Kent looks to separate out legal function into arms-length trading company

Kent County Council (KCC) will next month consider whether to implement a package of reforms that could in time see its legal services function separated out into an external, arms-length trading organisation.

This trading company would eventually compete for instructions from both the private as well as the public sector.

However, the transfer of KCC’s lawyers into a separate company will have to wait until alternative business structures are permitted.

This new regime is not expected to come into force until October 2011 at the earliest, with speculation growing that implementation of this part of the Legal Services Act might be delayed. It is understood that provisions allowing in-house local authority legal services to trade with the private sector through a company might not be in place until March 2013.

The proposal to separate out the legal function is part of KCC’s Change to Keep Succeeding reform plan, which is designed to transform the council’s operating framework and save the local authority £340m over the next four years.

The plan will see Kent establish five directorates, namely: business strategy and support; customer and communities; enterprise; families, health and social care; and education, learning and skills. This restructuring will make the council “work as a more integrated organisation rather than as a series of federated services”, it claims.

A role of Director of Governance and Assurance (Monitoring Officer) will be introduced, reporting into the Corporate Director for Business Strategy & Support. This post would be at a lower grade compared to the current Director of Law and Governance role, which would disappear.

The Director of Governance and Assurance post would “reflect the increased need of the authority to build upon its current governance environment and to ensure in the light of the very significant changes both policy wise and financially that we are facing, the Council is spending its money wisely and taking its decisions well”.

The restructuring proposals will be considered by the county council on 16 December. If approved, and subject to consultation, they would be implemented by 4 April 2011. The separation of the legal services team would follow later.

A KCC spokeswoman said: “Kent County Council so far has a very successful model of legal services and we are very proud of that. We have some significant challenges ahead of us and we are transforming the way the whole organisation operates to make sure we deliver our services to residents in the best possible way.

“As part of that restructure, we are exploring the best way forward for our legal services, which includes the possibility over time of developing them into an arms-length company. However, this is very early stage thinking and the restructure is still at the consultation stage.”

In its response to Change to Keep Succeeding, Kent’s opposition Liberal Democrat Group said that it had “seen no evidence to support the need for a company to be created from Legal Services”.

The submission added: “We would be pleased to receive details of what such a company could achieve that the current Legal Department cannot, together with an assessment of the extra costs to the authority to cover the need for such a company to indemnify itself against claims from KCC and other clients.”