Essex Legal Services (ELS) has become just the fourth local authority legal department to become an alternative business structure (ABS).
The Chelmsford-based legal department of Essex County Council predicted that it could make an additional surplus of £1.8m by 2020 through a “growth strategy” with creation of the ABS as “one of the key enablers”.
The licence, which became effective at the beginning of this month, follows in the footsteps of Buckinghamshire Law Plus, which combines the legal teams from the county council and Milton Keynes Fire Authority; HB Public Law, the shared legal service set up by Harrow and Barnet councils; and LGSS Law, the joint legal services departments of Northamptonshire and Cambridgeshire county councils.
In its proposal paper to the council, ELS said the ABS would provide a “mechanism” for ELS to grow its client base. “As a separate legal entity the ABS will be able to work for organisations other than local authorities and public sector bodies.
“Additional income can be generated through access to a wider client base, which will also increase the resilience of the in-house service.”
Setting up an ABS would enable it to “pursue business currently not permitted under either the constraints of local authority trading or the regulatory requirements of the SRA”, building on a new strapline to be used by ELS – ‘first for public law’.
Because the ABS would be liable to pay corporation tax, the paper said it was “imperative” that services would only be provided by the ABS arm of ELS “where regulations prevent the provision of such a service by the in-house department”.
Last month, Kent County Council decided to spin off Kent Legal Services – which led the way in offering legal services to other public sector bodies – is to be spun off into an ABS owned by the council with the aim of returning “a significantly increased and sustainable income stream for the taxpayer”.
In February, four local authorities in the south of England – Brighton & Hove City Council, East Sussex County Council, Surrey County Council and West Sussex County Council – announced that they were set to create an ABS in a bid to increase their income in a time of budget cuts.