Last updateMon, 02 Mar 2015 10am


Subscribe to the magazine

We aim to advise you of the most up-to-date issues faced by major corporations and leading finance directors, in the form of interesting articles and individual stories.

If you are interested in subscribing to the Director of Finance magazine, register your details here.

More litigation against local authorities

An increasingly litigious society is putting pressure on local authorities as they face an ever increasing number of litigation cases.

In the last 12 months, 40 per cent of local authorities surveyed by law firm Eversheds experienced an increase in the number of disputes, with judicial reviews showing the largest increase.

Around one in five have experienced claims valued at more than £5m.

Stephen Cirell, head of the local government sector at Eversheds, said the findings confirmed what he knew was happening in the sector.

“We seem to be moving to a more US style litigious society which puts local authorities in the front line. They need to have the teams and the resources available to handle a range of litigation cases from judicial reviews through to complex contractual issues and often high value property disputes," Cirell added.

The research revealed that authorities are moving to a multi-channel approach to providing legal services, with a greater emphasis on using counsel and external legal support as well as strengthening in-house legal teams.

There is a focus on the nature of the claim and the merit for seeking external advice and support.

Overall, respondents felt that 75/25 per cent was the optimal balance of in-house dispute advice versus external advice, with 42 per cent employing external lawyers because of a lack of financial resources and personnel.

"Historically local authorities have always cited cost as a reason for not working with external legal advisers, but the need for expert knowledge and experience in specialist areas and the increased pressures on legal teams means that cost has become just one of the factors being considered," Cirell explained.

A finding that could be of concern in the report was that the number of disputes and the volume of work in many authorities are preventing legal teams from developing new techniques and approaches to dispute resolution.

Litigation is still the most common dispute resolution technique, with a third of local authorities stating it as their preferred approach, but this was primarily driven by a lack of experience of alternatives as opposed to proactive choice.

Alternative approaches are increasing, however, with 43 per cent of authorities increasingly employing alternative dispute resolution (ADR).

The findings indicate the most preferred method of handling disputes is determined by the cost, with the least costly and most cost effective option being the most preferred, rather than the method most likely to reach a satisfactory solution.

Cirell said that local authorities' legal teams were dealing with rapidly increasing work loads and reduced time to look at refining their resolution approaches.

He warned that they will need to start considering how they are going to manage their work load.

“We believe that many more will be taking a more private sector approach and moving to a panel system for external support,” he concluded.

In light of the increase in litigation, over the coming year nearly a third of local authorities anticipate an increase to their internal legal teams.

It is generally perceived as difficult to recruit staff for these roles, however, with 59 per cent saying recruitment is a very hard task.

Although work loads are already high, the timing of actions is unpredictable and coupled with the inability to hire staff at short notice local authorities may be considering the greater use of counsel and external lawyers to tackle case work.

The survey looked at a cross section of local authorities from County Councils, London Borough Councils, Unitary Authorities and Metropolitan Authorities.

Related articles

Related links

Latest News

Most Read

Latest Magazine

Follow Us On Twitter