Client demand for a more business-like local authority legal service is driving two London councils to join forces with a regional ABS powerhouse.

Westminster City Council and the Royal Borough of Kensington and Chelsea are part of a shared service arrangement with the London Borough of Hammersmith and Fulham. However, the two councils propose to merge with LGSS Law Ltd, a 'social enterprise' firm owned by Cambridgeshire and Northamptonshire county councils, and Central Bedfordshire Council. Hammersmith and Fulham would remain in-house.

A cabinet paper prepared by Kensington and Chelsea states that the merger would enable the legal service to act for organisations affiliated with the private sector such as council joint ventures and to deliver a more business-like experience for clients.

The paper says: 'Councils have for some time sought to reduce their external legal spend and this has been done incrementally by growing the in-house teams as far as possible and creating a critical mass. An ABS would provide an opportunity to create a sizeable firm of over 200 staff which can reduce external legal spend more significantly.'

LGSS was set up in 2010 as a shared service between Cambridgeshire and Northamptonshire. LGSS Law was created in 2015 after the councils were granted an alternative business structure licence. Central Bedfordshire joined a year later. LGSS Law employs 140 staff who provide services to more than 100 public and not-for-profit organisations.

The cabinet paper states that Kensington and Chelsea, and Westminster recently interviewed clients of the shared legal service, who were satisfied with the quality of advice they received. However, it also highlighted areas needing improvement, with priorities including: a clear demonstration of value for money; regular and correct billing; a legal service that acts in a more business-like and commercial way; and better responsiveness and accessibility in routine work such as property.

Total general fund savings for both councils are estimated to be £703,000 a year by 2020, with income increasing by £356,000 by 2023. The councils would like the merger to 'go live' on 1 December. Implementation costs would be £291,000 for Westminster and £281,000 for Kensington and Chelsea.

The cabinet paper states that the ABS will not venture into private client work such as divorce or conveyancing. It will target local authority partner organisations such as the police, health providers. charities, housing associations and private organisations that provide local authority services.

Kensington and Chelsea cabinet members will vote on the proposal tomorrow.