Joint venture: 10-year contract
Kent Legal Services (KLS) – the legal division of Kent County Council – has formally launched its bid for outside investment by issuing a tender for a commercial partner with which it will form a joint venture/alternative business structure (JV/ABS).
As well as servicing all of the council’s legal needs – estimated to be worth up to £100m to the JV/ABS over the 10-year life of the agreement – the JV/ABS will look to “maximise the opportunities that are available in the rapidly changing external legal market” by delivering services to others.
The tender invitation said the creation of a JV/ABS “will enable KLS to improve capacity and acquire technology, capital, leading-edge business systems, additional expertise and resources in sales and marketing to enable the existing client base to be grown and new clients to be secured”.
KLS has been at the forefront of innovation among local authority legal departments, and the tender said “traditional models of legal service delivery or outsourcing would not allow” the council to build on this.
The issue of the formal tender follows an initial ‘market engagement exercise’ in April.
A key priority is the return to the council of a “significant and sustainable income stream that exceeds the current level of return made by KLS”. KLS has an annual turnover of approximately £9m, of which between 6-8% is undertaken for external clients, generating a surplus of around £2.5m (before deduction of corporate overheads).
A commercial partner will be expected to provide an initial capital investment, “together with working capital and on-going investment from within its own resources”, as well as “a clear business plan for rapid and sustainable growth”, the delivery of “innovative on-going process improvements”, and business development expertise.
The aim is for the JV/ABS to achieve and sustain “a position as a market leader in the provision of legal services to the public sector” in the face of competition from other local authorities, local authority ABSs, traditional law firms and “the new breed of law firms who are setting up with significant automation to enable reduced fees”.
Bidders should either have already received approval for an ABS, or be committed and prepared to immediately enter into the process of having an ABS submission approved. Kent will shortlist three to five potential partners before making a final decision.
Geoff Wild, head of KLS, declined to comment so as to not to prejudice the tender exercise in any way.
There are currently two local authority ABSs: Buckinghamshire Law Plus and HB Legal Services.
