why would we really want to go anywhere else?  

We think that there are enough public bodies out there with a wide range of services to be able to call off on us. We don’t need to get all of the law from each council because each council will do whatever it sees as appropriate.  But across the piece, there is enough legal work to keep us well and truly occupied.

What are the main points of advice you would give to other shared services projects from the experience in setting this one up?

Keep it simple, understand what it is you want to do and don’t try to do ‘one size fits all’ for all of the authorities involved. We don’t provide one service to all of the councils involved in Lincolnshire Legal Services  - they’re all different and they have different needs and ways of working.

Don’t spend too much time faffing about. We lawyers are particularly predisposed to that way of thinking. We could still have been sitting round the table, double-dotting the i’s, double crossing the t’s and doing all the risk assessments. You’ve just got to take a leap of faith at some point.

And I wouldn’t start on 1 April again! There are too many other things happening on that day. If I were doing it again, I’d certainly want to think about the option of perhaps starting as a shadow on 1 April and start formally on 1 September, or some other date where there’s nothing else happening. However, if you give yourself a firm target you must get on with it. These sorts of projects will take as much time, energy and oxygen as you choose to give to them. If you’re not committed to it, you don’t want to do it, then stop sitting in nice meetings with biscuits and talking about it; either do it or don’t, because you can talk about it for ever.

I hope the whole shared services thing is going to get a new lease of life. There have been a lot of people who have been paying lip service to it, but I think that the current national and local government agenda in terms of meeting the current economic challenges is going to bring it back up to the fore. It is cheaper at the end of the day, and even if that’s not your driving force - and it wasn’t necessarily for us - it just makes sense doesn’t it?