Make or buy? Enabling environment for public-private partnerships and creative sourcing of people-centred justice services.

“At the level of ministries, the budget for doing justice is almost exclusively going to the organizations in which lawyers traditionally work in their individual capacities: courts, prosecution and legal aid.“ Task Force for Justice

Public organization funding and delivery

Privatization

Procurement

Public-private partnerships

Deregulation

Regulatory sandbox initiatives

Photo by Ewel Z

The problem of organising justice services

Justice leaders must cope with an ever growing justice gap. Ministers, top-level judges, leaders of bars and law societies see that their services are responding to only a small part of the demand for justice. Leaders are realising that different approaches are needed for the design, funding and supply of justice services (read our report on Towards basic justice are for everyone: challenges and promising approaches). 

The way forward: Enable creativity and innovation with achieving outcomes in mind

A key strategy to bridge the justice gap is to reconsider the ways of organizing and delivery of justice services. Powerful movements are challenging the status quo in the provision of many public services, including in the field of justice. New public management, privatization, performance-based budgeting and other streams of theory and practice question the balance between public and private delivery. As a leader you can look at the justice services from the perspective of the ‘make or buy’ decision and review several models for delivery of justice services:

As a justice leader your ultimate challenge is not whether justice services should be public or private; in-house or out-house. The objective is to reduce the justice gap through delivery of justice that works for the people — people-centred justice. Below we list models that have the potential to resolve the justice needs of individuals and companies. All models are based on 2 key criteria for deciding who produces and delivers justice services, and how:

By definition the public sector organises, finances and delivers many justice services, particularly related to adjudication. Sovereignty, public monopoly over the exercise of power, and market failures are the three most common grounds for public delivery of services.

We review a couple of scenarios where the make or buy of justice service decisions are involved. As a justice leader, you can use two criteria to assess what is the best place for a justice service. These criteria are:

1) Is the service financially sustainable in a market setting?
2) How critical is the service for a policy or a set of policies?

Policy-critical
Not policy-critical
Financially sustainable
PPP, Procurement
Privatise, Deregulate
Financially not sustainable
Keep in-house
Procurement

Public organisation, funding and delivery

Justice services are provided by public authorities with public funding when market transfer is impossible or undesirable. Biding adjudication of civil, criminal and administrative disputes is almost universally performed by state-run courts. Investigation and indictment in criminal cases is also reserved for police and prosecution services. The key reasons for public delivery of justice services are:

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Based on careful analysis, as a justice leader you may decide that a service currently organised, funded and delivered by the public sector should be transferred to the private sector. The private sector assumes the responsibility for service delivery and for the business model. The state can keep the oversight functions through a regulatory agency or transfer oversight to self-governing organisations. Some of the advantages of private sector delivery are – greater competition, flexibility, creativity and innovation due to specialisation and unique skills or technologies, less red tape and lower costs. There are also concerns about the privatisation of public services: quality decrease, cherry picking, leaving out those who cannot pay, discontinuity of service if no profit, costs of contract management and oversight, emptying of the public sector from skills to properly monitor and so on.

Following are some examples of privatisation of justice services: prison services in the US & UK, land registries in UK, enforcement of court decisions in several countries eg. North Macedonia and notaries in Portugal, Poland and Hungary.

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Privatisation

Procurement

In procurement, the public sector remains responsible for the delivery of a service but instead of producing it with it’s own resources, specifies contractual obligations and procures the service from the market. Procurement allows the public sector to focus on core  justice activities. Non-core activities are sourced from the market where competition, innovation and specialisation provide many benefits. For instance, courts often contract out IT services, security, archiving and building maintenance service while keeping the focus on its core service – adjudicating disputes. Lower price, higher quality, scalability, reduced or eliminated need for costly investments are some of the main benefits. Disadvantages of the procurement model are the principal-agent problems (information asymmetry and dependency), loss of capacity in the public sector and distortion in market competition. Several modalities are possible based on the type of the service, the relationship between the contracting parties and other factors. Some of the most frequent modes of soliciting services from the market are contracting out, procurement, and concession. The most frequently used criteria for selecting a provider are: economic and financial standings of the provider, value for money, lowest price, management and technical skills and management and quality control systems.

Particularly interesting for justice leaders is the specific case of business process outsourcing in the justice field: courts and other adjudication tribunals can bid entire court procedures to external parties. For instance, a court can solicit bids for providers of divorce procedure, money order procedure or administrative appeal procedure. In such a case, a whole process is outsourced. The role of the court changes from provider to producer of the service. There are several benefits of such a business process outsourcing:

Challenges that hamper business process outsourcing in the field of justice:

An example of business process outsourcing is the BC Civil Resolution Tribunal (Civil Resolution Tribunal Act) in Canada.

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Public-private partnerships (PPP) are used mostly in infrastructure projects or when the service is complicated and requires flexible and long-term relationships between public and private actors. Diverse PPP schemes exist. Most often the model is used to secure private financing and operation of an asset against future payment through fees and taxes. The private partner could be responsible for various processes — financing, construction, operation, management and maintenance. PPP scheme can be invoked to arrange the provision of the service. In the field of justice PPP are mostly used in penitentiary around the needs to build and maintain prisons.

Most often, the example of PPP in justice is the building, operation and maintenance of private incarceration facilities. See examples here and here

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Public-private partnerships (PPP)

Deregulation

Аs a justice leader you probably deal with situations when regulation (or self-regulation) gives monopoly for service delivery to a limited group of actors in the private sector. One strategy for reducing the justice gap is to amend or abolish the regulation so that the service is organised on a competitive basis. The most obvious example is the monopoly of the organised bar associations over all or part of services such as legal advice and legal representation. Such monopoly protects the incumbent actors against national or international competition. Other examples of regulation are the ownership of law firms, legal education, fee arrangements, employment of lawyers by non-lawyers, advertising of legal services etc.  With deregulation (also called liberalisation) the market is opened to all or to a broader array of private or public actors.

Further Reading:

Clementi, D. (2004). Review of the regulatory framework for legal services in England and Wales.  

UK Legal Services Act 2007.

Scotland Legal Services Act 2010.

Garoupa, N. (2013). Globalization and deregulation of legal services. International Review of Law and Economics, 38.

Boston Consulting Group. (2021). The Effects of Deregulating Legal Services in England and Wales Effects of Deregulating Legal Services in England and Wales

Hsieh, P. L.-T. (2013). ASEAN’s Liberalization of Legal Services: The Singapore Case. Asian Journal of WTO and International Health Law and Policy, 8(2), 475–497.

IAALS, Unlocking Legal Innovation Project

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Тhese are safe environments that allow you as a justice leader to experiment with services, delivery and business model arrangements that the existing regulation would not permit. In the sandbox, alternative models can be tested on an experimental basis under the oversight of a regulatory authority which monitors specific aspects of the delivery. In other words, sandboxes are a safe testing ground for new services. In this environment, entrepreneurs can test different modes of delivery and business models. The regulators can observe the outcomes and the impact of such models.

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Regulatory sandbox initiatives

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