Local government lawyers have obtained a QC’s opinion in a dispute with the Solicitors Regulation Authority (SRA) over their ability to provide reserved legal activities to external bodies and individuals, it has emerged.
The dispute between Lawyers in Local Government (LLG) and the SRA is centred on interpretation of rule 4 of the Practice Framework Rules – which deals with the restrictions on in-house practice – and whether councils must set up alternative business structures before offering services externally.
Philip Thomson, director of Essex Legal Services and board member of LLG, complained last summer that restrictive rules for in-house lawyers were forcing local authority legal departments to set up ABSs.
A spokesman for LLG said yesterday: “Senior colleagues are currently considering the implications of the advice received from senior counsel and how best to take matters practically forward, including with the SRA and other regulatory authorities”.
In a report on its website, the LLG said Crispin Passmore, executive director for policy at the SRA, addressed the issue at a meeting of its London branch last month.
He told the meeting: “The first question to ask should be, ‘Do I provide reserved work to the public or a section of the public?’ Ultimately it will be for the courts to determine one way or the other but we have to interpret it sensibly. Ask yourself, what’s the level of connection between you and the person your providing a service for? Is there a prior connection?”
Mr Passmore said a local authority, health authority, and police and fire authority within the same area pooling back office functions was likely to meet the requirement for a connection; however, a legal department sending out a brochure to all fire authorities in the country to market its services would probably fall foul of rule 4.
LGG’s report added: “This is a contentious area and LLG are working to obtain further clarity. In the meanwhile, wishing to avoid litigation and work collaboratively with LLG and you the membership, the SRA are keen to encourage dialogue during their 18-month timetable of regulatory reform.”
The SRA has previously said that one of the reasons it is reviewing its approach to in-house lawyers is because rule 4 is “cumbersome at best”, and has mentioned the possibility of waivers.
In a separate development, a survey has found that one in five local authority legal teams are giving “serious consideration” to becoming alternative business structures.
Of 100 heads of legal contacted by Local Government Lawyer as part of a major report The legal department of the future, 21% said ABS status was “under serious consideration”, while a further 25% said they “may look” at becoming an ABS “in the medium-term”.
The remaining half of legal department chiefs said they were not considering the move. Only 2% of departments are currently operating as an ABS, with the same proportion about to apply or in the process of applying.
Elsewhere in the survey, more than half of local authorities (55%) said they currently sold legal services to other organisations, with a further 5% saying they had “definite plans to sell”.
Only 17% said they had no plans to provide legal services externally, with 23% saying the move was “presently under consideration”.
It emerged last week that Brighton & Hove City Council, East Sussex County Council, Surrey County Council and West Sussex County Council are to bring together their legal teams in a partnership called Orbis Public Law from 1 April 2016.
Under the plans they will then develop a business case to create an ABS to work alongside Orbis and handle work that the councils cannot undertake themselves.