In the Media

Councils look to ABS status for survival

PUBLISHED April 29, 2014

The number of local authorities seeking alternative business structure status for their legal departments is set to mushroom, Gazette research reveals.

With the award of the first local authority ABS licence imminent, a snapshot poll of the largest councils in England and Wales shows a significant number are considering the option, to allow departments to remain viable amid spending cuts and outsourcing.

Cambridgeshire and Northamptonshire county councils - which operate under shared service arrangement LGSS - said they are about to apply for a joint ABS licence.

Sheffield, one of the largest metropolitan boroughs in the country with almost 700,000 residents, said it is 'open to a range of models and is considering the options'.  

A spokesman for Wirral Metropolitan Borough said it is considering ways of maintaining its legal services activities, adding: 'This may include consideration of an alternative business structure.'

Trafford Metropolitan Borough said: 'We are actively exploring all options to maintain and increase the work being carried out by legal services and all avenues to reduce the cost of our service. Alternative business structure is one of these.'

East Sussex County Council also said an ABS route is one of a number of options it is exploring.

Over the last six months a number of legal departments have announced plans to apply for ABS status, initially to permit them to continue to work in sectors being outsourced by their councils.

Buckinghamshire County Council, one of the first to apply for ABS status, said registration is imminent. Anne Davies, head of legal services, said: 'We are currently in the process of having very positive discussions with the SRA and hope to get our registration through within the next few weeks.'

HB Public Law, a shared venture between the London boroughs of Harrow and Barnet, expects SRA approval by the end of next month.

Leicestershire County Council and the city councils of Plymouth and Southampton said they are not currently considering an ABS but would not 'rule out' this option in future.

Alison McKane (pictured), head of legal at the London Borough of Lambeth, told a Gazette roundtable: 'In Lambeth we are going down the co-operative council route with mutuals and spin-outs. If we stand still we are going to end up with a large legal department with very few clients. So we have to act. It's as simple as that.'

James Pigott, from Kent County Council - which announced plans to apply for an ABS last month - said: 'A number of local authorities are seeing their client base diminish due to circumstances outside their own control.'

But Linda Walker, head of public law and corporate governance at HB Public Law, said the model was not for everyone. 'I think it has almost become a little bit trendy and people think "Oh yes, we'll apply for an ABS" but actually a heck of a lot of work goes into making the application.'

Responding to the Gazette's poll, a number of local authorities ruled out the option of an ABS, including Bracknell Forest, Manchester, Salford, Reading, Hertfordshire, Hartlepool, Rotherham, Dudley, Calderdale, Solihull, St Helens and Liverpool.

Alex Jack, solicitor at Bracknell Forest Borough, said it was 'far from clear' that the ABS route is the best service model.

'The move to an ABS would entail significant expenditure on professional indemnity insurance premiums and solicitors account rules compliance,' he said.

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