Law of the landlords

The emergence of joint procurement processes for legal services, along with the sharing of legal panels by social landlords, suggests that law firms looking to work with the sector face the prospect of their industry undergoing the trials of consolidation. Mark Cantrell reports

Legal firms are being framed – no, not in the slang sense of being ‘set up’, but rather in the ways that the working relationship with clients is shifting as the social housing sector continues to evolve.

Think frameworked, then, as modern methods of procurement are being expanded out of their formative arena in the physical world of repairs and maintenance and into the realm of the ‘brain work’ that is legal – and other – services. Quite how this rise of frameworks, panel working, and consortia-backed tendering and resource sharing will subsequently affect the legal industry is currently an open question, but change is most definitely afoot.

Certainly, the processes have played an important role in shaping the modern construction industry, insofar as it relates to facilities management and refurbishment, changing the form and function of the competing businesses as much as it has their clients. In some ways, along with the countless other drivers, such measures have seen a transformation in the nature and operations of social housing
over the last 20 years, as much as those who seek to engage in business with them. Such is the ongoing legacy of partnering.

There is no direct comparison, of course, between a law firm and a maintenance contractor, but both agencies must be procured according to established rules and guidelines. And the driving factors of achieving value for money with cost-savings that can be ploughed back into services, not to mention quality of service, transcend any field of endeavour, be it mental or manual. So, in that regard there is little distinction.

When it comes to law, however, the scope is as broad as it is deep. In this day and age, there is perhaps little of life that remains untouched by legal matters, so procuring the right legal minds to help a social landlord stay well-informed, and properly advised, is increasingly crucial. The added drivers are many; there are potential pitfalls to be aware of and potential pratfalls to avoid.

“Over the last 20 years, housing associations have had to develop into what are multi-million pound businesses – but with that strong social conscience that runs as a thread throughout the sector,” said Nick Atkin, chief executive of Halton Housing Trust. “Because of the increasingly complex nature of the things we are involved in, we need to make sure we dot every ‘i’ and cross every ‘t’ – and that we don’t fall foul of any technical legislation that is out there.”

There’s certainly a lot for the sector to take in these days, not only for core housing services such as tenancy agreements, rent arrears, employment and human resources, but also what may be termed the “responsive legal” matters such as injunctions against anti-social behaviour. Beyond that, the increasingly complex activities expected of the sector, such as regeneration, brings in a host of additional areas of legal expertise, such as commercial contracts, procurement, matters of finance, conveyancing, land issues, newbuild, shared ownership and more. Next, there are those ‘constitutional’ matters to address – such as governance, board representation and so forth. Then, well – the list can go on. And that’s before we even begin to think of the ramifications of living in an increasingly litigious society.

Sound legal advice, therefore, is a day-to-day essential, so it is perhaps little wonder that the social housing sector is taking more lawyers on board to long-term panels so that advice on legal matters
is readily available ‘on tap’ as it were.

Generate, an informal association of social landlords’ chief executives, chaired by Halton’s Atkin, recently launched its new Legal Services Procurement Framework to provide this ready stock of legal expertise to the member organisations of the group. What’s more, it is looking to make the services of its panel available to likeminded RSLs who wish to join.

The reasoning, as with any joint procurement exercise, is to pool resources collectively and generate cost-savings that can be ploughed back into business. Generate’s framework is slightly different, however, in that up to 25 per cent of those savings are to be re-invested directly in core housing association services, or to fund new initiatives that the group’s members would not otherwise have the funding to carry out. The legal advice obtained from the appointed panellists of firms is also shared between the member associations, so they are not paying for the same advice four times as individual organisations, but only once.

There are a number of firms on the new framework, including Weightmans, Devonshires, Forbes, Anthony Collins, Cobbets, Coffin Mew, Howarth Goodman, Mace & Jones, Brabners Chaffe Street, and Berryman Lace Mawer. Between them, they are providing a wide range of legal services, including housing, property, employment and pensions, corporate and governance, commercial, funding, litigation, business restructuring and projects, and in addition to the savings in fees, it is also expected to generate considerable back office savings by reducing duplication and so forth.

It’s something of a curious circularity; legal advice is an essential aspect of the procurement process, so how does one secure the necessary legal advice for the procurement of legal services? Generate’s answer was to team up with the consortium Fusion21 to help put the framework together and procure the legal expertise. In and of itself, Generate’s new legal procurement framework is a good deal for its members, but it’s not the only joint procurement exercise in town, indicating that the legal landscape may be in for a ‘re-cultivation’ in the coming years. Certainly, according to TLT S olicitors, based in London and Bristol, it may stimulate some consolidation within the legal industry.

“Certainly over the last few years, there’s been more formal relationships in terms of housing associations going out to tender services and having panels, but what is emerging now that is different is the fact that a number of associations or local authorities are combining together to procure legal services,” said Lynne Murray, a partner with TLT and the head of the firm’s social housing practice in London.

TLT has itself recently won positions on two such panels established by clients who have teamed up to jointly procure legal provision. The London Boroughs Legal Alliance (LBLA) has appointed 16 firms (including TLT) to a three-year panel to provide legal advice in such areas as commercial, construction litigation, procurements and outsourcing, housing, property and regeneration, and other specialist areas. Again, the onus is on pooling resources and cutting costs, and it is expected to save millions of pounds a year for the member authorities, which include Camden, Hammersmith & Fulham, H illingdon and H ounslow, the West London Waste Authority, and others.

The firm is also one of 13 practices appointed to Birmingham City Council’s new legal panel, contracted for four years, and TLT is providing specialist legal advice on planning. The panel is open to 38 regional and national local authorities, such as Herefordshire County Council, the London Borough of Hackney, and Wolverhampton City Council, so the member firms’ advice is set to get around. And BCC has also extended an invitation to other authorities to make use of the panel, without incurring the costs of procurement. So, it points to the potential for savings all round. For local authorities, as for social landlords, the benefits of joint procurement and sharing information are clear in terms of savings and efficiencies. There are also some benefits for the legal firms appointed, such as a steady stream of work, perhaps a raised profile and networking, but conversely there are the inevitable downsides.

As TLT’s Murray added: “Whereas before if you tendered to onehousing association but didn’t get on their panel, well that was only one housing association. Now if you tender to a consortium then
that could potentially be seven, 10, 20 housing associations that you no longer work for. So, is this likely to lead to a rationalisation of the sector? I think quite possibly it might well do. That’s going to be something to watch over the next two or three years.”