Another year, another budget, and another debate about class. It was ever thus. But aside from ‘them working class lot’ with their bingo and beer, it appears that local authority legal teams are becoming more and more drawn towards privatization, such are the cuts being made to the public sector.
According to the Joseph Rowntree Foundation, the country’s 363 local authorities are expecting 30% cuts from their budgets between 2008 and 2015, with the local government’s share of the economy going down from 5.1% to 3.6%. A report in The Lawyer this week has concluded that legal services will be the most badly affected by these cuts, despite the legal requirements of most local services being on the rise – the population is apparently about to grow by 3.5 million in this same period. The article reported that legal departments in Bristol, Manchester and Newcastle city councils will have to find savings of £230,000, £150,000 and £50,000 this year.
‘Streamlining’ is the hardest word to say, it seems, but it’s a word that most councils will be using on a repeated basis.
As a response to this, we are already seeing council legal teams pairing up with other council legal teams – there are 17 shared local authority legal services in the country as of writing. But more striking is the emerging trend of local authority legal teams gaining alternative business structure licenses and therefore becoming a separate organization to their public sector authority. The Lawyer lists Buckinghamshire County Council, Harrow, Barnet and Lambeth as councils looking to pursue this route. It may not be long till we see Buckinghamshire Law+ in action – apparently in partnership with the Buckinghamshire and Milton Keynes Fire Authority.
This privatization process will allow authority legal teams to compete for clients and work on their own terms, effectively becoming private practices. It will signal a significant shift in the way in which local government legal departments work but considering the ongoing plight faced by local government amid continued austerity, it may prove to be the most viable option.
As it stands, according to Oxford Economics, the outsourced market for public services already has an annual turnover of £82 billion and this could rise to £140 billion by the end of year, according to analysts at Seymour Pierce. So legal teams are not alone in being affected in this way by current public sector cuts – “it’s like the trains all over again”, some might say.
The caveat is that the increased reliance on outsourcing deals with local authorities does not always go particularly well, with government contracts with Capita, G4S, Atos and Serco all coming into scrutiny in recent scandals. These scandals can themselves reap severe costs – last summer Somerset County Council had to pay £5.9m (£2m of which was a legal bill) to settle a contract dispute with Southwest One – an outsourcing partner owned by IBM.
The Lawyer article on this topic concluded with this warning:
Although change lies ahead, with a parliamentary committee calling for tighter controls on public sector contracts only last week, outsourcers expanding into the local authority legal market are clearly doing so at a particularly sensitive time.
The story may strike some as typical of an era of continued Tory privatization, but the flip-side is that it may be an example of innovative new legal business models in action. The story is just as typical of the current need for legal businesses and authorities in a continually disruptive era for the profession.