The outsourcing arm of FTSE 250 construction company Carillion could become an alternative business structure (ABS) as it looks to grow its advice services team beyond in-house and legal aid work, it has emerged.
The prospect of in-house legal functions transforming from a cost centre to a profit centre has been mooted for some time, in part because of the ABS regime, but thus far has been restricted to the local government sector.
As reported on Legal Futures last week, Carillion has won a new contract from the Legal Services Commission to provide legally aided housing and debt advice by telephone – the largest category by volume – having last year taken over contract holder Eaga.
The team of 60 paralegals servicing the contract, based in Newcastle, also works with Carillion’s in-house legal department to handle low-level legal work, such as contract review. From next month Carillion’s 12 panel law firms will be required to use Carillion Advice Services (CAS) when acting for the company.
Panel firms can also use CAS for non-Carillion work as a way to reduce costs – which Reading-based Clarkslegal is already doing – while the plan is to offer it to other companies and non-panel law firms, and possibly to individuals as well given the experience with legal aid.
CAS is managed by Carillion Legal; it has no qualified lawyers but there are around 30 qualified staff in Carillion Legal.
Company secretary and director of legal services Richard Tapp told Legal Futures that Carillion has developed and built on the team from that originally serving the legal aid contracts, with the team growing from 50 staff since the takeover. There are plans to expand it to 80 from early next year.
He said that with the upcoming changes in legal aid, the available work streams have changed, “but this has helped us with the opportunity to utilise and develop experienced teams into carrying out work for Carillion directly and on our matters through our network law firms”.
He continued: “From an ABS viewpoint, we think that the Advice Services solution is scalable into new specialisms, building on the processes and systems we have. At present the activities it undertakes do not require it to be an ABS, but we would not rule out that option for the future. Certainly the team is experienced in advising individual clients directly through the legal aid scheme, and has done so very successfully for a number of years.”