Potential uncertainty over how local authority legal teams can work under Solicitors Regulation Authority proposals has driven a group of East Anglia councils to set up an alternative business structure.
The four founding councils of shared legal service nplaw - Norfolk County Council, Norwich City Council, Great Yarmouth Borough Council and South Norfolk District Council - have agreed to set up an ABS. The venture has also been separately agreed by Norfolk County Council, which will be the sole shareholder of the new entity.
Chris Skinner, assistant practice director at nplaw, told the Gazette that the councils are hoping to submit an application to the SRA before Christmas.
The development comes as the regulator undergoes a review of its handbook, including rules to ensure that charities and not-for-profit bodies are regulated in a 'flexible and appropriate' way. These could apply to local authority services.
Skinner said: ‘We provide services in some specialist areas to local authorities across England and Wales. The SRA’s view is that a local authority cannot provide services on a wide scale to other local authorities beyond its geographical area. They say it’s prohibited by the Legal Services Act 2007.’
Under the proposed handbook changes, 'we would not be able to provide services to lots of local authorities that we do at the moment’, Skinner said.
The group Lawyers in Local Government, in its response to the SRA’s Looking to the future consultation, said clarity was needed on what is meant by ‘public or section of the public’ in the context of local authority-employed solicitors who wish to provide advice to other bodies within the powers set out in the Local Authorities (Goods and Services) Act 1970.
It called on the regulator to make a joint approach to the oversight regulator, the Legal Services Board, for government clarification on the wording, which originates from the 2007 act.
Skinner told the Gazette that the new ABS will be called Anglia Law Ltd.
Unlike other local authority ABSs that have transferred staff into the ABS, staff from nplaw’s 87-strong legal team - which includes 65 lawyers - will be seconded to the new entity as and when they are needed. However, the situation will be kept under review.
Skinner said: ‘From our point of view it’s easier to do it on an incremental basis. It feels much easier to us than scrapping the county as the employer and starting with a new employer.’
A report of the council’s policy and resources committee states that a ‘growth strategy’ will help to achieve an additional surplus of £50,000 to £300,000 from 2017/18 through to 2019/20 respectively.
Skinner told the Gazette: 'We accept that the current local authorities we work for have had massive cutbacks over the last few years, spending less on legal services. We want to be able to replace that lost income.’ Plans include growing parts of the business that nplaw has become well-known for, such as compulsory purchase projects.
Skinner added: 'We also want to offer ourselves when local authorities have a crisis and need some work because, for instance, staff have left. Think of us instead of locums, for example. We’ve had some success picking up work for short-term arrangements where a body has been overloaded or someone has left.’
The committee report notes that corporation tax will be payable on profits generated by the ABS. ‘It is therefore imperative that management decisions on how work is allocated between the nplaw in-house service, and the ABS, takes into account the impact of corporation tax on profits that may accrue.
‘Services will only be provided by the ABS where regulations prevent the provision of such services by the in-house department.’