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Once the business case is signed off, and the baton passed to the design stage, it is important to consider the wide range of legal implications as early as possible.
Entering into a shared service is not the easiest option especially as it can be much more complicated than a traditional outsourcing or commissioning arrangement. So, when the focus should be on delivering the vision for the shared service and the benefits to be gained, exploring the legal implications could feel like the rain clouds have arrived to spoil the carnival.
Whether or not the partners discuss them openly, there may be some issues that are lurking in the background and it is important to agree how they should be dealt when the partners are working well together, instead of at a future time when relationships may be under considerable pressure.
Examples of unanswered questions could be….
● How do we handle things if something goes wrong?
● I am handing over my budgets/staff, what control will I have?
● How much of our limited time/resource are needed to pull an agreement together?
● We have got this far, so surely we can sort things out amicably if there is a problem!
● I have downloaded this agreement from the internet and it seems fine to me, so why not use it?
Whilst, partnership trust is essential, some written assurances will still be required especially where staff moves are involved, budgets committed and joint services are to be provided.
The best time to start drafting these is when there is a preferred model that the design will be based on the shared vision.
Legal Agreement or a Memorandum of Understanding – what is the difference and when might they be used?
You may want to talk to your legal people about using a Memorandum of Understanding (MoU) initially because it may take some time to resolve the details for a properly drafted agreement.
The MoU is not a legal agreement and will not normally be legally binding. However, it can be used by the parties at an early stage once they have determined what they want or need, and should record agreed actions, commitments or intentions. There is an example tool for drafting an MOU between partners in the SSA Trust & Shared Vision Toolbox.
Once the design stage begins, and the implications for staffing, budgets and governance become real, you should consider recruiting at least one legal adviser to the design team.
They will help you move from an MOU to more formal legal agreements.
These documents will bind the partners to actions, so the accuracy and attention to detail of experienced, skilled legal minds is critical. The agreement will not adequately reflect the arrangements into which the parties are entering unless certain basic points have been resolved including: –
● What is the scope of the new collaboration – eg.whole authority, or specific functions?
● What is the chosen model – collaboration, partnership, hosting, commissioning or agency?
● What are the business case imperatives and financial issues that require legal agreements?
● How will staffing arrangements be structured – eg secondment/TUPE?
● What are the obligations of each party and consequences of any breaches?
● How will the governance, accountability, control and risk be managed
What terms might be included?
One size does not fit all, so the details will depend on the arrangements made by the parties.
On the next page I have set out a number of the areas I would expect to see in an agreement if you asked me to review.
Hope for the best, prepare for the worst…
It is worth investing time and resources to produce an agreement that accurately records the arrangements, intentions, and consequences of failure to deliver on promises made by the parties.
In addition to the obvious protections and assurances, a written agreement can provide guidance for others when future difficulties arise – eg governance arrangements, performance arrangements and steps to be taken if a party does not fulfil their obligations.
Finally, it is advisable that the agreement should not be produced by lawyers in isolation. The legal advisers should have a good understanding of reasons behind the parties’ agreement; and the arrangements they have devised to ensure that their vision for the shared services is achieved and objectives are met.
Take the lawyers ‘back to the floor’…
It is also helpful if lawyers have a good understanding of the challenges encountered when implementing or operating a shared service.
Why not take ask them to experience the work being carried out by the service to be shared? Get them to meet the staff and even the residents, students or patients who will benefit from the new service.
It will convert their legal advice and activity from a dry exercise, they develop in a remote office, to a very human interaction that will bring a passion for success to their work.