Innovation: Essex Legal Services given green light to apply for Alternative Business Structure status

Essex Legal Services’ (ELS) innovative in-house legal department has received the go ahead to apply for alternative business structure (ABS) status to enable it to generate further revenue.

Since March 2015, ELS – which has long conducted work for public bodies other than Essex County Council (ECC) – has been looking to establish an ABS to enable it to widen the remit of that outside work. At a meeting on 20 October ECC’s Cabinet said that ELS can take all necessary steps to achieve that ambition.

While ELS is able to work for many public bodies, there are restrictions under the current structure and new work may include charities, which ELS is currently unable to approach.

ELS clients include other councils, probation trusts, fire and police authorities, schools and academies, however initial forecasts have identified “additional surplus of £165,000, £963,000 and £1.8m from 2017/18 through to 2019/20 respectively, which would be achieved through adopting a growth strategy with the creation of an ABS listed as one of the key enablers,” according to a proposal prepared for the Cabinet meeting last week.

The proposal says that for tax reasons all legal work currently undertaken for ECC will remain with the in-house legal team. Only work that cannot be undertaken by the in-house legal service will be conducted under the ABS.

The Cabinet has agreed that director of legal services Philip Thomson will become a director of the ABS alongside Alex Hallam, ELS solicitor and assistant director.

The proposal says: “It is understood that following discussions with the SRA [Solicitors Regulation Authority] that these appointments are likely to receive approval as part of the ABS application.”

The ABS will be required to have a compliance officer for legal practice (COLP) and compliance officer for finance and administration (COFA) and it is proposed that Hallam will be the COLP while ELS’ head of practice management, Debbie Paget will be the COFA.

The ELS management team will now develop a business plan for the ABS, which has to be approved by the SRA.

Other revenue generating county council legal teams include Kent Legal Services, which was last year given the go ahead to apply for ABS status.

Almost 100 entities have been granted ABS status so far this year, including Schillings, Mishcon de Reya, Gordon Dadds and Nottingham Law School Legal Advice Centre.