Not many happy returns

It's just a year since the Bar Council unveiled its ProcureCo solution to the impending changes in the funding arrangements and management of legal aid contracts. So, as the anniversary approaches, what has happened? Well, everything and nothing really.

There have been some interesting developments in both barristers' chambers and solicitors' firms. Unfortunately, two of the major obstacles slowing the race to embrace the opportunities for profitable growth are the Luddite-thinking and glacial movement restricting some of the protagonists.

The concept of the ProcureCo was a brilliant one and the Bar Council deserves hearty congratulations for promoting it. The original document, though, was heavily flawed; for example, the labyrinthine articles of association and general complex management arrangements inhibited what needed to be a fast-moving and proactive commercial work procurement vehicle.

At a stroke the Bar Council changed the way chambers needed to think. A few smart sets have taken the original ProcureCo concept and modelled it to their own requirements with potentially far-reaching consequences for the way they do business with their clients. Of course, many large commercial sets have long had contractual/ collaborative/negotiated work arrangements with their clients and, perhaps, it's time others threw off the proscribed, graduated fee approach to doing business. ProcureCos offer this solution.

It is reported that 100 chambers have ProcureCos, though sample evidence suggests that's an exaggeration and the number is more likely to be between ten and 20. Even those who have thought their way through it and set up the corporate vehicle have had little chance to exercise them as its main target is legally aided contract work and the conditions for that aren't with us yet. However, there are a couple of chambers that are using corporate vehicles to manage local authority, NHS, insurance, PI and other work areas which are miles away from legal aid.

The Bar v solicitors

This, of course, is how the ProcureCo concept will evolve and is exactly what, one imagines, the Bar Council had in mind when they started. Evolution does take divergent paths. Indeed, there is news of some solicitors' firms setting up corporate procurement vehicles inside their partnerships in order to run particular types of work through them and also to take advantage of the tax regimes for such vehicles. These can be more financially advantageous and flexible for higher-rate taxpayers.

There is even talk about all partners in a firm considering setting themselves up in this way and contracting out their services to the firm. So, as solicitors took advantage of the handsome fees negotiated by the Bar in Carter to increase the number of their HCAs, it looks like some might have, again, beaten the Bar to the punch.

Similarly, the clever chambers will transform their structures, strategies and management to position themselves in the right place in the market to maximise their experience and expertise in advocacy and to avoid the complicated and potentially fatal knee-jerk reaction there has been to invade solicitor territory.

There are chambers that, without considering the work, expense or consequences, blithely imagine that they will attend police stations and carry out litigation work when they have a criminal legal aid contract. Naturally, this might antagonise solicitors who, after all, have had quite a lot of experience of these things and a more interesting and acceptable way for the Bar to proceed might be to seek collaboration and cooperation with solicitors. It is usually advisable to concentrate on the things one is good at and the Bar is best at advocacy.

Solicitors will argue, with some justification, that the ten or so years' experience they have over the Bar in running legal aid contracts gives them an insuperable advantage when, and if, OCOF/BVT comes. Perhaps though, the Bar is nothing if not flexible and speedy once it gets moving. As mentioned before, however, there are still too many chambers paralysed by indecision and lack of strategy. Undoubtedly, the infrastructure required to pitch for, win, run and profitably administer a legal aid contract is complex and there will be some chambers that have already identified the component parts and are building it.

The playing field becomes level for all parties once OCOF/BVT becomes part of the equation, as neither the Bar nor solicitors have practical experience of that in the context of a legal aid contract. The Bar Council is expansive about the supposed cost-base advantage the Bar has over solicitors. The Bar, they say, runs at a cost of about 25 to 30 per cent of income while solicitors are up at the 70 per cent level. Supposing these figures are correct, and they are fast becoming part of the folk law of the Bar, one ought to stop and ask why this might be the case. The answer, sadly for the Bar, is that solicitors do something for that money and one of those things is having the infrastructure and resource to run legal aid contracts.

Chillingly for the Bar, there is also a wide differential in the salaries and benefits of employees of most chambers and most solicitors. It is true that some chamber managers and senior clerks are paid a lot more than their counterparts (if they exist) in solicitor's firms. But the general non-salary benefits the employee of a firm enjoys far outweighs those their opposite number in chambers have. Many chambers make no pension provision, other than the statutory minimum, and have no performance-rated bonus schemes or other benefits associated with a 21st century commercial business. This will need to change and will erode the supposed cost-base advantage the Bar thinks it currently has.

Most chambers seem to be thinking of ProcureCo as a vehicle to win a legal aid contract and, as it looks like it will be a crime contract that first hoves into view, that's where the emphasis is going. In 2008/ 09, the LSC CJS figures showed that there were 1,700 solicitor crime contract holders. An MoJ policy document of March 2010 intimated that here might be ten or a dozen contract holders in each CJS area in future. This means that there might be around 500 or so contract holders at the next round and the competition among existing holders will be fairly fierce.

The MoJ may encourage new entrants to the contract round and innovative providers with well thought out bids could do well. The Bar should step up to this challenge and bring its unparalleled experience and expertise in advocacy into the reckoning.

Becoming contenders

However, there's a lot more work to be done on the Bar's ProcureCo offer before it will be fit to compete against most solicitors. The evidence so far doesn't reveal much substantive activity with most potential players seemingly waiting until much more is known about how it will all work in practice.

It could be a long wait during which time others will have a small number of flexible strategies for success in hand ready to roll out the right one at the right time. In any event, the MoJ is more liable to be impressed by an early demonstration that the Bar has a working model and are contenders.

The casual observer might conclude that there was going to be a lot of duplicated effort and wasted money going into competitive bids between those wishing to have a contract. They might also wonder why there wasn't more cooperation happening to maximise efficiencies and minimise cost. They might wonder why solicitors, with their experience of police station work and litigation, and barristers, with their advocacy skills, didn't just recognise the opportunity for cooperation which is staring them in the face.

They'd be right, and just below the horizon are consortia of small to medium-sized solicitors forming to bid for contracts, and there is also talk '“ though not that much visible action '“ of barristers' chambers having some sort of involvement in these. Who knows, perhaps the ProcureCo, or its evolved descendant, might just be the catalyst for collaboration between the two sides of the legal profession which could lead to fusion.