Entrusted with £2 billion of public funds, the Arts Council England faces scrutiny and legal actions over its funding decisions. Rachel Rothwell meets the lawyers in the front line

There is something unusual about the three-lawyer in-house team at the Arts Council England. They are young, they do not wear suits, they are all Australian and they seem uncommonly upbeat. ‘I find the arts very stimulating, and this has been my most interesting job,’ enthuses head of legal Scott Pugh, an English-qualified solicitor.


Between 2003 and 2006, the council will pump £2 billion of public funds – much of which stems from the National Lottery – into the arts. It has 900 employees, operating from one national office and nine regional offices, which merged into the single organisation in 2002.


Mr Pugh joined the council in 2004, and later hired Australian lawyers Antony Loizou and Amy McLeod as legal officers. He manages a £500,000 annual legal spend – and a very varied workload. As he puts it: ‘We are jacks of all trade, and masters of some.’


The council is a fun place to work, despite the team being so busy ‘there is no time to breathe’. Mr Loizou explains: ‘A lot of staff here are artists. In terms of their mannerisms, they are a delight to work with, and also their friendliness and their spirit. In terms of dress, there are people who wear stud rings and have bright hair.’


Ms McLeod adds: ‘In my first week, I went to a meeting at one of our regional offices in Brighton. I was quite shocked to see people with eyebrow studs. You also see people wandering around in hippy clothes with lots of beads.’


Ms McLeod was brought in last July to handle capital projects, such as investment in new premises for arts organisations, and to reduce the legal spend in that area. She says: ‘The projects are often worth at least £250,000, and can be multi-million pound projects, such as the refurbishment of the Royal Festival Hall. We have recently given £50 million to the Royal Shakespeare Company [for its waterfront development in Stratford].’


While Ms McLeod sticks to the big capital projects, Mr Pugh and Mr Loizou handle everything else that is thrown at them. Although the team is invited to the occasional première, they insist that much of their work is ‘not that glamorous’. The number of commercial contracts to be drafted and reviewed is daunting – and, they explain, they also find themselves called in to help whenever the many artists and others within the organisation read the word ‘law’ or ‘contract’.


Since it is handling public money, everything the council does is heavily regulated and scrutinised, and it has been ‘quite a target’ for freedom of information (FOI) requests, with the number of requests already running into three figures. ‘I have had to become an expert on freedom of information,’ says Mr Pugh.


Then there is the matter of being sued – a not infrequent occurrence for an organisation that decides where to invest billions of pounds worth of funds. There are plenty of disgruntled artists out there.


The latest judicial review action to hit the council surfaced last July, when it withdrew funding from black theatre group Talawa Theatre Company’s £9 million Westminster theatre project. Talawa says the building now stands half completed as a result of the decision to cut funding.


Mr Pugh says: ‘The Arts Council has always been very committed to black theatre. At the moment, we are trying to resolve this dispute by alternative dispute resolution. We have had to call in outside lawyers, Bircham Dyson Bell, but the in-house team has been very involved, co-ordinating meetings to formulate instructions. We also had to deal with Talawa’s FOI requests.’


Mr Loizou adds: ‘But the arts industry is not that litigious. We always try to take a conciliatory approach, and be open and transparent.’


That said, the lawyers are no strangers to litigation – and they normally seem to win. Mr Pugh recalls: ‘We have been sued by someone for what they alleged to be data protection incidents, relating to research they had done on artists and diversity. He lost a pre-action disclosure action against us.


‘Then there was another fellow who sued us because we had not provided [several hundred thousand pounds of] funding. He alleged we had entered into a contract with him just by holding ourselves out as being able to provide grants. It was bizarre, but we still had to defend it. We won a strike-out action.’


Much of the department’s work involves handling the legal aspects of the council’s many special projects – one of the more enjoyable aspects of the job. Mr Loizou enthuses: ‘I have been involved in a project called Anthem for Northumberland, with award-winning music artist Nitin Sawhney. The project gets school kids together with music producers and writers, to make a film about the region. I handled the recording and publishing contracts, rights clearances and approvals, and intellectual property rights. It is hugely satisfying as you really feel that projects like this are doing good in the world.’


Another initiative that the legal team itself is leading is called ‘Artists and the Law’, a drive to make artists more business savvy. Mr Loizou says: ‘I actually think that art is not growing as it should do because people are so worried about infringing others’ rights.’


Mr Pugh adds: ‘What countries like Australia and the US have is a not-for-profit advice service for artists. We might look at setting up such an organisation – but we will need help from lawyers who are prepared to do pro bono work.’


The team has also been involved in the recent proposals for legislation to combat religious hatred. It has suggested wording that will not prevent freedom of artistic expression, which has been put forward in meetings with the Home Office. Last week, the government suffered surprise defeats in the House of Commons on the Bill and agreed to accept amendments which should allay the fears of the artistic community.


Last summer, the legal department got to grips with its external legal provision, holding a formal tendering process to select a panel of firms for more specialist work. Before that, firms had been instructed on an ad hoc basis by the nine different regions, with no consistency between the offices. Mr Pugh says: ‘We have procurement procedures which require us to demand value for money, and we had not really tested the market before. We have been quite tough in getting the law firms to agree to certain rates.


‘It was a very large exercise – we had 125 submissions made by firms. With the benefit of hindsight, if we did it again we would make it much smaller. We selected on the basis of sector experience. It’s important that we get on with the people at the firm, but the most important thing is that they need to be giving us bloody good advice.’


He adds: ‘We review the panel firms’ performance in an ad hoc way, and talk to key players in the Arts Council to see if they are happy with the advice. We expect lawyers to be up-front about the respective risks of various options. Given our budgetary constraints, we can’t afford a bells-and-whistles approach in every instance, particularly where risks are relatively low.


‘We expect our lawyers to sensibly provide quotes before taking on jobs, and make every effort to stay within the budget. We ask all our solicitors to provide fully itemised bills. They must appreciate that we are a public authority which is ultimately accountable to the tax-payer.’


Mr Loizou adds: ‘We don’t want over-servicing. In that way, the in-house team is a good cost-saving measure, because we know what we don’t need.’


The government is currently reviewing the Lottery ‘good causes’ for beyond 2009, with speculation that health will be included for the first time – possibly at the expense of the arts. The Olympics are also expected to draw heavily on Lottery funding. Mr Pugh says: ‘It is important that the arts continue to receive funding, because they have a really big impact on the well-being of society as a whole.’


Is an appreciation of the arts a must for working in the council legal team? ‘It helps to be interested in the arts,’ says Mr Pugh. ‘But at the end of the day, we are lawyers.’