At the beginning of February, a Seymour Pierce report found that the value of Government contracts awarded to the private sector had doubled over the past four years. Such outsourcing included finance, HR and payroll and legal services.

I think the increase in outsourced legal services is a positive development for all involved. In house lawyers are able to focus on strategy and implementation while developing expertise in niche areas. At the same time, the local authority has flexibility to choose high quality advice at a suitable cost, and can confidently enter into new legal territories with the support of both in house and external lawyers.

This partnership will ultimately make access to free, quality initial advice by third parties more readily available to local authorities.

Historically, local authorities have appointed panels of lawyers under contracted agreements, which have provided competitive pricing, as well as additional benefits that include secondments, training, web hosting, knowledge sharing and helpline access. Traditionally, this has been an expensive process, but new central purchasing body rules have allowed the cost and time factors associated with running procurements to be substantially reduced. This has led to an increase in external legal advice, rather than in house, being used.

Local authorities are often experienced in dealing with European law, such as competition law, state aid and procurement. However, it has been suggested that in house lawyers specialising in these areas cannot be protected from the Freedom of Information Act 2000 simply by citing legal advice privilege. As such, external advisors, who are covered by this privilege, are needed to protect the sensitive records of all parties involved.

Local authorities are now more involved in the wider economy and regeneration than they used to be, which can cause a conflict of interest for in house lawyers, especially where parts of a development programme are transferred to a joint venture or trading subsidiary. Regeneration and land assembly projects are now commonly carried out by joint ventures, which could cause a dispute if an in house lawyer was to advise the local authority fund on seeking capitalisation, while at the same time instructing it on grounds of financial prudence.

To prevent these situations and ensure that any of the previously mentioned issues are overcome, external lawyers can be used to counsel one of the parties.

Jay Mehta is associate in the public sector group at business law firm DWF.