Insight Local Government Lawyer Insight July 2017 15 this might have on their need for legal services. The requirement should be defined at an authority and departmental level, and heads of legal should not be afraid to challenge client departments, because it is not uncommon for departments to respond to reduced capacity in their own teams by referring more work to legal services. This may be appropriate, but it may be more effective at corporate level to increase capacity where it is needed, rather than increase legal expenditure. There should also be a sense check at corporate management team level, to ensure that the authority as a whole is prepared to endorse the legal need established by each individual department. Properly understanding the need that the legal department is expected to meet can be a complex and time consuming task, but one which is worth the investment of time as it is the starting point to becoming more efficient. As part of this exercise it is worth seeking views as to how the client departments consider the needs might best be met, so that their opinions can be taken into account. There may be particular projects or areas of work where they have a firm view about whether they would like support from the in-house team, or prefer external legal advice. That is not to say that this view should necessarily be the deciding factor, but it is certainly an element to consider. Assess how the authority’s legal needs are currently being met Having identified the need, the next task is to thoroughly understand whether the current service meets the established need, and what could be done differently. Again, the work involved in this should not be underestimated. If it feels too daunting to tackle the whole of legal services at once, or there is not the capacity to do so, benefits can still be gained from addressing one area of work, particularly one of high demand. This stage requires a thorough analysis of the work-streams, and who is doing the work, breaking down what work is done internally, and by external suppliers, and in both cases understanding the levels of expertise used on the work. It is not uncommon to find that in an internal team, over time, work has defaulted to lawyers who may be more senior than is strictly required for the level of work. Resetting the levels of expertise and experience at which work is carried out can be a sensitive subject; some lawyers may be unwilling to leave their comfort zone to carry out more senior work with which they might be less experienced, or equally reluctant to allow certain types of work to be carried out at a more junior level. Engaging the team in these discussions is crucial to ensure successful delivery, but heads of legal should not shirk from exercising leadership, and being firm about changes that are required to achieve efficiencies. It is also necessary to drill down and thoroughly understand the cost of processes. This may be difficult to determine in practice, because in addition to the budget held by the in-house team, some departments may have additional direct legal spend which may be hard to identify, and accounting practices may make it difficult to extract third party costs from expenditure recorded as legal spend. Identifying the cost should not only concentrate on the cost of the person carrying out a particular process, but all the peripheral costs such as a share of overheads, and even the lost opportunity of what else the person might be doing if they stopped that task – for example, could they be doing something else that might generate income for the authority? Understanding the alternatives After analysing how needs are being met, the second stage is to consider alternatives. Nothing should be ruled in or out at this stage. Although there may be strong political or cultural reasons why a particular alternative might be unacceptable, it should still be considered (although not wasting too much time on detail if it is a non-starter) and the reasons why it is not acceptable will form part of the business case to support the recommended option. There are many ways of providing an alternative to the current provision, including: ● Different structure to the internal team ● Different mix of work carried out by the internal legal team ● Different processes ● Technology ● Different arrangements for use of external legal suppliers, e.g. establish or access an existing framework arrangement Shared services As part of this exercise, it will be necessary to recommend growth, or reductions, in service. It could make sense to concentrate on growing areas where there is already strong expertise, and perhaps an ability to develop an income stream from that expertise. It could also make sense to grow an area of work where current expertise is limited or non- existent, but where it would be beneficial to the authority to have in-house provision to support that area of work. Areas that might be worth reducing service are those which cost more to provide than they deliver in benefits, but care must be taken. For example, prosecutions for littering offences are a prime example of work which can cost more to provide than the authority recovers in fines and costs, but there may be a strong political desire to be firm on littering offences. Any target operating model that changes the status quo will be time consuming and potentially complex. It will be necessary to gain the support of the in-house legal team, client departments and senior management, and ensure that they are fully on board with the aims. [But] if the business case supporting the target operating model is strong enough, the project is likely to be worth pursuing despite any hurdles encountered.