Legal services will be a future ‘boom area’ for councils, according to a report from a local government thinktank.

A quarter of councils currently generate external income from legal services, while a further 43% are considering it, according to Localis’ report Commercial Councils: The rise of entrepreneurialism in local government.

The report says local government, suitably empowered, can become the ‘engine room’ of the public sector, delivering services including legal to a range of public bodies.

Kent County Council’s legal services arm, for instance, generated a £2.4m profit on £12m of activity in 2012/13.

LGGS, the ‘wholly joint venture’ established by Cambridgeshire and Northamptonshire county councils in 2010, was cited as an example of intra-public sector trading - part of a ‘growing trend in joined-up vehicles and increasingly blurred geographies’.

The report states: ‘What we are therefore seeing is a growing understanding that the provision of services will not just be divided between public, private or third sectors,but geographically within the public sector itself.

‘With around half of authorities currently running some form of joint venture with neighbouring and more distant councils, the increase in the aforementioned areas such as procurement and legal services (less reliant on geographic knowledge than,for example, housing or waste) may well partly be in this form.’

Meanwhile, Cambridgeshire County Council and Northamptonshire County Council announced yesterday the launch of a trading venture LGSS Law Ltd after being granted an alternative business structure licence by the Solicitors Regulation Authority.

The firm was created by integrating the two councils’ existing shared in-house legal teams. The councils said the team already supported approximately 75 organisations and the conversion into a regulated legal practice would enable them to support a wider range of clients.

The underlying driver, the councils said, was to enable the provision of ‘highly cost-effective and resilient legal services, benefitting from economies of scale’.

LGSS Law Ltd director Quentin Baker (pictured) said the team of 85 lawyers will focus solely on the public and not-for-profit sectors, including charities, health and social landlords.