The London boroughs of Harrow and Barnet will formally merge their in-house legal teams from 3 September.
The two councils approved the shared services arrangement in April, saying that the move would give them greater depth and range of expertise and reduce the amount of money spent on external lawyers.
The shared service is also expected to deliver savings by reducing spend on case management software, law libraries and office space.
The aim is to save £4.4m over a five-year period as well as meet likely rising demand for legal services.
Under the arrangements, Barnet staff will transfer to Harrow under TUPE. At first the lawyers will work on their “own council's projects”, but they will gradually begin to handle matters for both authorities.
Harrow Council Portfolio Holder for Performance, Customer Services & Corporate Services, Cllr Graham Henson, said: “To protect the front-line services our residents rely on, we are continually looking at options to reduce our back office costs and find savings that have no impact on residents.
“By linking our legal services with Barnet in an innovative partnership we will be able to deliver savings whilst increasing the range of legal expertise both councils can provide. It is an excellent example of how both councils are working together to manage the difficult situation we face.”
Nick Walkley, Chief Executive of Barnet Council, added: "This innovative move will bring real benefits to both councils, not only financially but through sharing our expertise and examples of best practice."