Use of legal services

Management of Legal Services – Chief Executive Responsibilities

It is the responsibility of the chief executive of each Financial Management and Accountability Act 1997 agency to manage the legal service needs of the agency efficiently and effectively.  The Legal Services Directions 2005 (‘the Directions’) issued by the Attorney-General under section 55ZF of the Judiciary Act 1903 set out the framework for management of legal services and handling of legal matters by Australian Government agencies.  The Directions are available on the Office of Legal Services Coordination website.

Paragraph 11.1 of the Directions spells out key obligations on agency chief executives as follows:

The Chief Executive of an FMA agency is responsible for ensuring that:

• the agency’s arrangements for legal services, especially any litigation for which the agency is responsible, are handled efficiently and effectively,
• appropriate management strategies and practices are adopted so as to achieve compliance with these Directions,
• the agency’s legal services purchasing, including expenditure, is appropriately recorded and monitored, and that, by 30 October each  year, the agency makes publicly available records of its legal services expenditure for the previous financial year,
• lawyers (whether AGS, the Attorney-General’s Department, private lawyers, counsel or in-house lawyers) providing legal services to the agency are aware of, and are required to assist in ensuring that the agency complies with, these Directions (including compliance by legal services providers with these Directions through contractual arrangements wherever possible),
• details of any possible, apparent or alleged breaches are reported to the Attorney-General or OLSC, together with steps taken or proposed to remedy any breaches,
• the agency reports to OLSC about the legal services expenditure and legal work of the agency, using a template approved by OLSC that specifies the matters to be reported, within 60 days after the end of each financial year (a new obligation commencing from the end of the 2008-09 financial year),
• any matters required to be approved by the Attorney-General or the Attorney-General’s delegate are raised promptly, and
• any matters of which the Attorney-General or OLSC is required to be informed are notified promptly.

Effective management of legal services, taking into account the specific operating environment and responsibilities of the agency, offers a number of benefits for agencies.  For example, proper handling of legal matters is vital for overall risk management, including by effective use of legal advice to identify deficiencies in agency operations that may give rise to unnecessary or inappropriate legal risk.  Further, careful attention to the optimal mix of legal services for an agency can ensure optimal value for money, not only in respect of the legal services received, but for other activities for which legal services are an input.

Legal Services Purchasing

Paragraph 9A.1 of the Legal Services Directions introduces Appendix F to the Directions, which requires a Commonwealth agency to use a common form tender package approved by the Attorney-General when procuring its legal services from external legal services providers. The package is intended to streamline the process for purchasing legal services. It will also require agencies to take into account the pro bono work undertaken, and proposed to be undertaken, by tendering firms.

A useful source of information for Australian Government agencies purchasing legal services is the Australian National Audit Office’s Legal Services Arrangements in Australian Government Agencies Better Practice guide of August 2006. The Better Practice guide was developed following the 2005 Australian National Audit Office report on legal services arrangements in the Australian Public Service.   This report examined the efficiency and effectiveness of the procurement and management of legal services by Australian Government agencies and the Better Practice guide contains a number of recommendations and guidelines for better practice.  The report and the Better Practice guide are available on the Australian National Audit Office website.

The Legal Services Directions

The Legal Services Directions, referred to above, apply to Financial Management and Accountability Act 1997 agencies.  Certain provisions also apply to other Commonwealth entities (see paragraph 12).  Examples of the matters governed by the Directions in relation to agencies are as follows.

• Reporting: Agencies are to report to the Attorney-General or OLSC on significant issues that arise in the provision of legal services, especially in handling claims and conducting litigation (paragraph 3.1).
• Tied work: Certain types of legal work for Australian Government agencies, such as constitutional, public international law, advice to Cabinet, national security and legislative drafting work, can only be performed by 'tied' providers of legal services (for example the Attorney-General’s Department or the Australian Government Solicitor, depending on the nature of the tied work).  Exemptions from these requirements can be granted in appropriate cases.  See paragraph 2 and Appendix A to the Directions.  One purpose of the tied work rules is to ensure a consistent and coherent legal position is taken in key strategic areas of law.
• Claims/ Model Litigant: Claims and litigation are to be handled in accordance with certain rules, including the obligation on the Australian Government to act as a model litigant (paragraph 4 and Appendix B), and in particular, noting that agencies are not to start legal proceedings unless they are satisfied that litigation is the most suitable method of dispute resolution.  The obligation to act as a model litigant extends to litigation before courts, alternative dispute resolution procedures, settlement negotiations, and merits reviews proceedings before tribunals.  Monetary claims brought by or against the Commonwealth must be settled in accordance with legal principle and practice, and where there is a major claim ( that is, claims exceeding $25,000), written legal advice that the settlement is in accordance with legal principle and practice is required (Appendix C).
• Counsel: There are restrictions as to the terms on which counsel may be engaged, including requirements that an agency cannot brief counsel unless OLSC has approved an initial rate for counsel, and counsel cannot be paid an amount above specified thresholds without the approval of the Attorney-General or delegate (paragraphs 4E and 5 of Appendix D).  A key objective is to ensure a broad range of counsel is skilled in undertaking work for the Australian Government, including women.  All barristers are to be selected for their skills and competency independently of their gender, and an agency is to ensure that arbitrary or prejudicial factors do not operate to exclude the engagement of female barristers.
• Employees: Legal assistance may be provided to employees in specified circumstances (paragraph 9 and Appendix E).
• Consultation: Where legal advice is sought on legislation administered by another agency, that agency must be given a reasonable opportunity to consult on the proposal to request advice, a copy of the request, a reasonable opportunity to consult on the matter prior to finalisation of the advice, and a copy of the advice.  This is subject to certain exceptions (paragraph 10).
• Advice on constitutional law matters: Agencies that seek legal advice on a constitutional law issue from the Australian Government Solicitor must at the same time give a copy of the request for advice to the Secretary of the Attorney-General’s Department.

Office of Legal Services Coordination

The Office of Legal Services Coordination in the Attorney-General’s Department supports the Attorney-General in the performance of his First Law Officer role.  The Office has a number of functions relating to the Directions including the following:

• advising agencies and legal service providers to agencies on the interpretation and application of the Directions
• briefing the Attorney-General for the purposes of the Attorney-General’s exercise of discretions under the Directions (for example, the decision whether to pay counsel in excess of $5000 per day and the decision to allow in-house lawyers within agencies to act as solicitors on the record in court proceedings)
• exercising delegations under the Directions (for example, approval of counsel fee rates above $1600 for junior counsel and $2400 for senior counsel up to $5000, and decisions to provide exemption from ‘tied work’ requirements), and
• investigation of alleged breaches of the Directions and advising on or requiring remedial action as well as advising on process improvements to address the causes of breaches.

The Office of Legal Service Coordination’s other functions include a number relating to legal services for the Australian Government including:

• advice to the Attorney-General, and assistance to Commonwealth agencies on legal services purchasing arrangements
• administration of the Parliamentary Entitlements Regulations provisions governing legal assistance to Ministers
• support the Attorney-General in relation to his role as a shareholder Minister in the Australian Government Solicitor (along with the Minister for Finance and Deregulation), and
• support to the Solicitor-General and advice to agencies on whether the Solicitor-General is available to be briefed in a particular matter.

More information about OLSC’s functions, as well as publications that provide general advice about such matters as interpretation of the Directions, can be found at http://www.ag.gov.au/olsc.