ACSeS conference report – Facing up to the future

The theme of this year's ACSeS conference was leadership. With the range and complexity of challenges facing local authority legal departments, it is needed more than ever, writes Derek Bedlow.

A year which has seen a general election, a change of government, fundamental regulatory changes and a savage spending review was always going to create some points of debate for heads of legal at this year's conference of the Association of Council Secretaries and Solicitors (ACSeS), and so it proved.

The theme of the conference was leadership, consistent with outgoing President Mirza Ahmad's theme for his time in office, but it was a theme very much set in the context of the big question being asked by delegates: how do we cope with these changes?

The pace and scale of change in local government was demonstrated by the theme of the technical sessions, which covered most of the big issues facing local authorities – such as Total Place, TUPE, partnership working with the third sector and, perhaps most importantly of all, how councils can make cuts without ending up in court. Summaries of all of these topics will be published on Local Government Lawyer over the next few weeks.

The phoney war

The overall challenge facing local authorities – and their lawyers – was spelt out by Steve Freer, chief executive of the Chartered Institute of Public Finance and Accountancy (CIPFA).

One overriding issue facing councils is that, despite the hype, the Comprehensive Spending Review (CSR) did not provide much clarity about where the cuts would fall. This month’s grant settlement will provide a bit more detail, but it will be Spring by the time that this is worked into councils’ budgets and the cost-cutting programme will begin in earnest.

In outright terms, the cuts will take local government back to 2003 levels of funding. “This may not sound so bad but it's about the increment of change – the pain is at the margin,” Freer said. “It's estimated that local government needs a 5.6% increase in income a year (including inflation) to maintain services, whereas the CSR suggests a reduction of 6.7% year-on-year."

The implication, Freer said, is that the public has yet to feel the impact of the spending cuts, meaning that much of the litigation that is likely to result has yet to become apparent. More fundamentally, it also means that once the practical effects of the cuts do begin to be felt by voters, the government will come under pressure to amend or water down some of its policies.

Furthermore, come the next rounds of local elections, the usual cycle of opposition party winning control of councils is likely re-assert itself, pitting local against central government again in a re-run of the 1980s. “The reality will quite different from the rhetoric,” Freer said. “Real services will get cut and the public will get annoyed. The next six months will be critical.”

For this reason, Freer added, councils must be prepared to determine their own strategies and stick to them, regardless of the noises coming out of central government. He also put a question mark against the government’s ability to fully deliver on its localism agenda when push comes to shove.

“I am not cynical about the government's commitment to localism, but the question is: how will it play out? There will be battles and fall-out along the way and the question is whether these good intentions will survive a fight between local and central government. The message is that once you've decided in your strategy, you need to be impervious to what the government is saying. Their enthusiasm for devolving power may yet wane if the need to make cuts diminishes or if some authorities find it too difficult. There is a serious danger that localism will remain rhetoric rather than reality.”

The immediate task of local government senior management is make the best job it can of implementing the cuts, Freer suggested. “Nobody expected to be dealing with downsizing, but it is in our interest to do this as well and impressively as we can, regardless of what we think of the government's policy,” he said. “This is our job for the term of this parliament. This environment will become the new normal, although it should get a bit easier with time.

“Money did get pumped in at too fast a rate, even if the economy could afford it. If we find ourselves in that position again, we should be more restrained about pumping money into public services; otherwise you end up with a boom-bust cycle. Creating and then abolishing things like RDAs and quangos is not a good way to run a business.”

Recovery position

For lawyers and others working in the so-called ‘support services’, however, this is likely to prove doubly difficult as back office functions are set to bear the brunt of staff and resource cuts. Stephen Turner, chair of the Solicitors in Local Government group (SLG), emphasised the need for lawyers to remain a central part of council’s management structures and decision-making processes.

“There's no doubt that there's a need for lawyers at the heart of local government. The rule of law is paramount and the need for lawyers is greater than ever, especially with the implications of the Localism Bill which will involve the law in some form or other. Local authorities are already complex webs of legislation and guidance and the complexity of the Localism Bill will create unforeseen legal consequences. There's a fundamental danger in the drive to get more from less if it impairs the ability of the lawyer to give advice to professional standards.“

Freer suggested that the extent to which lawyers are affected by the cuts depends on how valuable their contribution to the present situation is considered to be.  “Professional jobs are not as appreciated in local government as they should be and they could be subject to deep cuts,” Freer said. “It is crucial for lawyers to position themselves so that they are seen as part of the solution to dealing with the cuts, and part of the machine that can deliver the changes needed to cope.”

“Often we neglect management responsibilities when we are busy elsewhere, which can be dangerous. Lawyers are part of the creative bits of the organisation, but the challenge for heads of legal is to keep their roles as optimistic and proactive as possible.”

The chair of the session, Municipal Journal editor Mike Burton, suggested that the uncertainty created by the cuts might prove to be an opportunity for legal departments to show their value to their organisations.

Mirza Ahmad, the outgoing ACSeS president, also suggested that the current turmoil might – in the medium-term at least – prove to be an opportunity for legal departments as well as a threat. “Whilst the current climate may lead to a financially-driven agenda over the next two to three years, the challenges and opportunities created will require great legal, governance, partnerships and democratic decision-making skills and abilities to support the members in the de-commissioning, creation and delivery of these challenges,” he said.

“The climate in favour of finance officers for senior positions will, therefore, turn and ACSeS members will need to be ready and willing to grasp the opportunities and lead on these corporate and strategic challenges.”

Amongst the trends that present the best opportunities for local authority lawyers to show their mettle is a renewed focus on risk management at many councils, as the localism agenda means that councils increasingly find themselves having to wean themselves off their reliance on central government guidance and funding. Another is the contribution that lawyers can make to the changing governance arrangements that local authorities will need to put into place to deal with changing structures for service delivery.

However, the challenge here is for lawyers to provide this advice in a constructive way. Steve Freer suggested that the imaginative use of and open-minded attitude to the proposed general power of competence amongst lawyers would be an important way for lawyers to show that they can be part of the solution to budget cuts rather than part of the problem.

“I hope that the general power of competence transforms the thinking in local authorities rather than just being something that is used at the margins,” Freer said. “My personal hope is that it will take some of the pressure off ultra vires and enable us to undertake projects without the never-ending process of asking: have we got the powers? That is a problem sometimes when working with lawyers – the delay this causes is expensive and is something we should try to address.”

One council that is taking steps to address this issue is Birmingham, which is developing the 'relationship lawyering' concept within local government – refocusing and redefining the role of the legal adviser to develop a clear alignment with the corporate teams the work with. Each of the council's directorates is assigned a lawyer (two for children to reflect child protection and education functions) to co-ordinate workflow and maintain a harmonious working relationship with the client department. “Clients do not want legal to be something separate from them,” Birmingham's Assistant Director of Legal Services, Jane Robson,  told the conference.

More generally, there was general agreement that legal departments do need to do more to show their councils what they can do. As one delegate put it: “We need to think outside the box. As heads of legal, if we just carry on as we are, our roles will be cannibalised and marginalised, through shared services and outsourcing.”

Models on parade

How legal departments can achieve these worthy aims against a background of jobs cuts and falling budgets, however, is another question. Unsurprisingly, much of the debate surrounded the ways that departments should organise themselves in order to maintain the services they provide at a time when the demand for legal advice is set to rise.

In September, an ACSeS committee developed a range of seven business models for legal departments – from the traditional department structure at one end to a fully outsourced model at the other. The chairman of the Solicitors Regulatory Authority (SRA), Charles Plant, was on hand to explain that one of the models for the delivery of legal services envisaged by the SRA after the Legal Services Act 2007 becomes fully operational is for in-house teams to create new entities to offer legal services to the public and that he saw no regulatory reason why local authority could not do the same.

At a later session, the proponents of some of the more radical models already in existence – those at Kent and Essex county councils – were on hand to explain how their systems worked.

Kent’s trading model – which sells legal services to other public sector bodies - is well-known and the legal department has linked up with law firm Geldards with the aim of selling the concept more widely.

Although some in other local government teams have queried whether the Kent model is legally permissible, Geoff Wild, director of law and governance at Kent, explained that his department’s ability to sell its services at a profit to other public sector bodies was based on a combination of powers granted to local authorities by successive Local Government Acts, including those passed in 1970, 1972, 2000 and 2003, including use of the well-being powers provided by the last of these.

Moreover, Wild added, both the Solicitors Code of Conduct and the Bar Code authorise in-house lawyers to “act for another organisation or person to which or to whom the employer is statutorily empowered to provide services” (solicitors) or, for barristers, “where the employer is a public authority…an employed barrister may provide legal services to another public authority on behalf of which the employer has made arrangements to supply legal services.”

On the opposite side of the Thames Estuary, Essex Legal Services Partnership is a joint arrangement between Essex County Council, 11 of its district legal teams, two unitary councils (Southend and Thurrock) and the Lee Valley Regional Park Authority. It has also recently been joined by Suffolk County Council and may soon include a number of Suffolk’s district legal teams.

Unlike more formal shared services structures, such as that between Lincolnshire County Council and a number of its district councils, Essex Legal Services is not a single shared entity, but a partnership operated through a partnership board composed of all of the respective heads of service funded by an annual contribution from councils involved and project funding from the local Regional Improvement and Efficiency Partnership.

Member authorities share a case management system, an extranet and website, jointly procure legal and other services, conduct joint training exercises and have created a single market to trade legal services between one another. Plans for the future include the provision of legal support for parish and town councils and the creation of its own locum agency.

Describing the present arrangement as "mix and match", Essex County Solicitor Philip Thomson said that the final shape of the partnership was unclear at present. Yet while means remain a work in progress, the ends are very clear.

“This is about creating a renaissance in local authority legal services,” Thomson said. “We need to rebuild confidence in the importance of law to local government.

“We have not merged the departments because we wanted a solution that everybody could be part of, given that they have different views. But our partnership is designed to be flexible, so that would be possible. Nobody yet knows which model will prove to be the standard of the future. Which will turn out to be VHS – and which Betamax?”