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Striking out in a new direction: Setting up an ABS

What does it take to set up a legal services alternative business structure? Hilary Irving of North Yorkshire County Council outlines the risks and rewards.

First North Law

North Yorkshire County Council’s legal department has a long history of providing value-for-money services to their colleagues at the council and external clients. We are an innovative, commercially-focused legal team and we like to keep ourselves at the forefront of the latest legal developments.

The exciting prospect of setting up an alternative business structure, or ABS, captured our entrepreneurial spirit particularly as we would be the first to evolve from an in-house legal team in the North of England.

We are confident that our expertise and knowledge would provide a valuable resource to others. However, due to regulatory rules, we are not able to sell our services more widely than the North Yorkshire boundaries.

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Our aim was to provide legal services to the public, private and voluntary sectors through a stand-alone company initially using seconded resource from NYCC. Thus, First North Law Ltd was born.

I was under no illusion that it was going to be easy; I needed to draw on a multitude of skills that I had developed along the way in traditional legal roles and also from my experience of setting up my own company outside of my legal career.

Firstly, we looked at our unique selling points; what customers would want; and how we could compete in the market place with our private sector colleagues. We needed to play to our strengths and start with a sector in which we excel - the education legal advice sector - and exploit our significant expertise in this area.

Finding our place
We quickly identified our unique selling points which are listed below.

  1. We are a trusted brand: we are North Yorkshire County Council’s in-house team but are seconded to work for First North Law. Whilst we have a specialist legal education advice team, we provide a full range of legal support from commercial/procurement support, employment law to children’s/adult’s social care advice.
  2. First North Law operates with a strong public sector ethos and profits made will be invested back into the public sector. Our customers will benefit from receiving excellent legal services that are extremely competitively priced in comparison with other legal services providers. We work in true partnership with our customers.
  3. We offer a significant range of legal services and have particular expertise in the education sector; we understand the legal duties and challenges faced in this area and this enables us to achieve the best outcomes for our customers. Our legal advice helpline provides services to schools, colleges and academies and has been operational for over 17 years. Our legal services in this area are second to none.
  4. We act with transparency, honesty and reliability built into every aspect of our work to give complete confidence in our services and charges to our customers.

Lining up the hurdles

We also needed to identify and overcome the challenges ahead.

We knew, in the real world, we were not going to be able to be completely certain about our business uptake and growth; as with the majority of new ‘start up’ companies, this was going to be a risk management exercise between best and worst case scenarios. We communicated this very clearly to our elected members and senior management.

We were careful to keep the development team small and worked with colleagues who had experience of working ‘outside the box’ and who were skilled at securing cooperation from others. This kept bureaucracy in decision-making to a minimum and allowed the project to develop at pace.

We did not want this project to be ‘just another job’, it was important for everyone to understand that this constituted an important opportunity to diversify workload, generate revenue, and provide job security for the future. Securing this goodwill, support and willingness to learn new systems and processes and adopt a more commercial mind-set was instrumental to the success of the project.

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It was also critical to get elected member and NYCC senior management ‘buy-in’ for the commercial venture and to make sure they accepted the risks in creating a new company which could not absolutely guarantee any set returns on investment.

We set up a good governance and decision-making framework for the company which included regular board meetings and monitoring sessions for the Compliance Officer for Legal Practice (COLP) and the Compliance Officer for Finance and Administration (COFA). This not only kept the pace for the project development but it also gave confidence to our senior management.

In order to secure SRA approval for First North Law, we had to work closely with the SRA; we established an excellent client relationship contact, who guided and supported us with the ABS application process. Face-to-face meetings reaped benefits and helped with the relationship.

We recognised the need to use the right kind of expertise at the right time, whether that be internal services or outside expertise. We worked very closely with our internal systems colleagues in order to put in place the framework and processes to allow First North Law to operate with clear separation from the NYCC systems. The technical steps to this can be challenging, especially in terms of technology, and it was crucial to get internal key players on board early.

It was essential to implement a charging structure (at realistic commercial rates) to allow NYCC to charge First North Law for any services rendered (either directly via seconded staff hours or indirectly via support/systems functions) in order to provide an audit trail which would demonstrate that public services were not being inappropriately used and that the public sector is not subsidising the wholly owned company.

Setting up First North Law is one of the most challenging but satisfying tasks I have undertaken during a long legal career. The launch of the company and ‘opening the shop door’ was a very exciting moment in recognition for all that we had achieved.

Some background
The creation of First North Law was developed to support North Yorkshire County Council’s commercial growth and is one of the companies that forms part of the expanding portfolio of services offered to external markets. These commercial ambitions are driven by the council’s determination to protect as well as transform frontline services.

North Yorkshire’s trading arm already generates around £95m, contributes £2.2m towards the costs of the council and adds £3.6m profit on top.

First North Law, as the name simply suggests, is the first ABS developed from a local authority in the North of England to trade in legal services. I am proud to have set up a company which showcases the skills of a legal team that has an enviable background and reputation in the provision of legal services and in achieving excellent customer satisfaction.

We believe First North Law is a law firm with a difference: we take pride in the services we offer and are confident that the company will thrive and achieve a strong customer base in order to achieve our commercial ambitions.

Hilary Irving is a Director of First North Law.

www.firstnorthlaw.co.uk

Insight December 2018 Cover

This article was first published in the December 2018 edition of Local Government Lawyer Insight, which can be accessed at http://www.localgovernmentlawyer.co.uk/insight

Insight is published four times a year and is circulated free-of-charge to all Local Government Lawyer newsletter subscribers (click here to subscribe) in electronic format. A single hard copy is also circulated to all local authority legal departments in England and Wales.

Also in this issue:

Sands of time
How can local government legal ensure its own survival?

Interview: Suki Binjal
LLG President on the future for local government lawyers

Time to shine
Why local government lawyers shouldn't fear management roles

Through the looking glass
The impact of Sir Cliff Richard’s victory over the BBC for councils’ relationships with the press

Look North
Behind the North’s first local authority ABS

Spotlight: Child Protection

  • Order in Court - good practice, bad practice and the pitfalls when it comes to local authorities and public law proceedings.
  • s20: Some welcome guidance from the Supreme Court
  • Local authorities and s.38(6) assessments, p24
  • Taking the strain? Is a crisis looming for local authority child care lawyers?

Spotlight: Place

  • The role of local authorities in housing supply
  • Unlocking stalled development sites
  • Property market snapshot
  • The importance of Place and revenue growth for local government