Page 1
Page 2
Page 3
Page 4
Page 5
Page 6
Page 7
Page 8
Page 9
Page 10
Page 11
Page 12
Page 13
Page 14
Page 15
Page 16
Page 17
Page 18
Page 19
Page 20
Page 21
Page 22
Page 23
Page 24
Page 25
Page 26
Page 27
Page 28
Page 29
Page 30
Page 31
Page 32
Page 33
Page 34
Page 35
Page 36
Page 37
Page 38
Page 39
Page 40
Page 41
Page 42
Page 43
Page 44
Page 45
LocalGovernmentLawyer The Legal Department of the Future February 2016 33 Tougher times for external providers Those who cannot meet needs and achieve further savings within their current structures look for different ways of delivering legal services. The responses to the survey suggest that heads of legal will not be turning to external providers to fill the gap in capacity or skills. More than 90 of respondents already outsource less than 20 of their legal work and more than half expect their budgets for external work to decrease with only 10 expecting an increase. The main reasons reported were costs with almost half considering rates for both routine work and specialist work to be too high. This will be unwelcome news to external legal providers who support local authority services although use of panels for both barristers and solicitors is widespread with three quarters of respondents using solicitors from panels and around half using barristers from panels. A surprising number report that they do not use panel suppliers at all 26 of respondents for solicitors and 35 for barristers despite the fact that those who do report reductions in legal costs of at least 10. This is perhaps an opportunity for those who do not currently use panels to find a way of making further savings. Shared services remain popular with more than a quarter of respondents already in some form of shared service and the same proportion actively considering it. Shared services have been a possible solution to the issues currently facing councils for many years yet more than half of respondents report that they have no plans for a shared service. Shared services first or last resort Interestingly the top three reasons given in favour of a shared service seem to be connected with budget issues namely internal efficiency and productivity gains financial pressures on legal departments and building resilience. The top three reasons given against a shared service seem more related to cultural issues namely members and senior officers want to retain an independent legal function sharing leads to a disconnection between legal teams and clients but also because the needs could be met and efficiency improved in the current structure. The comparison of the reasons for and against suggests that some councils will only consider shared services once they have exhausted all possibilities for efficiency savings within their current structure. We could therefore see a further growth in shared services if councils reach the position where they have no other alternative. Some respondents consider it preferable to make a positive and pro-active choice to share services before they reach the stage where there was no other way of survival. A quarter of respondents either have or are considering an alternative business structure ABS. However it is clear that an ABS is not always necessary to enable a council to trade as although only 25 of respondents either have or are seriously considering that option more than half of respondents are already trading services with other organisations. Some respondents recognised that an ABS was necessary for them to keep existing clients particularly if their councils strategy included transferring council services to limited companies because even if the companies were currently wholly owned by the council there was possibility of private involvement at a later stage and the in- house team wanted to be in a position to continue to work for those clients in that scenario. Building the client base A considerable amount of trading is possible within existing local authority powers however and it seems that there is a large potential market. Respondent councils are already selling services to ALMOs Blue Light services and charities to name but a few. There is also a healthy market with schools with around three quarters of respondents already selling legal services to both maintained schools and academy and free schools. One view offered is that trading services seem attractive to local politicians who are more reluctant to enter into a shared services agreement because they still feel that it is our legal department whereas shared services are sometimes thought to result in a loss of control over the legal department. For those that are not trading services the main reason given by over three quarters of them is that they do not have sufficient resources to take on extra work. Other reasons include lack of experience in working for external clients lack of sales and marketing experience and issues relating to competing needs of their own authority. Only 32 cite a lack of demand as a reason. This suggests that there is a potential market that some councils are unable to exploit because they do not have sufficient resources to do so. This is an interesting dilemma and one that tests a councils appetite for commercialisation. With the right mix of entrepreneurial skills it ought to be possible in some cases to create a convincing business case for increasing an in-house team to allow it to exploit the potential market. This is not without risks and it seems that the majority of councils who are trading services have started on a small scale using existing capacity until they are reasonably certain that the work will continue. There are mixed views from respondents as to whether trading services will put them in competition with each other and erode the collaborative Although best practice can be shared there is no one size fits all approach and heads of legal have to create legal services that meet the needs of their own council with whatever budget is available to do so. It seems that the majority of councils who are trading services have started on a small scale using existing capacity until they are reasonably certain that the work will continue.