Almost £3m of debt owed to cash-strapped Northamptonshire County Council by a law firm it co-owns could be at risk.
LGSS Law’s finances are being ‘closely monitored’ by the board and shareholders – which include the council and neighbouring authorities Cambridgeshire County Council and Central Bedfordshire Council – because ‘recovery of sums are at risk’.
A finance report to go before the Conservative-run cabinet on Tuesday (May 14) says there have been “a number of long-standing, historic billing issues between LGSS Law and Northamptonshire County Council and the council continues to work with LGSS Law to resolve these outstanding queries as a priority, making payment for services which can be suitably evidenced.”
A £1 million overdraft given by the council to the social enterprise law firm when it was set up in 2015 has not been repaid and according to the report ‘ at present the organisation is relying on this resource for working capital.’
The law firm, whose head office is in Huntingdon and has employed up to 150 solicitors, also owes NCC £1.78 million.
£1.55 million of this sum is linked to historic recharges of agency workers dating back to the 2015-16 financial year.
Leader of the opposition Councillor Bob Scott said it was a mistake for the council to set up the company in the first place.
He said: “The monitoring of it has clearly been lax. LGSS, was the brainchild of former chief executive Paul Blantern and clearly has not worked out.
“This is public money and it should have been under constant review. There has been a lot of issues and the fees kept going up and up. It has been a mis-managed venture.”
The council is making a provision for £356,000 which is 20 per cent of the overdraft and debt, in case it cannot be recovered.
Leader of the Liberal Democrat group Councillor Chris Stanbra said ‘there are questions that need to be answered’.
He said: “Someone has taken their eye off the ball when it comes to dealing with LGSS Law. When the overdraft was first given there should have been a repayment schedule put in place.
“Someone needs to explain how it has come to this to ensure that it does not happen again.”
The company has lost a contract recently. As of last month, East Northamptonshire Council (ENC) moved its legal contract from LGSS Law to District Law.
An ENC council report said the decision had been made because ‘while legal advice had been generally good’ there had been issues with high staff turnover, untimely advice and late invoices.
From its inception, the social enterprise, which was one of the first of its kind in the country, was run by Quentin Baker. Mr Baker left LGSS Law in May 2018.
The organisation’s interim executive director Debbie Carter-Hughes has been contacted for comment.