One pioneering ABS receives stamp of approval as another sees investors sell off its shares

Farmer: successful model

Farmer: successful model

Barnet and Harrow councils in London have renewed their shared legal service, HB Public Law, a year early, preserving the alternative business structure (ABS) that has the biggest local authority legal team in the country.

HB Public Law was set up in 2012 as a shared legal practice for Barnet and Harrow councils and will now run for at least another five years.

In a statement, the councils said HB has enabled them “to focus funds on front-line services through reduced spend on external lawyers, managers, case management systems, law libraries and office space”.

Councillor Sachin Shah, leader of Harrow council, said: “I am very pleased that HB Public Law is proving the validity of the concept behind it. It has delivered excellent legal services for Harrow council, and Barnet councillors are evidently pleased with it too. It’s an innovative arrangement that meets our needs.”

His counterpart at Barnet, Councillor Richard Cornelius, added: “This innovative approach has brought real benefits to both councils, not only through the savings it has delivered but through shared expertise. The fact the business continues to grow in strength is proof that innovation in the public sector can reap rewards.”

The move comes after a period of sustained growth for HB Public Law, with the practice significantly expanding its client base. It added the London Borough of Hounslow and Aylesbury Vale District Council in 2015, before in July this year Buckinghamshire County Council – the first local authority alternative business structure – joined the practice, which was the second.

HB, which also acts for the West London Waste Authority, has 150 lawyers based in Harrow and Aylesbury. The practice also has a partnership with law firm Bevan Brittan.

Jessica Farmer, head of legal practice at HB Public Law, said the renewal “proves the success of the model – offering specialist public sector legal expertise at cost effective rates”.

Meanwhile, another pioneering ABS – Fairpoint Group plc – has seen its share price crash since issuing a profits warning about its legal arm last Friday. Legal services now make up the bulk of Fairpoint’s business.

After closing at 52.5p last Thursday, its shares finished trading on AIM yesterday at just 15.25p. The stock has been falling steadily this year, from a high of 165p in March.

The trading update issued last week said that while Fairpoint’s legal services business – Simpson Millar – achieved revenue and profits in line with expectations to the end of October, “the results for November are below plan and are likely to be lower than expected in December as well”.

The debt services side of Fairpoint was trading “broadly in line with expectations and the closure of the debt management business remains on track for completion in early 2017”. The update added: “However, the planned benefit of the reduction in associated overheads is taking longer than expected.”

As a result, Fairpoint told investors that its 2016 results were “likely to be materially below market expectations”.

It continued: “The board is formulating plans to mitigate the potential impact on the trading performance and financial position of the group going forward, including the suspension of future dividends.”

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