To consider should the Council extend its legal services to offer services to the third and public sector?
The Chair introduced the item and informed the Panel that the Leader had requested that the Panel scrutinise the potential for the Legal Services department to generate income for the Council by offering services to the third and public sector.
Kevin O’Keefe, the Director of Governance, stated that the Legal Services team had improved significantly over recent years and that this had been recognised both regionally and nationally. Legal teams in various local authorities had set up alternative structures and were able to engage with other public authorities to provide them with services. Local authorities could set up a wholly owned company offering legal services for a commercial purpose, which would permit it to offer legal services to other parts of the public sector and to commercial companies carrying out local authority or other public-sector functions. These were known as Alternative Business Structures (ABS). Kent and Essex County Councils were examples of local authorities undertaking this practice.
The Director of Governance informed the Panel that research had been undertaken and there were 197 individual charities in Wolverhampton that could provide a market for business to provide services on a cost recovery basis. An ABS could also provide a service to other local authorities and even go as far as to act for them. The Panel expressed concern about additional pressure on staff and the development of the proposal. The Director of Governance stated that resources for the service would be insourced rather than outsourced. There had been informal conversations with organisations that were already interested in the type of service that could be provided. There had been no market testing carried out as of yet, but charities were obligated to reduce their expenditure wherever possible. The Council’s Legal team had a good case management system and were successfully achieving all of their KPIs. External evaluations of the team were positive and there was an assurance that the team would not be given more work than was achievable.
The Panel queried whether there was evidence that local authorities that had set up ABS companies had been successful and what the financial information would be. Andy Moran, Service Director – Commercial, informed the Panel that, as all of the companies were relatively new, there was not a lot of data available. It was likely to take two years for the company accounts to be published.
Helen Child, the Chief Officer of Citizens Advice, Wolverhampton, attended the meeting at this point to provide the perspective of the voluntary sector. The Chief Officer stated that it was felt that the proposed service would be of benefit to many smaller organisations in the sector but that it was not an offer that Citizens Advice, Wolverhampton would be likely to take up. It was felt that there may be a conflict of interest as many of their issues that would require support involved the Council in a different role. As part of the Citizens Advice organisation they received legal support consisting of HR employment law, health and safety and contracts, as part of their membership. It was felt that local support priced competitively would be an attractive proposal for many organisations.
Following queries from the Panel, the Director of Governance confirmed that any income addition from an ABS would be for general use by the Council to fund quality public services, rather than directly to private solicitors. As Central Government was reducing funding it was a necessity to trade and raise revenue. The Director of Governance stated that the company would not be for profit, the income generated would be to cover overheads and to provide services. The Panel agreed that the proposal should be explored as the Council was tasked with making savings and generating income. The proposal was still draft and the Panel requested that, once it had been properly developed and tested, the full business case be bought to a future meeting.
a. robust soft market testing,
b. determination of risk,
c. an identified market,
d. projections on the volume of business,
e. impact on the existing workforce,
f. further exploration of the means by which revenue would be generated,
consideration on conflict of interest and the impact on feasibility.