JON ROBINS EXAMINES THE RELATIONSHIP BETWEEN LAW FIRMS AND LOCAL AUTHORITIES IN LIGHT OF THE FORTHCOMING BEST VALUE REGIMEWith the eagerly-awaited demise of compulsory competitive tendering (CCT) set for January next year, the end of the Cold War between the public and private sectors is nearly over in local government.

However, glasnost has come early to the town halls, as evidenced by a growing number of partnerships between law firms and the legal teams at authorities.The growth of such arrangements, according to Philip Thomson head of the Law Society's Local Government Group (LGG), has been 'electrifying'.

The public finance initiative (PFI) was a catalyst (see below) he says, but more recently the practice is expanding from corporate work into other areas.

In the last 12 months, regional firm Eversheds has linked up with Lancashire County Council, Birmingham firm Wragge & Co with Buckinghamshire County Council, and Nabarro Nathanson with Lewisham Borough Council in London.Close working relationships between public and private worlds is nothing new in local government, remarks LGG vice-chairman Roger Bowden; pointing out that in the mid-80s authorities often set up companies to handle economic re-development work.

However, the introduction by the previous government of the CCT procurement regime in 1988 forced in-house teams in local government into direct competition with their private practice colleagues.

Mr Bowden notes that CCT was marked by 'a degree of suspicion', if 'not a cooling of relationships', between the two sides.However, New Labour's best value regime - to be introduced next April under the Local Government Act 1999 - consigns CCT to the dust-bin.

Under the new provisions, councils will have to review their services and decide whether they or, in the case of legal work, external solicitors are best placed to deliver them, based on the performance indicators which are meant to measure efficiency and service delivery.

Mr Bowden observes that some of the main local government players take the view that partnership - 'embryonic in the past' - can be made to grow into something bigger in the brave new world of best value.

A growing number of leading firms in local government law are recruiting prominent council lawyers to develop their practices in this field.Nick Dobson, who until June was chief solicitor at Doncaster Borough Council and is now local government partner at Leeds firm Pinsent Curtis, agrees.

Partnership is 'right at the heart of best value', he reckons.

Mr Dobson says: 'It expects authorities to involve the private sector in helping them look afresh at the way they perform their functions, and it is obviously beneficial for an authority to have a special relationship with a law firm'.

In particular, under the new legislation, local authorities will be obliged to undertake best values reviews and a close relationship with a law firm will immediately give them access to useful bench-marking material, he says.In more general terms, the government expects authorities to develop more 'lateral thinking' in the provision of services.

Pinsent Curtis has yet to become a partner firm, but adds that it is something that it is exploring with a number of authorities.

Mr Dobson says that what they hope to offer local authorities is to be 'part of the Pinsent Curtis family'.But the best value partnership is a nebulous concept.

'It can mean whatever you want it to mean,' Mr Dobson says.

It could encompass 'formal partnerships' backed by contracts detailing guaranteed volumes of work for the firm involved or a 'softer relationship' where there is no such guarantee but, perhaps, a condition that the firm would on tender lists.In April, Wragges signed a three-year contract to become Buckinghamshire County Council's partner firm.

According to Peter Keith-Lucas, a local government partner at the Birmingham firm and former president of the Association of Council Secretaries and Solicitors (ACSeS), it is the most wide-ranging partnership to date.

There is a contract, he says, but there is no minimum amount of fees specified.

'Relationships like this have to be developed on a degree of trust,' he says, adding that one year the relationship could generate a considerable amount of work, while in others there would be little.

A 'significant' amount of time he spends with the authority is non-fee earning, but this time helps to build up the relationship.Wragges is the exclusive legal services provider for the authority, with the exception of child-care and mental health work.

There is no rigid demarcation between in-house team and partner firm and, for example, its solicitors attend many of the council's internal management meetings and one of the council's conveyancers is currently on secondment at the firm.

It has also set up video-conferencing facilities at its own expense to encourage the council to make the first call.The link-up between Nabarros and Lewisham derives from joint work they did on a PFI project.

Malcolm Iley, a partner at Nabarros and formerly city solicitor and deputy chief executive at Plymouth City Council says the two sides got on well, and decided to keep the partnership alive.

There is a contract but it is 'not binding on either side', he says, but both parties are committed to co-operation.

Mr Iley says the firm works together in a wide range of areas, including tendering for work, writing a book on the new local government legislation and sharing training facilities, such as seconding a trainee to the council.Since the partnership was announced the firm has been 'inundated' with interest from other authorities, Mr Iley says.

However, Nabarros plans to 'manage' up to eight partnerships and 'make them work well' rather than blanket the market place.Ian Fisher, the legal services manager at Lancashire County Council, says its partnership with Eversheds was the first of a kind.

In May last year, he placed an advertisement in the Gazette seeking firms to apply to be its partner firm and asking their applications to address the best value regime.

There were 25 responses from law firms, and four were short-listed, i ncluding Manchester firm Cobbetts and Birmingham practice Anthony Collins.There is no formal contract, and Eversheds is guaranteed no minimum level of work.

There was 'some degree of suspicion' from senior colleagues at Lancashire as to what Eversheds would get from the relationship, admits Mr Fisher; but he adds that the benefits include enhancing its public sector reputation and winning more of the authority's work.

Eversheds hopes to become the authority's own 'preferred external supplier', he says.However, it clearly cannot take anything for granted, and in September it was announced that Pinsent Curtis and Cobbetts had beat Eversheds in a tender for its pension fund work.Judith Barnes, a partner in Eversheds' public sector unit, observes philosophically that it is a 'healthy' approach for the authority to take, adding that Eversheds won both the PFI work and insurance-related litigation work.

So far, feedback from the council has been positive.

Most importantly, the district auditor Eddie Drozdziak is a convert to the approach and recently described it as 'an innovative example of public/private partnership and good practice in promoting and delivering best value'.John Bennett, a consultant solicitor at Eversheds, says these relationships are developing because of a recognition on the local authority side that they can learn from the private sector, and an acknowledgement from law firms that straight-forward competition will no longer work.

The best value partnership goes beyond traditional arrangements.

Partnerships are not just about providing top-up legal services, he says, but what they are about is adding value to that work and 'a sharing of control'.MATT BARNARD REPORTS ON HOW LOCAL AUTHORITY LAWYERS ARE ADAPTING TO THE DEMANDS OF PRIVATE FINANCE INITIATIVESIt will come as a surprise to many people who think of the private finance initiative (PFI) as a recent development to discover that the first PFI project was used to fund the QE2 Bridge - also known as the Dartford-Thurrock Bridge - in 1987.

However, PFI was only formally adopted as a government policy in 1992, and the first local authority PFI project was the Colfox School project carried out by Dorset County Council in November 1997.According to the latest list published by the Department of the Environment, Transport and the Regions (DETR), there are now a total of 103 local authority projects which have been approved by the Treasury and have been guaranteed government funding.

As those local authority lawyers who have been involved in PFI will know, getting to the stage of approval is an achievement in itself, as John Polychronakis, head of legal services at Dudley County Council acknowledges.

'There are huge complexities involved in it, and most people involved in the first scheme or two have been on a fairly rapid learning curve,' he says.Local authorities need to get a specific government department to sponsor each project, and these range from the DETR - which covers things such as housing and IT - to the Department of Health and the Home Office.

The Department of Education and Employment sponsors the largest number of projects, reflecting the importance the government places on education.

The local authorities involved in PFI tend to be the bigger county and metropolitan authorities.Some of the biggest projects which have been identified by the Treasury Taskforce (TTF) as 'significant' are being carried out by Tower Hamlets (housing and education), Norwich (IT), Nottinghamshire (rail), Staffordshire (street lighting), Hereford, Worcester, Surr ey (waste management), Lambeth (schools), Kirklees (waste management and schools), and Dudley (schools).The difficulty for the in-house teams at the local authorities is that because of their size, PFIs will only be appropriate for a limited number of projects.

Mr Polychronakis estimates that a project has to be worth at least £15 million to justify devoting the resources needed to get it off the ground.

That means that whereas central government departments, such as the Ministry of Defence, will be able to develop a specific in-house expertise, many local authorities have to rely on outside advice, at least to begin with.PFI is not a completely unfamiliar concept as it is the next stage in public private partnerships of which most local authorities have considerable experience.

The Kirklees PFI project on waste management was largely done in-house because they had a lawyer, Julie Muscroft, who had considerable expertise in public-private partnerships.However, the authority's second project will be largely handled externally, as Kirklees' head of legal John Enns explains: 'People who do develop any sort of expertise of these things are being snapped up by the private sector left, right and centre - as indeed was Ms Muscroft.

We are quite keen to build up that level of expertise again, but whether we will be able to do it is a matter of some debate.' Ms Muscroft now works for Irwin Mitchell.Like Kirklees, many authorities are keen to develop their in-house expertise.

Ian Hodgson, a partner in the banking group at Denton Hall, has noticed the desire to learn in the local authority sector: 'I think PFI has developed a mystique of its own, so there is a keenness to be involved in decision making, seeing how contracts are developed and the principles that are being applied, with a view for local authorities to be able to deal with these things in-house in the long run.'In some areas, though, private practice lawyers acknowledge that their in-house colleagues already have an advantage.

Tim Steadman, a partner in Clifford Chance's PFI group says: 'It is crucial to secure a PFI credit, which requires the application of complex tests laid down in the capital finance regulations.

And I think most in-house lawyers have more experience in the application of the finance regulations than external lawyers, so I think in this case you have to pay some considerable respect to the accumulated experience of the in-house lawyers to making those judgements.One of the things driving local authorities to bring the projects in-house is that the cost of using outside lawyers can be extremely high.

However, it is not a simple task, as Mark Norman, the in-house lawyer at Tower Hamlets who deals with PFI, explains.

'My preferred option would be to buy in a specialist contract locum and then to have some partnering arrangement with a big City firm to buy in the top-up advice.' he says.

'The problem with that is that you can't go and get a specialist contract lawyer for six months because they don't exist.

All you can really do is set up a dedicated project team and then back-fill with locums on the day to day work.'However, one of the things that is helping is the standardised contract guidelines that have been issued by the Treasury Taskforce (TTF), which deals with PFI rules.

This is an attempt to lay down a standard framework around which PFI contracts are negotiated, and according to David Goldstone of the TTF, a draft of a standardised contract specifically tailored for local government is due out in the next month.

The guidelines have been we lcomed by both in-house and private practice lawyers, though some warn that there are problems with the private sector trying to 'cherry-pick' those conditions which it likes while rejecting those which it does not.For any local authority legal department, PFI means a significant increase in the burden that is placed on it.

Even if they use external lawyers, they are still required to manage the negotiations, and the challenge is to make sure the rest of the department's work does not suffer.But as Dudley's Mr Polychronakis says: 'It is not just PFI schemes which are new; there are new items of work on a regular basis.

It's just one measure of the effectiveness of an organisation to incorporate new areas without diluting its ability to do routine stuff.

I have a good team of people here, and that's what we do.'LINDA TSANG FINDS OUT WHAT LOCAL GOVERNMENT LAWYERS THINK ABOUT THE IMPACT OF THE COMMUNITY LEGAL SERVICELocal authorities are a major funder of legal services through grants to law centres and advice agencies.

Estimates on the level of funding range from more than £150 million a year, in last December's white paper 'Modernising Justice', to about £250 million a year, in the consultation paper on the community legal service which was published this autumn.The consultation paper on the Community Legal Service (CLS) recognises that one of the problems for the advice sector has been its reliance on discretionary funding.

Under the Access to Justice Act, the Legal Services Commission with establish, maintain and develop the CLS.

It will also be under a duty to inform itself about the need for legal services and, in co-operation with other funders, including local authorities, plan for the provision of legal services.

Recent debates have centred on whether the government ought to impose a statutory duty on local authorities to fund the CLS.Local authority grants are currently the main source of funding for citizens advice bureaux (CABs), but funding varies enormously across the country.

There is a significant variation in per capita funding by local authorities.

District funding of CABs in England and Wales varies from less than 20p per head of the population to more than £2.50.Vicky Chapman, policy director at the Legal Action Group, who will soon join the Law Society as head of law reform, argues: 'While some local authorities are good at funding advice provision in their area, many are not.

There is a real danger that local authorities may reduce or withdraw funding, hoping or believing that central government is going to step in and provide the service.

This inequality can only be addressed if local authorities are put under a duty to plan for and to fund advice provision in their area.

There is the risk of penalising the good local authorities, which have supported advice provision in their area, and rewarding the bad ones.'But compulsory funding is not necessarily the central issue.

Roger Bowden of Wyre Borough Council is vice-chairman of the Law Society's local government group.

He says that in his area, the council provides a support service by granting substantial funding to the CABs in the area.

He says: 'If there is no new money, then obviously there may be an impact on that funding.

In our particular situation, we do welfare rights work by supporting citizens advice bureaux - anything we choose to do in this area would potentially be at the expense of those existing agreements, and we would not be in a hurry to do that.

And that situation would not be different under the Community Legal Service.

If ther e is no additional funding, you have to ask the question, if you are going to do more, it will cost more, and will that have an adverse effect on the other services and needs which should also be provided or funded? It depends where you start from, some authorities provide those services, such as advice on welfare rights or housing benefits, direct, and some also provide representation.

If that funding has to go to fund something else, such as to the partners under the CLS, then you may have to rob Peter to pay Paul.'Whether that robbery will take place is yet to be confirmed in practice.

The Lord Chancellor's Department (LCD) approached a number of authorities at the beginning of this year looking for volunteers to do research into the setting up of the CLS.

One of the original six core pioneer partners is Cornwall County Council.

The other participating pioneer authorities are Kirklees, Liverpool, Nottinghamshire, Norwich and Southwark in London, and last month 40 associate pioneer local authorities joined the scheme.Cornwall County Council's involvement as a pioneer partner started in February this year, and involved finding appropriate partners for the scheme.

Initially it approached the six district councils, and then the service providers, with which it already had a relationship, such as CABs, Shelter and other voluntary organisations, and also the funders, which included charitable sources, like the National Lotteries Charities Board and the Rural Development Council.

Lastly, the local law society also came on board as a partner in the pioneer scheme.As Philip Crewdson, the county trading standards officer at Cornwall County Council, explains, the scheme has involved undertaking research and analysis and mapping out provision and service delivery.

Mr Crewdson says: 'It covered what the council did, who did it and who paid for it.

Initially, the private sector was not included, but that sector has now been included, and the report must go to the LCD at the end of this month.'Mr Crewdson sees certain benefits from the scheme, such as formal concordats between the different partners, whether funders or providers of services; standardisation of the criteria set for providers to satisfy funders, and the introduction of a quality mark.

He goes on to say: 'The idea was to identify any gaps and ultimately, once the CLS is up and running, those gaps will be plugged.

We may well be seeing some savings and less duplication.

And whatever the findings that we put to the LCD, some legal aid funds will find their way to the commercial sector, as one of the partners under the national directory of quality assured legal services under the CLS who will be referred work will be private practice solicitors.'But with the proposed referral system to the different service providers in any area, and the inclusion of the private sector in that system, there are questions raised about how a limited fund can be stretched to cover a wider number of service providers.

And it is not the issue of whether funding should be a duty for local authorities that is causing most concern.

The view is that whether funding is compulsory or not, with a limited budget, one area will inevitably lose out if it is decided that another service should have priority.Martin Palfreman, advice services development director at another pioneer authority, the London Borough of Southwark, says: 'The scheme has been an opportunity to get the funders and providers, both non-profit and private sector, around the table, and to formalise the structure of how those services ar e provided.

The research has also been an opportunity to get a clearer picture of what the needs are and what the resources are from the different pots.

It has shown the contribution that local authorities make in this area, and it is hoped that it will serve as a tool to attract resources internally and externally.'And it is not just a matter of looking at legal services in isolation.

He adds that with local authorities also undertaking reviews for best value as well as the pioneer scheme for the CLS, the whole role of internal providers is ripe for review and change.

He stresses that 'both reviews are about identifying needs and also priorities - what the CLS partnerships have done is to be more refined and objective about meeting those needs'.Wyre Borough Council's Mr Bowden agrees: 'Councils do not want to be in a position where they are unable to continue with existing arrangements which are working very satisfactorily from the point of view of the clients.

Ultimately, that is what any service is for, it is for the people who need that advice, and that seems to be the most worthwhile criterion.'LUKE CLEMENTS LOOKS AT THE CHANGES FACING LOCAL GOVERNMENT LAWYERS WITH THE IMPLEMENTATION OF THE HUMAN RIGHTS ACTIt is now 12 months since the Human Rights Act received royal assent.

During this time it has been the central departments of state which have been most active, each attempting to 'Strasbourg-proof' its portion of the statute book.

Instead of gazing at the 1 January 2000 like their Y2K colleagues, they have been running through endless 2 October 2000 scenarios.

On that day the Act comes into force and effects the most fundamental change in our domestic legal system since the Bill of Rights 300 years ago.Training has been identified as the crucial initiative, with the Lord Chancellor's Department alone setting aside £4.5 million for this purpose.

For the Act is not so much mechanistic, as philosophical; and this, perhaps is the most important point for senior local government lawyers.In the 11 months that remain before the Act comes into force, the limelight shifts to local government with the central spotlight on local government lawyers.

Their role is crucial.

They must ensure that their authority's policies and practices are 'Strasbourg-proof' as well as endeavouring to communicate the aspirations and philosophy that underlies this profound constitutional change.

The Act is an enormous opportunity for effecting positive change.That said, such a fundamental change in the UK's legal system will inevitably cause problems.

The statutory duty under section 6 requiring local authorities to act compatibly with the European Convention on Human Rights and the right to redress for aggrieved parties will clearly have a profound impact.Likewise, the loss of precedent inherent in sections 2 and 3 means that many areas of law that seemed clear, will no longer be so.

Indeed the very simplicity of the convention system will cause problems.

Virtually every high street lawyer will, when in a tight corner, chance her or his arm by making reference to the Act.

Most convention arguments will be bad ones, but it is by no means simple to separate the substantial from the frivolous.It will be of some relief to know that we are likely to see a robust response from the judiciary whenever a Convention point is taken.

Advocates will not be allowed to toss in a Convention point and then stand back and watch how the court digests it.

Courts will expect advocates to produce properly referenced arguments to support their submissions.

Lord Justice Sedley has emphasised this point, warning that the Act will not be allowed to become a 'knock down, drag out' process of unnecessary claims, where 'every two-bit crook without a defence' would cite that Act.Responsibility for the local implementation of the Act will inevitably fall to local government lawyers.

They will need to develop a strategy to ensure that, by 2 October 2000:-- their policies and practices are compliant with the Act; and-- their employees have a thorough awareness of the objectives of the Act, and the detailed obligations it places upon the authority.To achieve these objectives, it will be necessary to:-- review all policies and practices, department by department, in order to identify those which are likely to need amendment; and-- implement a systematic staff training programme.Many authorities are commencing this process with a general seminar on the Act, attended by senior personnel and members.

At such a session the experiences of other authorities can be shared, enabling a strategic 'authority-wide' approach to be taken as well as providing a forum for exploring the compatibility of any locally 'idiosyncratic' policies or practices.At the next stage, individual departments need to consider between themselves what they think are likely to be the problem areas and the implementation needs of the Act.

These events will then feed back into the corporate implementation strategy, at one or more additional interdepartmental 'trouble-shooting' workshops.A first step often involves the circulation of a briefing paper on the likely impact of the legislation, illustrated by examples of possible problem areas.

Inevitably these will range widely, but should include the authority's internal employment and privacy policies, its adjudication procedures (such as its handling of licensing, planning, statutory complaints, housing benefits appeals and so on) as well as particular departmental issues, for example:Social services and educationThe use of secure accommodation orders; ex parte emergency protection orders; post-care order planning procedures; civil actions for negligence; school exclusion orders; school non-attendance prosecutions.Housing and evictionsEnforcement procedures for unfit dwellings; discrimination against tenants; the continued viability of the tort of trespass as a remedy.Planning and the environmentThe use of planning contravention notices; excessive reliance on land-use factors in planning refusals; the rights of neighbours to challenge detrimental development.Law and order issuesCriminal prosecutions and the use of bailiffs; the Crime and Disorder Act; CCTV.Health and safetyRoad maintenance; the (lack of) protection for pedestrians and cyclists; protection from anti-social neighbours or environmental dangers.Equal opportunities policiesDiscriminatory policies against people with learning difficulties (access to files, sexual freedom in local authority homes, the use of their money, etcetera); gypsies and travellers; poor people, young people generally, etcetera.