Efficiency drive curbs local authorities' spend on legal advice

Local authorities' spend on external lawyers in the UK has fallen by 10 per cent in the last year, according to new research.

Fees spent on law firms and barristers dropped from £174m in 2012/13 to £156m in 2013/14, as efficiency drives in public sector legal services begin to produce results, Thomson Reuters found.

The drop follows a substantial increase in expenditure over the preceding three years, partly driven by the legal costs of restructuring public sector service provision during the post-2010 austerity cuts and partly by agreeing complex outsourcing arrangements.

Cuts in public spending have led to a growth in innovation by local government as councils strive to maximise the impact of reduced funding.

The average local authority spent £360,000 on external law firms in 2013/14, while the UK's unitary authorities - those responsible for the provision of local government services within a comparatively larger district - each spent an average of £561,000. London boroughs, however, spent an average of £753,000 during the same period.

This disparity in spend remains even when population differences are taken into account. London boroughs spent almost twice as much on external legal services per head than the UK average.

Many councils have undertaken projects to reduce their spend on external legal services, including consolidating their panels of firms and sharing in-house legal teams with other local authorities.

Desmond Brady, head of government at Thomson Reuters, explained that local authorities have been reluctant to impose cuts on front-line services, which has led to legal support being targeted to create efficiencies.

'These figures show that some of them are finding success,' said Brady. 'More and more councils have even started to look beyond the traditional approach of in-house legal teams supplemented by a panel of firms, towards models where legal services need not be a major cost.'

Some councils have restructured their legal departments and invested in developing in-house expertise to enable them to take on legal work for other clients, with the aim of reducing their overall legal spend, or even making legal departments cost neutral.

Buckinghamshire County Council and Milton Keynes Fire Authority, for example, registered their combined legal departments as an alternative business structure (ABS) in 2014, to take on legal work from a range of clients, with a focus on the public sector.

Cambridgeshire and Northamptonshire County Councils and the London Borough of Lambeth are also planning ABSs, while Kent County Council is planning a joint venture ABS with a private sector partner.

'As more of these shared legal partnerships and joint ventures come on-stream and reach maturity, they will be closely watched to see which models are most successful in helping local authorities to reduce costs,' added Brady.

John van der Luit-Drummond is deputy editor for Solicitors Journal
john.vanderluit@solicitorsjournal.co.uk | @JvdLD