3.4.1 There are a number of specialists within the legal profession (on property, tax, corporate finance etc), who have built up considerable sector-specific expertise in PFI, and public-private partnerships. However, it pays to check that both the firm and individual have the expertise required, particularly commercial experience of negotiating project finance.
3.4.2 A number of objective legal reference guides to firms' capabilities and specialties exist, including PFI, and could play a useful role in the decision-making process. Internal legal teams must also be consulted closely on the appointment of external legal advisers. Again, consideration should be made of what skills and experience could be provided by in-house lawyers before considering the scope of external advice required.
3.4.3 Particular areas where, after exploring in-house options, external legal advice may be appropriate (without duplicating financial advice) include:
• structuring the transaction and advising on the procurement approach to be taken that best avoids the pitfalls of previous projects;
• advice on contractual issues on invitation to tender documentation, the project agreement, its terms and conditions, and any lease and other agreements;
• contract terms and conditions following appropriate published Taskforce model;
• how to approach negotiations with bidders, possibly undertaking certain aspects of negotiation on the procurer's behalf;
• drafting and settling of final contracts; and
• other more general advice, for example, on taxation, property, planning, environmental law, banking, competition law and intellectual property.
3.4.4 An important aspect of good legal advice is that the adviser should clearly explain to the procurer the implications of contract terms and other legal issues. As part of this work, the legal adviser should document for the procurer how the proposed PFI contract will achieve the allocation of risk and the commercial terms which the procurer has negotiated with their selected contractor.
Example of an Inappropriate Legal Advisory Role
A Local Authority appointed legal advisers on the basis of their extensive experience of local government and by virtue of their being the lowest price bid. When it came to detailed contract negotiations, however, the advisers lacked the necessary project finance expertise to negotiate effectively and realistically with bidders, their funders and the funders' legal advisers. In many aspects, the external advisers merely duplicated the Authority's own in-house knowledge of local authority law rather than complementing it with the necessary commercial experience.