A London local authority is considering applying for two alternative business structure licences in a bid to pre-empt local authority work going to commercial outsourcers.

The first ABS would be wholly owned by the London Borough of Lambeth, with the possibility of a tie-in with another local authority, and will aim to provide legal services to third-party organisations such as charities in the borough.

The second ABS is intended to be run as a joint venture with a law firm and provide legal services to other local authorities.

Mark Hynes, head of legal and director of corporate affairs at Lambeth, told the Gazette that separate licences would help the council avoid risk.

Councils are under pressure to innovate in the face of back-office services being outsourced, he said. ‘We need to keep an eye on the market. Outsourcers are now themselves applying for ABS status. I can envisage a scenario where [they are] bidding to handle the back office and we would not be masters of our own destiny anymore.’

Hynes, who chairs Lawyers in Local Government, said that local political leadership was irrelevant. ‘There is a perception that Conservative authorities might be more receptive to outsourcing. But I think all authorities will put politics aside to look at the business case and savings [they have to make] with savage cuts,’ he said.

‘We’d be pre-empting that scenario as we could already say we are providing a cost-effective [service]. The bottom line is there needs to be something in it for the local authority.’

Having an ABS would also mean the legal department could continue to provide legal services in a scenario where other council functions are outsourced.

Several local authorities have applied for ABS licences, but Lambeth would be the first to adopt a ‘double-barrelled’ strategy. Creating ‘ABS 2’ as a separate entity would mean that ‘if it does not fly, it is not like a deck of cards coming down,’ said Hynes.