Lawyers in Local Government and LGA obtain advice from QC on trading
Lawyers in Local Government (LLG) and the Local Government Association (LGA) have jointly obtained advice from a QC on the issue of local authorities’ ability to undertake reserved legal activities for other public bodies.
Writing on her blog last week, LLG President Bev Cullen said: “Members will no doubt recall the stance of the SRA last year concerning the ability of local authorities to undertake reserved legal activities for other public bodies. The SRA view was that only authorities that had established an ABS [alternative business structure] could undertake this work.
“As this is an important issue for members, LLG and the LGA have jointly instructed a QC for advice on the issue particularly in regards to the definition of 'public'. The advice has now been received and we are in discussion with the LGA as to what action we will take to pursue the issue with the SRA.”
The issue came to the fore in December 2015 when a senior official at the Solicitors Regulation Authority, Executive Director for Policy Crispin Passmore, expressed the view that legal departments did need an alternative business structure to carry out reserved activities work such as litigation and court advocacy beyond their immediate area.
Central to whether an ABS is needed is the question of whether client public bodies of local government legal departments are members of ‘the public or a section of the public’, for the purposes of section 15(4) of the Legal Services Act 2007.
The SRA’s Passmore told Local Government Lawyer at the time: “There are lots of grey areas with this sort of definition and it will always be very fact sensitive, but examples might be a council saying ‘We want to do a deal with the local health authority and the local fire authority, where we pool resources in lots of different ways because we are all under budget pressure and one of the things the council does is deliver legal services to all in this little group'. To me, that probably isn’t delivering services ‘to the public or a section of a public’, it's to a closed group.
“If on the other hand, the local authority in question decided to market their services to all public bodies around England and Wales, that may well be beyond the small club and that might be you are trying to deliver to a segment of the market, a segment ‘of the public’ and ‘the public’ is institutions as well as individuals. That has gone beyond the sharing of in-house function and that’s where it’s trying to sell services for profit as part of its revenue-raising as a local authority.”
If the SRA is right and that, in carrying out work under, say, the Local Authorities (Goods and Services) Act 1970 for other public bodies outside the local group in Passmore's example, local authorities are carrying out reserved legal activities for ‘the public or a section of the public’, section 15(4) of LSA 2007 effectively means local authorities can undertake this ‘reserved’ legal work only if they do so through an authorised entity such as an ABS. Local government legal departments are not authorised entities.
In response to Passmore’s comments, Geoff Wild, Director of Governance and Law at Kent County Council, pointed to an opinion obtained in 2013 from James Goudie QC, a leading local government silk at 11KBW, who concluded that “local authorities and other ‘public bodies’ for the purposes of [the 1970 Act] are manifestly not ‘the public’ nor ‘a section of the public’ and that therefore Section 15 of the LSA does not prevent [local authority solicitors] from providing services to such bodies”.