Secretary’s Review of Commonwealth Legal Services report · Web view2020-04-14 · The critical...

Secretary’s Review of Commonwealth Legal Services

Chris Moraitis PSM

2016

http://agate.agdnet.ag.gov.au/resources/forms/

ContentsTransmittal Letter.............................................................................................................................................. iv

Terms of Reference.............................................................................................................................................v

Executive Summary...........................................................................................................................................vi

Current framework for legal services...........................................................................................................vii

Conclusions about the current framework...................................................................................................vii

A better framework for Commonwealth legal services...............................................................................viii

Coordination and collaboration to improve outcomes and support efficiency.............................................x

Better and more consistent standards for government lawyers and in-house legal areas...........................xi

Ensuring the best value external legal services...........................................................................................xiii

Chapter 1 – Introduction....................................................................................................................................1

Scope..............................................................................................................................................................1

Methodology..................................................................................................................................................1

Key concepts in Commonwealth legal service...............................................................................................2

Government policy context............................................................................................................................4

Observations about the current state of Commonwealth legal services.......................................................6

Notes on terminology and attribution.........................................................................................................12

Chapter 2 – Model for Commonwealth legal services.....................................................................................13

The current model for Commonwealth legal services.................................................................................13

The Australian Government Legal Service...................................................................................................19

The role of General Counsel.........................................................................................................................22

Clarifying the role of Australian Government Solicitor................................................................................26

The Office of Legal Services Coordination....................................................................................................32

Recommendations.......................................................................................................................................33

Chapter 3 – Mechanisms for collaboration and coordination.........................................................................35

Information sharing......................................................................................................................................35

Legal Services Directions..............................................................................................................................40

Tied Work.....................................................................................................................................................44

Significant Legal Issues.................................................................................................................................50

Solicitor on the record..................................................................................................................................54

Monetary Claims and Settlements...............................................................................................................56

The future role of Office of Legal Services Coordination.............................................................................57

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Chapter 4 – In-house legal areas......................................................................................................................62

Snapshot of in-house legal services.............................................................................................................62

Defining the role of in-house legal areas.....................................................................................................65

Influence of in-house legal areas.................................................................................................................67

Architecture – why systems and processes matter......................................................................................70

Shared services............................................................................................................................................75


Chapter 5 – Government Legal Careers...........................................................................................................78

Background..................................................................................................................................................78

Professional Identity....................................................................................................................................79

Professional development and training.......................................................................................................82

Mobility and recruitment.............................................................................................................................87


Chapter 6 – External legal services..................................................................................................................92

The role of external legal services in the Commonwealth legal market......................................................92

External Legal Services – procurement........................................................................................................94

Engagement of Counsel.............................................................................................................................107

Informed Purchaser....................................................................................................................................113

Recommendations.....................................................................................................................................116

Appendix 1 - Review Methodology................................................................................................................117

Introduction...............................................................................................................................................117

Stakeholder Engagement Strategy.............................................................................................................117

Research and Data Collection....................................................................................................................118

Comparative analysis of legal services in international and Australian jurisdictions.................................119

Appendix 2 - Data Collection Survey..............................................................................................................120

Methodology..............................................................................................................................................120

Snapshot of Survey Results........................................................................................................................121

Survey Data Tables.....................................................................................................................................122

Text of data collection survey and covering note.......................................................................................129

Appendix 3 - Entities consulted.....................................................................................................................136

Commonwealth Government....................................................................................................................136

Private Legal Sector....................................................................................................................................137

Other Jurisdictions.....................................................................................................................................137

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Industry and Other.....................................................................................................................................137

Forums, Information Sessions and Focus Groups......................................................................................139

Appendix 4 - Review Recommendations.......................................................................................................143

Appendix 5 - Glossary....................................................................................................................................148

Bibliography...................................................................................................................................................151

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Transmittal LetterSenator the Hon George Brandis QCAttorney-GeneralParliament HouseCanberra ACT 2600

Dear Attorney-General

Review of Commonwealth Legal Services

In accordance with the Terms of Reference issued to me on 18 December 2015, I am pleased to present to you the report of my Review of Commonwealth Legal Services.

This report considers how legal services can be delivered most effectively and efficiently to the Commonwealth to support government action and manage Commonwealth legal risk. It acknowledges the evolution of the Commonwealth legal services market since the last comprehensive review in 1998, and takes into account broader government initiatives including the Efficiency through Contestability Programme.

The findings and recommendations of this report draw upon the expertise and experience of a diverse, experienced and highly engaged group of stakeholders. I would like to thank those who gave their time as part of an extensive consultation process. In particular, I am grateful to the High Level Working Group for their insights.

I acknowledge the contribution of Mr David Borthwick AO PSM as an external adviser to the Review. Mr Borthwick’s experience and independent perspective were critical to shaping this report.

In conducting the Review and preparing this report, I was assisted by a team within the Attorney-General’s Department, led by Sara Samios and Paula Gonzalez. I am grateful for their advice, commitment and enthusiasm.

Yours sincerely

Chris Moraitis PSM

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Terms of ReferenceHaving regard to the role of the Attorney-General as First Law Officer, the size of Commonwealth legal spend, the diversity of the Commonwealth’s legal needs, the Efficiency through Contestability Programme and the need for an efficient and proportionate framework for the sustainable delivery of effective legal services to and by the Commonwealth and its entities, the Review is to examine and report on:

1. The means for ensuring appropriately coordinated and aligned Commonwealth legal services to identify and manage Commonwealth legal risks, take account of whole of government issues and avoid duplication;

2. The efficiency and effectiveness of legal branches of Commonwealth entities, including how in-house legal work is and should be organised and what elements of Commonwealth legal work should be competitively sourced;

3. The appropriate mechanisms for the efficient procurement of external legal services by Commonwealth entities, including the Legal Services Multi-Use List;

4. The appropriate role and scope of tied legal work;

5. Potential improvements to the Legal Services Directions 2005;

6. Possible savings to be brought forward in the 2016 Mid-Year Economic and Fiscal Outlook; and

7. Any other relevant matter concerning the delivery, performance or cost of Commonwealth legal work.

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Executive Summary The Review was asked to consider and report on an efficient and proportionate framework for the sustainable delivery of effective Commonwealth legal services.

The critical functions of Commonwealth legal services are to identify and manage Commonwealth legal risk, and enable and support Commonwealth policy, programmes and functions. The Review has examined how legal services can be delivered most effectively and efficiently to the Commonwealth, focusing on ensuring high-quality and coordinated advice is provided to Government in the future. The Review also considered how the arrangements support the role of the Attorney-General who, as the First Law Officer, is the chief legal adviser to Government. The Review has also arisen in the context of broader government reform agendas including the Efficiency through Contestability Programme.

The Review has found that current arrangements for Commonwealth legal services are not structured to best manage Commonwealth legal risk and are inconsistent in terms of delivering value. The Review has also found examples of good practice across the Commonwealth, including positive developments within entities and in engagement of the private sector. The Review has made recommendations in four key areas.

A better framework for Commonwealth legal services (Recommendations 1, 2 and 3) Linking government lawyers through automatic inclusion in an Australian Government Legal Service,

delivering information sharing, collaboration, guidance and professional development. Strengthening the accountability of General Counsel in entities for their contribution to a joined-up

approach to managing Commonwealth legal risk. Better positioning the Australian Government Solicitor to fulfil its role as the key central provider of

Commonwealth legal services, with an emphasis on defined priorities and delivering value.

Coordination and collaboration to improve outcomes and support efficiency (Recommendations 4, 5 and 6) Clarity of priorities and targeted resourcing for the Office of Legal Services Coordination to support

whole-of-government approaches and the roles of the First and Second Law Officers. An electronic solution to better share critical legal advice and other information held by Commonwealth

entities to improve consistency and reduce duplication of effort. Maintenance of tied work arrangements, with adjustments to ensure they achieve the core objective of

minimising risk to the Commonwealth’s position for the most critical legal issues.

Better and more consistent standards for government lawyers and in-house legal areas (Recommendations 7 and 8) Identifying and promulgating good practice arrangements for in-house legal areas in support of quality

outcomes and efficiency, including through shared arrangements if appropriate. A clear statement of expectations, ongoing tailored training in core skills and mobility opportunities for

government lawyers.

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Ensuring the best value external legal services (Recommendations 9 and 10) Maintaining external legal services providers as a critical component of Commonwealth legal services

arrangements. Obtaining better value for external legal services through establishment of a whole-of-government panel

and updating arrangements for engaging counsel.

Current framework for legal servicesThe current framework for Commonwealth legal services is largely a product of the implementation of the 1997 Logan Review, which resulted in the Australian Government Solicitor (AGS) becoming a government business enterprise (GBE) and provided greater flexibility for entities to determine how they obtain legal services. On 1 July 2015, AGS was consolidated back into the Attorney-General’s Department (AGD).

Since the Logan Review, there has been a marked change in the size of the Commonwealth legal market and in the market shares of participants. Commonwealth spending on legal services has more than doubled in real terms, due to factors including increased volume and complexity of regulation, and increased reach and complexity of Commonwealth programmes. The Commonwealth legal services market has become more decentralised since 1998. Most work is now done by in-house legal teams (52%) and private law firms (22%). AGS’ market share is now less than 15%, down from 46% in 1998. The structure of Commonwealth legal services is now substantially more decentralised than most comparable countries.

Although total legal spending has remained relatively static from 2008-09 to 2014-15, in-house legal areas have increased their market share. This most likely reflects the fiscally constrained environment and the perception that in-house legal services are cheaper.

Conclusions about the current frameworkChapter 1 identifies that, under the current framework for Commonwealth legal services:

In-house practices are larger than before and many are quite sophisticated. They have a strong awareness of their entity’s needs and are very responsive to entity priorities, but are less well connected to whole-of-government perspectives.

AGS continues to be a critical service provider, particularly for tied work and other significant issues. AGS’ services delivery, responsiveness and professionalism has improved greatly since the early 1990s when its work first started to become open to competition.

Increased engagement with the private sector has provided access to additional critical expertise in support of Commonwealth interests. However, the Commonwealth is not taking full advantage of its combined purchasing power.

The Office of Legal Services Coordination (OLSC) in AGD is a coordination point for supporting the First and Second Law Officers, identifying significant issues and supporting a whole-of-government approach to critical issues. There is clear scope for OLSC to better support whole-of-government interests and collaboration across entities.

The strengths of the current arrangements include:

the increased availability of expert and trusted internal legal advisers with an in-depth understanding of entities’ core business

development of responsive, efficient and pragmatic in-house legal arrangements in many entities

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a highly professional and more responsive AGS, and effective engagement with the market, including access to a diverse range of expert external service

providers and better ability to manage fluctuating demand.

Key issues with the current arrangements include:

areas of duplication, such as Commonwealth entities separately obtaining advice on the same issues inconsistency and weakening of a whole-of-government perspective due to entities operating in

isolation from one another lack of support for smaller in-house legal areas disparate approaches across entities which are indicative of missed opportunities to identify and

share good practice arrangements, and structural limitations on making full use of the Commonwealth’s purchasing power, with entities

generally negotiating rates individually and with no visibility of other entities’ arrangements.

With the contestability lens, the Review has found that Commonwealth legal work is already contestable. Other than for tied work, entities have a wide range of options for obtaining legal services. The question entities need to ask themselves is whether the best value is represented by doing particular legal work in-house, using a private sector provider or using AGS. While the Commonwealth legal market is contestable, a key gap is that not all entities are currently equipped to make a fully informed value assessment. A value assessment requires weighing up the cost, expertise and service levels of the potential providers and, within the context of the particular matter, choosing the provider which is best suited in the circumstances.

The recommendations of the Review are described in summary form below. The complete recommendations are in the relevant Chapters and collated in Appendix 4.

A better framework for Commonwealth legal servicesChapter 2 of the report considers whether there would be benefit in making changes to the model for the delivery of Commonwealth legal services. The current arrangements have delivered some benefits, particularly in delivering responsive services for individual entities, but have weakened consistency and the whole-of-government perspective.

One option for responding to these issues would be substantial centralisation of Commonwealth legal services, for example adopting a model similar to the Government Legal Department in the United Kingdom (UK), which has moved towards providing legal services on a centralised basis to most government entities. However, this would require very substantial structural and logistical changes across entities. The Review instead supports a model which responds to the key concerns but is simpler to implement. The model should also continue to allow entities to respond quickly to demand for legal services, including to engage effectively with external legal service providers.

The Review has concluded that an effective framework for Commonwealth legal services delivery requires:

government lawyers who provide high quality legal services to their entity, meet core competencies and standards and understand their role within a broader Commonwealth legal services framework

General Counsel who are trusted advisers within their entity, contribute to identifying and managing whole-of-government priorities and provide a key leadership role in Commonwealth legal services

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a central area of legal expertise which is aligned with the Commonwealth’s legal needs and priorities, and delivers excellent services, and

a coordination point to support the Attorney-General in his or her role as the First Law Officer, facilitate collaboration between entities and promote best practice across Commonwealth legal services.

The Review recommends the establishment of an overarching Australian Government Legal Service (AGLS) with a primary purpose to support the delivery of high quality and joined-up legal services across the Commonwealth and its entities. Government lawyers would remain employees of their entity, but their membership of AGLS would be automatic and form a core part of their professional identity to foster active participation. The proposed AGLS is a central theme in the recommendations of this Review, including in the areas of information sharing, government legal careers and the role of General Counsel.

General Counsel across Commonwealth entities are a critical leadership cohort in Commonwealth legal services. Achieving consistency and alignment of the management of legal issues across the Commonwealth is impossible without the active engagement of this cohort. The Review proposes that the broader responsibilities of General Counsel be clearly stated, and that a framework be put in place to support these responsibilities. In particular, responsibilities to support good practice across the Commonwealth, contribute to coordinated management of whole-of-government issues and lead engagement with the AGLS. This would be reflected in a charter sponsored by the Secretary of AGD, to better articulate the role of General Counsel with respect to the role of their entity and their broader Commonwealth responsibilities.

AGS, as the key central provider of Commonwealth legal services, is a critical component of the Review’s proposed future framework. The ongoing need for a central provider came through strongly in consultation on the Review. AGS’ role in tied work, its depth of Commonwealth legal knowledge and its support for managing whole-of-government issues remains critical, and cannot be replicated in the private sector or in individual entities.

The future operating model for AGS needs to support the role of the First Law Officer and maintain deep expertise in matters of critical importance to the Commonwealth. The Review has concluded that, as AGS is no longer a GBE, a shift away from the full service model would bring better alignment with the Commonwealth’s expectations of AGS. An AGS dedicated to the delivery of high quality legal services within defined priorities based on complex, systemic or precedential issues for the Commonwealth and areas of law that are closely related to Commonwealth activities would better meet the Commonwealth’s legal needs.

Under this new model, AGS is not interchangeable with other external providers – it will always have some key differences in its role and approach. While AGS should operate in a competitive environment for everything other than tied work, it should not be expected to make a profit and should instead operate on a cost recovery basis.

SUMMARY OF RECOMMENDATIONS | A better framework for Commonwealth legal services

1: ESTABLISHMENT OF THE AUSTRALIAN GOVERNMENT LEGAL SERVICE An Australian Government Legal Service (AGLS) should be established to support coherent and consistent legal services across the Commonwealth, focussing on information sharing, collaboration, guidance, professional standards and training. All government lawyers would remain employees of their entity but would be members of the AGLS as part of their core role.

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2: ROLE OF GENERAL COUNSELThe role of General Counsel should be expanded and include their contribution to broader Commonwealth legal interests, sharing information across the Commonwealth, supporting engagement with the AGLS and ensuring compliance with the Legal Services Directions. These functions, and accountability for delivery, should be articulated in a charter for General Counsel and sponsored by the Secretary of AGD.

3: ROLE OF AGSAGS should be redefined to reflect its critical role in whole-of-government legal risk management arrangements. It should have defined priorities and investment in legal capability focused on the Commonwealth’s most important legal issues. As part of this, AGS should operate on a cost recovery basis, with costs reviewed by the Secretary of AGD every two years.

Coordination and collaboration to improve outcomes and support efficiencyChapter 3 considers the supporting mechanisms which direct or facilitate coordination and collaboration between the various parts of the Commonwealth legal services system. These mechanisms include the Attorney-General’s Legal Services Directions 2005 (the Directions) and OLSC. The purpose of these mechanisms is to ensure appropriately coordinated and aligned Commonwealth legal services to identify and manage Commonwealth legal risks, take account of whole-of-government issues and avoid duplication.

Within this context, a clear gap in the current arrangements is a mechanism to support the sharing of legal advices and other information such as guidance material and templates. Implementation of a solution to share information will improve consistency and efficiency and reduce duplication of effort between entities. The Review has taken the approach that information is foremost a Commonwealth resource and, as such, the expectation of participation in overarching solutions applies across all entities.

The Review has proposed a database for sharing legal advices, with a key focus on capturing information that has relevance to the broader Commonwealth. The database would include advice from AGS, external providers and in-house lawyers. The recommended solution is a whole-of-government approach that will require an upfront investment and ongoing funding in order to deliver future efficiency.

The obligations set out under the Directions are an existing mechanism to ensure coordination and alignment of legal services to manage Commonwealth legal risk. The Review has found that the Directions should be clarified and simplified, and better supported with up-to-date and comprehensive guidance material to assist entities to meet their obligations. Administration of the Directions would be improved through OLSC taking a risk management approach to compliance, focusing on remedial action for high risk breaches, including those relating to tied work and significant issues. There would also be benefit in generally standardising the Directions to apply to both non-corporate and corporate Commonwealth entities (NCCEs and CCEs), with consideration of exemptions or adjustments based on the particular circumstances of the entity.

Under the tied work requirements of the Directions, certain categories of Commonwealth legal work are considered so critical to government that work on those matters is limited to specified government legal services providers. Tied work is the key exception to the general expectation of contestability in Commonwealth legal services, and the Review considers this exception should remain. In addition, the

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categories of tied work should be expanded to include significant or precedential issues arising from key legal frameworks for public administration.

The Review has also proposed adjustments to the current arrangements for handling of tied work to better achieve the core objectives of tied work, including to:

clarify arrangements where there are multiple tied providers for a tied area of law provide greater flexibility in handling of legal matters that raise both tied and non-tied issues, and provide a mechanism in the Directions for resolving uncertainty or disagreements about tied work.

The ongoing need for a coordination body for Commonwealth legal services is apparent. OLSC is a key mechanism in delivering several of the recommendations of the Review, from information sharing, to supporting the AGLS, to administering the Directions. OLSC is currently heavily focused on its process, reporting and compliance obligations. A clear articulation of OLSC’s future priorities, encompassing collaboration, information sharing, facilitation of whole-of-government approaches and supporting the First and Second Law Officers, would better position it to support an effective Commonwealth legal services framework.

OLSC will require additional resources to deliver on these priorities, with entities across the Commonwealth standing to achieve efficiencies and improve outcomes from that investment. Additional resources will also provide an opportunity for OLSC to make better use of and increase sharing of information it already gathers.

SUMMARY OF RECOMMENDATIONS | Coordination and collaboration to improve outcomes and support efficiency

4: ROLE OF THE OFFICE OF LEGAL SERVICES COORDINATION (OLSC)OLSC should be focused on the priorities of collaboration, information sharing and supporting the First Law Officer. This should be supported by simplified Legal Services Directions, and capability and resourcing better matched to OLSC’s key deliverables, including supporting the AGLS.

5: SHARING KNOWLEDGE AGD should work with other entities to establish a central database designed to share key legal advice of broader relevance to Commonwealth entities, with appropriate protections for the security and integrity of the material. This should be supplemented with a mechanism to share other useful material such as templates and guidance.

6: TIED WORKExisting tied work arrangements should be continued, supported by a small expansion in scope to include significant or precedential issues arising from key legal frameworks for public administration. Tied work arrangements would also be improved by clarifying and simplifying delivery of tied legal services and providing greater flexibility in the handling of legal matters that raise both tied and non-tied issues.

Better and more consistent standards for government lawyers and in-house legal areasChapter 4 considers the structure and role of in-house legal areas across the Commonwealth. Given the diverse nature of in-house legal services, a ‘one size fits all’ approach to in-house arrangements is not desirable. Entities will need to continue to tailor their in-house legal arrangements to their particular needs.

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However, there is scope for entities to work together to maximise good practices for the benefit of the entity and the Commonwealth more broadly.

The value that an in-house legal area can represent to its individual entity is best demonstrated with a legal services strategy that addresses whether the in-house legal area has:

a clear role and purpose within the entity the ability to influence decision-making within the entity, and supporting architecture that enables it to operate effectively and efficiently.

The Review has explored approaches across the Commonwealth and identified examples of good practice in each of these areas. In particular, a coherent role or mission statement provides unanimity of purpose and defines the services that in-house legal areas are there to provide, and flowing from that, an understanding of what is best done by others.

There may also be opportunities to explore greater synergies between entities through shared services arrangements. There are a number of ways in which shared legal services could be delivered, depending on the particular circumstances. The Review has explored examples where shared services could be further explored. However, opportunities for shared services would need to be considered carefully on a case-by-case basis as, in many cases, shared legal services might be impractical or administratively cumbersome.

Effective in-house legal areas also need to be in a position to recruit, develop, and retain quality legal professionals. Chapter 5 examines recruitment, professional development and mobility arrangements for government lawyers to ensure they have the knowledge and skills required to effectively manage the Commonwealth’s legal risk.

A Commonwealth legal career offers the opportunity to work across a very broad range of subject matters and roles. Lawyers across Commonwealth entities have a unique set of obligations and expectations which are not being optimally supported by current entity-specific arrangements.

Within the AGLS framework, there are opportunities to develop a workforce of government lawyers that have the skills and knowledge to be nimbly deployed to best meet Commonwealth legal needs, including through:

building a clearer professional ethos for government lawyers across all entities developing a comprehensive set of competencies for government lawyers reducing duplication and improving consistency by delivering core government legal training, and facilitating mobility of government lawyers, including through secondment or exchange programs.

SUMMARY OF RECOMMENDATIONS | Better and more consistent standards for government lawyers and in-house legal areas

7: IN-HOUSE LEGAL AREAS The structure and role of in-house legal areas are a matter for each entity, but should take account of key indicators of good practice identified by the Review and promulgated through the AGLS. Entities should seek opportunities to ensure efficiency, including through shared arrangements if appropriate.

8: COMMONWEALTH LEGAL CAREERSGovernment lawyers should have a clear statement of expectations, ongoing tailored training in core skills and mobility opportunities.

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Ensuring the best value external legal servicesExternal legal services providers – both law firms and counsel – remain a critical aspect of Commonwealth legal services. Chapter 6 examines the role of external legal services in the Commonwealth legal market, and considers how Commonwealth entities can achieve best value for those services.

Structurally, the Commonwealth is not currently in a position to obtain the full benefits of its purchasing power in engaging external providers (other than counsel). The benefits of negotiation by individual entities are not available to others because there is no price discovery mechanism. Due to anticipated changes to the Commonwealth Procurement Rules, the current Legal Services Multi-Use List approach will be discontinued. The Review has therefore examined a range of alternative procurement arrangements to achieve:

access to the right services at the best price efficient and proportionate process, and fairness, transparency and access to key information for providers and purchasers.

On balance, the Review considers that a whole-of-government panel is the most appropriate model for legal services procurement in the future. Experience in several other jurisdictions supports this conclusion. Features of a whole-of-government panel would include sub-panels on defined topics, allowing entities an opportunity to negotiate further for specific matters and capacity for exemptions to use non-panel providers for niche legal issues. Implementation and administration of the panel would be funded through a small levy on suppliers. Successful implementation of a whole-of-government panel requires a degree of flexibility to ensure individual entities’ legal needs can be met, and relies on participation of informed purchaser entities across the Commonwealth.

The Review has found that the current arrangements for engaging counsel are highly effective at ensuring value for the Commonwealth. However, some adjustments to current arrangements would assist to make the arrangements more workable for entities, including adjusting thresholds to account for inflation, maintaining OLSC oversight while ensuring flexibility for experienced purchasers, and better information sharing.

SUMMARY OF RECOMMENDATIONS | Ensuring the best value external legal services

9: ROLE OF EXTERNAL LEGAL SERVICE PROVIDERSExternal legal services providers are a critical component of Commonwealth legal services. Entities should have clear policies for when and how to engage them, with reference to the objectives and expertise of the in-house legal area.

10: PROCUREMENT OF EXTERNAL LEGAL SERVICESProcurement of external legal services should be improved through establishment of a whole-of-government panel, with provision for flexibility and an emphasis on transparency. Arrangements for engaging counsel should be updated and take better account of the purchasing experience of entities.

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Chapter 1 – IntroductionOn 27 October 2014 the Australian Government asked the Secretary of the Commonwealth Attorney-General’s Department (AGD) to undertake a review of Commonwealth legal services (the Review). The Review commenced on 1 July 2015 following the consolidation of AGS into AGD.

ScopeThe critical functions of Commonwealth legal services are to:

identify and manage Commonwealth legal risk, and enable and support Commonwealth policy, programmes and functions

The Review examined how legal services can be delivered most effectively and efficiently to the Commonwealth, focusing on ensuring high-quality and coordinated advice is provided to Government in the future. The Review identified the following Commonwealth legal services issues that warranted detailed consideration:

the model for delivery of Commonwealth legal services (Chapter 2) mechanisms to support better coordination, collaboration and consistency in the delivery of

Commonwealth legal services, including the Legal Services Directions 2005 (the Directions) (Chapter 3)

efficiency, effectiveness and best practice for in-house legal areas (Chapter 4) government legal careers: professional identity, training and development, and recruitment and

mobility of government lawyers (Chapter 5), and the role of external legal services providers in the Commonwealth, including effective procurement

and informed purchaser capability (Chapter 6).

The Review did not consider criminal and prosecutorial work undertaken by the Commonwealth1 but its scope did extend to the function and role of entities exercising powers to issue civil and administrative penalties.

MethodologyThe Review team undertook extensive consultation, research and data analysis.

A broad spectrum of stakeholders across the Commonwealth, state and international jurisdictions, external legal services providers and industry were consulted. Consultation included written submissions on two issues papers and numerous interviews, forums and focus groups. The Review had the benefit of 125 written submissions and 135 face-to-face consultation events.

The research and data collection for the Review included a survey of entities, consideration of several previous reports on Commonwealth legal services,2 Commonwealth Legal Services Expenditure reports3 and a comparative analysis of legal services in international and Australian jurisdictions.

1 Consistent with general note 4 to para 15 of the Legal Services Directions 2005 (Cth), which provides that the Directions are not intended to cover these matters unless expressly referred to. 2 See Bibliography for full list of reports considered.3 See Bibliography for full list of reports considered.

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Mr David Borthwick AO PSM, a former Secretary of the Department of the Environment, was engaged as an external adviser to the Review to provide an independent expert perspective.4

A detailed description of the Review’s methodology is contained in Appendix 1, a summary of the approach and outcomes of the data collection survey is set out in Appendix 2, and a summary of stakeholders consulted is in Appendix 3.

Key concepts in Commonwealth legal serviceThe First Law Officer and the Second Law OfficerThe Attorney-General is responsible for ‘law and justice’, including ‘legal services to the Commonwealth’.5 The Attorney-General is also the First Law Officer of the Commonwealth and, in that capacity, has a particular role in managing the Commonwealth’s legal risk. The Attorney-General is the chief legal adviser to Government and has overall responsibility for the conduct of legal actions brought by the government.6 In R v Kidman7 Knox CJ said:

… the Attorney-General has full authority to represent the Commonwealth and to act on its behalf in all legal proceedings to which the Commonwealth is a party. By virtue of his office he is the legal adviser of the Crown in right of the Commonwealth and the proper person to conduct or defend legal proceedings on behalf of the Crown in that right.

The Attorney-General’s function of representing the Commonwealth in legal proceedings is reflected in the Judiciary Act 1903 (the Judiciary Act), which relevantly provides that ‘[s]uits on behalf of the Commonwealth may be brought in the name of the Commonwealth by the Attorney-General or by any person appointed by him or her in that behalf’.8

It flows from the Attorney-General’s overall responsibility for the conduct of legal actions involving the Commonwealth that he or she has some oversight of, and the ability to provide input on, such proceedings. To enable this, the Judiciary Act empowers the Attorney-General to issue ‘Directions’ in relation to Commonwealth legal work and enables the Attorney-General to intervene in constitutional matters.9 The Directions seek to provide the Attorney-General with visibility of significant legal proceedings involving the Commonwealth and with the ability to ensure that the Commonwealth is taking a consistent and coherent approach to legal issues with whole-of-government implications. The effectiveness of mechanisms to support the role of the First Law Officer flow through several issues within the scope of the Review.

The Attorney-General is also supported by the Solicitor-General, as the Second Law Officer, the Secretary of AGD and the Australian Government Solicitor.10

4 Mr Borthwick was also previously a Deputy Secretary in the Departments of the Prime Minister and Cabinet, Health and the Treasury.5 See, for example, Administrative Arrangements Order as at 1 September 2016 <http://www.dpmc.gov.au/resource - centre/government/administrative - arrangements - order - 1 - september - 2016 >.6 Wright B C and Fowler P E (eds), House of Representatives Practice, 6th ed, (2012), 64.7 R v Kidman (1925) 37 CLR 233, 239–240.8 Judiciary Act 1903 (Cth) s 61.9 Judiciary Act 1903 (Cth) ss 5ZF, 78A.10 Since 1 July 2015, the Australian Government Solicitor is a position established by s 55J of the Judiciary Act 1903 (Cth) that is occupied by a person in the Attorney-General’s Department.

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http://www.dpmc.gov.au/resource-centre/government/administrative-arrangements-order-1-september-2016

The Solicitor-General is the Second Law Officer of the Commonwealth (see s 5 of the Law Officers Act 1964). The functions of the Solicitor-General are to act as counsel for the Commonwealth (when required, for example in significant litigation) and provide opinions on questions of law referred to him or her by the Attorney-General.

What are ‘Commonwealth legal services’?As the Review has been asked to consider ‘Commonwealth legal services’, it is worthwhile to briefly define that term. ‘Legal services’ are not defined in the Terms of Reference or the Directions. There is general consensus that legal services includes:

providing legal advice drafting legal documents conducting or managing litigation or potential litigation, and engaging and instructing external legal service providers, including counsel.

Stakeholders for the Review had differing views about whether the definition of Commonwealth legal services can be broader than these generally agreed items. There are a range of other functions performed in some in-house areas that do not necessarily need to be performed by people with legal qualifications but in practice, are sometimes or always allocated to legally qualified staff. The Review has proceeded on the basis that:

To the extent that some entities require certain functions which are not exclusively legal (e.g. appearing in tribunal matters) to be performed by people with legal qualifications, those functions can be properly characterised as ‘legal’ services (‘Mixed’ category in figure 1 below).

Some other types of functions, including some performed by in-house practices (e.g. developing policy documents and sitting on committees), are unlikely to ever involve the provision of ‘legal’ services regardless of the qualifications of the staff involved (‘Other’ category in figure 1 below).

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Government policy contextThe Review arises within, and draws heavily on, a broader reform context for the Commonwealth public sector.

The Efficiency through Contestability Programme and the Smaller Government agendaThe Review has been undertaken in a manner consistent with the Efficiency through Contestability Programme11 and includes consideration of the issues raised by the Programme.

The Contestability Programme is a whole-of-government reform strategy to improve the efficiency and effectiveness of the public sector through increased competition. The Programme aims to examine current government functions to identify which functions should be open to competition and how that competition should occur. Broadly, the examination of functions requires the consideration of the following questions:

Does the function align with the Commonwealth Government’s core role and priorities? Can the function be done more efficiently and effectively? Can the function be done better and cheaper, in whole or in part, by someone else?

The Contestability Programme forms part of the Government’s Smaller Government agenda, which is directed at achieving sustainable government finances and economic growth, improved government efficiency and

11 Department of Finance, Efficiency through Contestability Programme (30 March 2015) <https://www.finance.gov.au/resource-management/governance/contestability/>.

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Figure 1: Scope of legal and other services

improved government service delivery. The decision to consolidate AGS back into AGD from 1 July 2015 was made in the context of the Smaller Government agenda.

At its core, the agenda seeks to address the challenge of delivering better public services with less funding and resources in real terms.

Responsibilities of heads of Commonwealth entities and accountable authoritiesThe heads and accountable authorities of Commonwealth entities play a critical role in managing the Commonwealth’s legal risk. Accountable authorities are responsible for managing their entities in a way that promotes the proper use and management of public resources, the financial sustainability of their entities, and the achievement of the purposes of their entities.12 Further, under s 16 of the Public Governance, Performance and Accountability Act 2013 (the PGPA Act), accountable authorities must establish and maintain an appropriate system of risk oversight and management for their entities. This includes arrangements to manage legal risk.13

The Regulatory Reform AgendaThe Review has been undertaken in a manner consistent with the Regulatory Reform Agenda, which is directed at reducing unnecessary red tape costs on individuals, businesses and community organisations. Any regulation of Commonwealth legal services, whether affecting external providers or Commonwealth entities, should be clearly proportionate to the risks it seeks to mitigate or the benefits it seeks to provide.

This approach of proportionality supports the recommendations of the 2015 Independent Review of Whole-of-Government Internal Regulation by Barbara Belcher (the Belcher Review)14 which recommended this Review apply its Principles for Internal Regulation in considering the Directions.15

Other recent reviewsThe Review has also drawn from other recent reviews about public administration, particularly:

Professor Peter Shergold AC’s report, Learning from Failure: Why large government policy initiatives have gone so badly wrong in the past and how the chances of success in the future can be improved (the Shergold Report),16 and

Sandra McPhee AM’s report, Unlocking potential: Australian Public Service workforce management contestability review (the McPhee Report).17

12 Public Governance, Performance and Accountability Act 2013 (Cth) s 15.13 For example, systems directed at ensuring that entities act lawfully, and that entities can maintain claims for legal professional privilege where appropriate.14 Belcher B, Independent Review of Whole-of-Government Internal Regulation (August 2015) <http://www.finance.gov.au/publications/reducingredtape/>. 15 Ibid, vol 1, 39, vol 2, 134.16 Shergold P, Learning from Failure: Why large government policy initiatives have gone so badly wrong in the past and how the chances of success in the future can be improved (12 August 2015) <http://www.apsc.gov.au/publications-and-media/current-publications/learning-from-failure/>. 17 McPhee S, Unlocking Potential: Australian Public Service workforce management contestability review (12 December 2015). <http://www.apsc.gov.au/__data/assets/pdf_file/0008/80000/Unlocking - potential - APS - workforce - management - review - Design_WEB.pdf>.

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http://www.apsc.gov.au/__data/assets/pdf_file/0008/80000/Unlocking-potential-APS-workforce-management-review-Design_WEB.pdf

http://www.apsc.gov.au/__data/assets/pdf_file/0008/80000/Unlocking-potential-APS-workforce-management-review-Design_WEB.pdf

http://www.apsc.gov.au/publications-and-media/current-publications/learning-from-failure/

http://www.finance.gov.au/publications/reducingredtape/

Observations about the current state of Commonwealth legal servicesThis overview to the Report briefly describes the current Commonwealth legal framework, explains how it has evolved, and identifies priority issues that are elaborated on in subsequent Chapters. In summary, this Report looks at how well the Commonwealth’s legal framework supports the First Law Officer, particularly by ensuring that Commonwealth legal services:

are coordinated and aligned to identify and manage Commonwealth legal risks, take account of whole-of-government issues and avoid duplication, and

represent best value for money.

The critical function of legal services in the Commonwealth is to support government action and manage Commonwealth legal risk. The efficacy and efficiency of the development, application, interpretation and, where necessary, the enforcement of laws and regulatory measures on behalf of the Commonwealth needs to be sound. It is critical that the Commonwealth obtains and applies high quality and consistent legal advice, behaves lawfully and fairly, and acts as a model litigant. In an increasingly interconnected world, there are also important international relations and national security dimensions to the Commonwealth’s legal framework which define its interactions with other countries and their citizens.

Because of the centrality of the Commonwealth’s legal functions, the Attorney General, as the First Law Officer (supported by the Solicitor-General as the Second Law Officer), has a formal responsibility to ensure that there is a consistent and coherent approach to legal issues, particularly where there are whole-of-government implications.

The current Commonwealth legal marketThe current framework is largely a consequence of the implementation of the 1997 Logan Review18 which proposed that, although there was “a strong and necessary public interest in maintaining a central legal service provider”, the provider should “be established so as to ensure competitive neutrality, to enable it to compete effectively with the private sector” and “the services of this central provider should be subject to increased contestability”.19

The Logan Review identified the total value of the Commonwealth legal market in 1995-96 as $198 million.20 The estimated market share was:

the Attorney-General’s Legal Practice (now AGS) – 46% in-house lawyers – 33% private law firms – 10%, and private counsel – 10%.21

18 Logan B, et al, Report of the Review of the Attorney-General’s Legal Practice (March 1997) <http://web.archive.org/web/20070911110757/http:/www.ag.gov.au/www/agd/agd.nsf/Page/Publications_ReportonthereviewoftheAttorney-Generalslegalpractice-March1997>. 19 Ibid 0.19.20 Ibid 4.27. The total figure does not include the Solicitor-General or legislative drafting work undertaken by OPC.21 Ibid 4.26-4.27.

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Since the Logan Review, there has been a marked change in the size of the Commonwealth legal market and in the market shares of participants. In 2014-15,22 the market share of the different providers was:

AGS – 14%, with other central Commonwealth providers having less than 1%23

in-house lawyers – 52% private law firms – 22%, and private counsel – 7%.

The total legal service spend of the Commonwealth was reported to be $728.15 million in 2014-15.24 If Commonwealth legal spending is adjusted for inflation from the time of the Logan Review the $198 million in 1995-96 would be $319 million in 2015 dollars.25 In other words, using the Logan Review expenditure estimates, Commonwealth spending on legal services has more than doubled in real terms.

The Logan Review Committee might have been surprised by this outcome. Usually when competition is enhanced in a market there is an expectation of downward pressure in prices and improvements in service delivery. This presumption assumes, however, that other factors remain more or less the same. This has clearly not been the case in the Commonwealth legal market. For example, as pointed out by the Blunn and Krieger Review,26 there are factors that have led to a significant increase in the demand for legal services. These include that the total volume of legislation and regulation have increased as has, more generally, the reach and complexity of Commonwealth programmes. In addition, the Review has heard from

22 Attorney-General’s Department, Commonwealth Legal Services Expenditure 2014-15 (2016) <https://www.ag.gov.au/Publications/Documents/Commonwealth%20Legal%20Services%20Expenditure/Legal-Services-Expenditure-Report-2014-15.pdf>. Disbursements, which were not included in the Logan Review accounted for about 5% of total expenditure.23 Other central providers are the Office of International Law (OIL), and the Department of Foreign Affairs and Trade (DFAT). Tied drafting work performed by Office of Parliamentary Counsel (OPC) is not included for consistency with the Logan review figures and because it is not reported to OLSC. 24 Attorney-General’s Department, above n 22, 6. 25 Calculated using the Reserve Bank of Australia’s inflation calculator at <http://www.rba.gov.au/calculator/annualDecimal.html>. 26 Blunn A S and Krieger S, Report of the Review of Commonwealth Legal Services Procurement (6 November 2009) <https://www.ag.gov.au/LegalSystem/LegalServicesCoordination/Documents/Blunn%20Krieger%20Report.pdf>, 6.

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Figure 2: Share of expenditure comparison 1995-1996 to 2014-2015

https://www.ag.gov.au/LegalSystem/LegalServicesCoordination/Documents/Blunn%20Krieger%20Report.pdf

http://www.rba.gov.au/calculator/annualDecimal.html

several stakeholders that there was unmet demand in Commonwealth legal services which necessitated some catch up when the market was opened.

However, there are also suggestions that Commonwealth entities have become more risk averse, with one consequence being the increased legalisation of issues, or the desire to get ‘legal signoff’ to help manage risks. The inevitable outcome of an increasingly cautious APS is an increased demand for legal services.

The Review cautions against a simplistic view of legal spending. In addition to cost, the value represented by Commonwealth legal services must take account of the relative public interest or benefit being achieved. These benefits are often less visible and are impossible to quantify across the Commonwealth. However, the Review is aware of several individual legal matters which could have resulted in financial costs to the Commonwealth or to its citizens of many millions (or in some cases billions) of dollars if the matters were not effectively resolved.

It is also important to note that the methods for calculating legal services expenditure have not been consistent over time. In its 2005 report, Legal Services in the Australian Public Service, the ANAO noted some of the challenges in calculating legal services expenditure and comparing with previous reports.27 The ANAO’s 2003-04 expenditure estimate was $446 million across the 40 entities surveyed, but with a clear upward trend in expenditure compared to earlier years.28 On inflation-adjusted terms, the 2003-04 figure is much more comparable with current legal services expenditure.29

Since 2008-09, expenditure on Commonwealth legal services has plateaued. This has occurred in the context of greater restrictions on the running costs of Commonwealth entities, with a sharpened focus on getting better value for money. As set out in Figure 3, although total legal spending in real terms has remained relatively static from 2008-09 to 2014-15, in-house legal areas increased their market share. This most likely

reflected the perception that in-house legal services are cheaper, in a fiscally constrained environment.

27 Australian National Audit Office, Legal Services Arrangements in the Australian Public Service, (20 June 2005) <https://www.anao.gov.au/work/performance-audit/legal-services-arrangements-australian-public-service>, 30-3228 Ibid 33.29 The ANAO’s figures can also not be directly compared to current expenditure, as they only surveyed 40 entities while the current expenditure reporting process covers almost all entities. The ANAO also includes the Commonwealth Director of Public Prosecution’s expenditure on criminal matters, which are outside the scope of the Review and not included in current figures.

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What are the consequences of the way that the legal market has developed?The main difference between the Commonwealth legal market and other comparable countries (such as the UK and Canada) is that it is much more decentralised, with many in-house and external providers. Generally, in comparable countries there is a far higher degree of central coordination and control, with a general presumption against outsourcing and a presumption to only outsource in limited circumstances, such as where specific expertise is required or where there are internal capacity constraints.

Other countries’ models tend to be based around a more centralised model. The Commonwealth has chosen to structure its legal services in a more decentralised and pro-competitive way. The Commonwealth’s system is well developed and works well in many respects. However, as outlined below, there are several aspects of the current model warranting further attention to ensure the Commonwealth and its entities are best placed to manage legal risk.

The Review has not approached its Terms of Reference by seeking to ‘unscramble an omelette’ and return to a centralised system. This would entail significant transitional complexity and risk, and the benefits of an extensive change are not sufficient to justify such a substantial undertaking. However, the Review considers it is feasible to both maintain the advantages of a decentralised competitive model, while bringing about and reinforcing a coherent, robust and effective legal service.

Australian Government Solicitor

Following the Logan Review, AGS was made a GBE. It was required to charge commercial fees and pay dividends to the Commonwealth. It competed against private providers but was constrained to only

23

Figure 3: Total reported legal services expenditure – adjusted for inflation and GST

undertake work for a limited number of clients, primarily Commonwealth entities.30 The Logan reforms followed earlier changes whereby AGS began to charge for services in 1992 and more areas of its work were opened up to competition from 1994.

These changes occurred in the context of improved performance by AGS – a number of stakeholders reflected on improved responsiveness and a greater client focus, although those improvements began before reforms to establish it as a GBE commenced. Stakeholders have universally emphasised the need for this responsiveness to continue. The experience of entities before the reforms was that legal advice was often not timely (although it generally was for high priority issues), tended to be dense and academic, and did not always have sufficient regard to entities’ operating environment.

The fall in AGS’ market share was to be expected as more areas of work were opened to competition. However, with a 14% market share, down from 46%, the Review needs to consider how the Commonwealth should position AGS in the future.

The Logan Review emphasized that there was a strong and necessary public interest in maintaining a strong central legal service provider. The Review shares that conclusion. Recently AGS ceased to be classified as a GBE when it was consolidated with AGD. AGS now undertakes tied work on a cost recovery basis, but little else has changed about its operating model in anticipation of this Review’s consideration. The Review has considered what adjustments should be made to AGS’s mandate and the way it operates to best meet what the Commonwealth’s needs from its central provider in the future.

In that regard, with a competitive external legal market well established, it is now appropriate to reinforce the role of AGS as the peak in-house legal service centre for the Commonwealth. Up until now, there has been a shift to regard AGS as one of many external legal services providers, other than for its tied work. The risk of continuing with this approach is that AGS could become less able to properly support the First Law Officer and the Commonwealth, running directly counter to the reasons why a central legal service provider was maintained.

The Review has sought a model for AGS that maintains its critical role as a central provider, supporting the role of the First Law Officer, ensuring deep expertise in matters of critical importance to the Commonwealth, and contributing to a consistent and coherent Commonwealth legal position.

In-house legal areas

There has been an appreciable growth in the size and functions of in-house legal areas. A key factor in this growth is the increased complexity of government functions and programmes, and the corresponding risks discussed above.

In-house legal areas tend to have a strong knowledge of their business environment and are generally highly regarded by their entity heads. While this is generally of great benefit for entities, it can also encourage unnecessary legalisation of issues by risk-averse business line areas. Skilled and experienced APS staff should fully understand and work effectively with the legal framework they operate under and in most cases should not require ‘legal signoff’ in the normal course of events. It appears the risk-averse APS environment may have contributed to the growth of in-house legal areas.

30 Judiciary Act 1903 (Cth) s 55N.

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Another factor is the large number of entities across the Commonwealth and the diversity of their functions.31 The in-house legal areas in some entities are very large, effectively acting like mid-tier law firms in their own right. In-house legal areas in smaller entities may be as small as a single lawyer, often with non-legal functions as well. It is difficult to generalise the experience across the Commonwealth and for this reason the Review has been mindful that one size clearly does not fit all. That said, entity-specific approaches can lead to:

duplication and inconsistency through different entities seeking legal advice on the same issue, often from different providers, and

entities focusing on how a legal issue affects them, sometimes without an adequate understanding of the broader consequences that issue may have for the Commonwealth.

The strengths of in-house legal areas are that they can develop intimate knowledge of their entities’ business and can insert critical legal insights in a timely way. They are also perceived to be cheaper than external providers, although cost is an imperfect comparator of value. However, in-house legal areas can become siloed, duplicate effort across the Commonwealth and may not give adequate support to the First Law Officer notwithstanding current mechanisms embodied in the Directions.

Role of external legal services providers

Since the Logan Review, private sector law firms have grown their share of the legal services market. The introduction of greater contestability has improved the provision of legal services to the Commonwealth, including by providing:

specialist expertise in particular areas of law greater flexibility to respond to large or urgent matters at short notice, and access to the broadest possible range of innovative legal services.

Contestability has also introduced incentives for discipline and responsiveness for all legal services providers, including AGS and in-house legal areas.

The procurement of external legal services is undertaken by each Commonwealth entity, drawing from firms on the Legal Services Multi-Use List (LSMUL). The LSMUL has operated since 2012, and involves, effectively, firms pre-qualifying to undertake legal work for the Commonwealth. Commonwealth entities can approach firms on the LSMUL and engage them, although frequently this involves running a competitive process between providers with fees being negotiated below the LSMUL list rates.

While the LSMUL has somewhat streamlined purchasing of legal services, the Review found it has fallen short of expectations. The greatest weakness is that it has perpetuated an opaque legal market. There is no effective ‘price discovery’ – one Commonwealth entity does not know what price is being paid for similar legal work being performed by the same, or another firm, for another entity. Consequently, entities do not have the benefit of the full purchasing power of the Commonwealth. Most entities believe that they obtain good value but cannot be sure as the market is not transparent to entities. The Commonwealth and individual entities should have access to information about the arrangements and prices achieved by other entities.

It is very important to acknowledge that price is only one factor in getting value for money for external legal services. The cheapest option is not necessarily the best, and in some circumstances the best is required even

31 As at 1 July 2016 there were 94 non-corporate Commonwealth entities (NCCEs), 71 corporate Commonwealth entities (CCEs) and 15 Commonwealth companies.

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if the price is higher. Informed judgements need to be made taking into account a range of considerations relevant to the particular legal issues being outsourced.

Due to upcoming expected reforms to the Commonwealth Procurement Rules, the pre-qualified model used in the LSMUL will be phased out. The Review has focused on what future approach would best ensure that engagement of external legal services reflects:

access to the right services at the best price efficient and proportionate processes, and fairness, transparency and access to key information for providers and purchasers.

Notes on terminology and attributionTo ensure readability, this Report has used summary terms in a number of contexts where the language is an imperfect descriptor for some entities or individuals. For example:

‘The Commonwealth’ is sometimes used in reference to all Commonwealth entities, although the Review recognises that a subset of those entities are not considered, or are arguably not considered, to be part of ‘the Commonwealth’ at law.

‘Government lawyers’ is used to describe all lawyers working in Commonwealth entities, although the Review recognises that a number of those entities have functional independence from the government of the day.

A full glossary of terms is Appendix 5.

All non-attributed quotes in this Report are from written submissions or other material provided by stakeholders to the Review. Stakeholders were advised that their input would be treated confidentially to enable their full participation.

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Chapter 2 – Model for Commonwealth legal services The current model for Commonwealth legal servicesAustralia’s model for the provision of Commonwealth legal services has become increasingly decentralised over a series of reforms since the early 1990s. The Commonwealth legal services model is characterised by the following features:

Prevalence of in-house legal areas in Commonwealth entities

There has been a significant growth of Commonwealth in-house legal areas since the reforms following the Logan Review, making up more than half the Commonwealth legal market. Of entities responding to the data collection survey, 76.0% had in-house legal areas, including 26.0% with in-house legal areas of over twenty lawyers.

Extensive use of external service providers

External service providers are widely used in Commonwealth legal services market. Entities generally have discretion to decide whether an external provider should be engaged.

A dedicated provider of legal services

AGS operates as the dedicated provider of legal services to the Commonwealth. With the exception of tied work, the majority of its work is done in competition with the private sector.32 As such, its role is not directly comparable with central providers in some other countries. AGS received approximately 14% of total reported legal services expenditure in 2014-15.

Office of Legal Services Coordination (OLSC)

OLSC plays a central coordination role to support the First and Second Law Officer and works with entities to ensure the Australian Government receives coordinated and aligned legal services. OLSC also administers the Directions.

Professional networks – the General Counsel Working Group (GCWG) and the Australian Government Legal Network (AGLN)

The GCWG is a group of senior legal services practice leaders from across the Commonwealth and was established in 2010 to consider strategic issues facing the Commonwealth legal services market.33

32 Other Commonwealth tied work providers include the Solicitor-General, OPC, OIL and DFAT. The Solicitor-General does not generally charge for the provision of services. OIL and DFAT sometimes charge fees for public international law work or obtain funding from line agencies for international litigation work. However, they do not charge for the majority of their work. In addition, OPC charges only for certain publishing functions and non-tied drafting work.33 The current terms of reference for the GCWG sets out membership of the group to include senior legal services practice leaders from the following Commonwealth entities: Attorney-General’s Department, Australian Competition and Consumer Commission, Australian Customs and Border Protection Service, Australian Securities and Investments Commission, Australian Tax Office, Defence Materiel Organisation, Department of Communications, Department of Defence, Department of Education, Department of Employment, Department of Finance, Department of Health, Department of Human Services, Department of Immigration and Border Protection, Department of Industry, Department

27

The AGLN was established in 2013 to provide a platform for information and experience sharing, and also to give government lawyers a sense of belonging to a professional network

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extending across the Commonwealth as a whole.34 Government lawyers are automatically eligible for membership of the AGLN on an opt-in basis.

29

of Prime Minister and Cabinet and Department of Social Services. 34 Blunn and Krieger, above n 26, 49-50.35 Based on information provided by those jurisdictions, as detailed in the Methodology at Appendix 1.

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Benefits of the current model for delivery of legal servicesIn submissions to Issues Paper Two stakeholders were invited to put forward their views on the current model. The majority of stakeholder contributions focused on their particular role within the current model rather than how the model as a whole is working for the Commonwealth.

Expert and trusted advisers

The value that in-house lawyers bring to individual entities is clear to the Review. In submissions and consultations many entities highlighted the value of having in-house lawyers with an in-depth understanding of core business and working with business line areas to ensure the entity meets its core objectives.

[D]epartmental lawyers have forged strong relationships with business areas meaning that business areas are more likely to engage with and seek advice on legal risks…departmental lawyers play a key role in building and maintaining corporate knowledge which ensures consistency of approach to legal issues.

Responsive, efficient and pragmatic

Many stakeholders outlined the efficiency gains to be made from in-house lawyers who fully appreciate the legal, financial and political realities of their operating environment, and understand the entity’s risk appetite as set by the entity’s senior management. There is a perception among entities that in-house legal services are generally more cost effective. Stakeholders also emphasised the value of informal ‘corridor chats’ in encouraging early and proactive management of legal risks.

[B]ecause its in-house lawyers are trusted advisers with a deep understanding of the regulatory framework and the objective of the [organisation], legal advice will be timely, strategic and practical.

In-house counsel can be available for quick discussions…[this] encourages program and policy areas to consult on small or minor matters that can prevent bigger issues arising in the future.

By being at the coal-face, in-house lawyers are well positioned to respond quickly and pragmatically to legal problems. In circumstances where they hold relevant expertise, in-house legal areas may provide a more efficient service due to more limited overheads and pre-existing entity knowledge.

A more responsive AGS

Operating within a decentralised legal services market has resulted in AGS evolving into a highly professional provider of legal services with a stronger client and service focus.

AGS [has] developed a strong and market driven culture in which priority has been given to client service, quality and efficiency without impacting negatively on the range of services offered nor on its investment in future quality of its services and staffing.

Effective engagement with the market

The decentralised and contestable approach has provided Commonwealth entities with access to a diverse range of expert external service providers. For some entities, the contestability of the current arrangements has resulted in greater and more direct access to the legal services market.

[T]he current highly contestable arrangements should be seen as providing a high degree of service to a diverse range of Commonwealth clients and are much more

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effective in managing the legal risks of the Commonwealth than the previous arrangements.

The ability to quickly access a broad range of technical legal experts and the improved quality and timeliness of legal services were other consequences of a more contestable environment. The ability to outsource short-term, high volume and time sensitive work to a competitive provider also enables in-house legal areas to manage their fluctuating workload.

Issues with the current model for delivery of legal servicesSubmissions on the positive consequences of the current decentralised legal services model were largely entity-focused. The submissions on issues arising from the current model highlighted aspects of the decentralised arrangements which work against a more coherent and joined-up approach to legal services.

Duplication

Many stakeholders observed that the growth of decentralised legal work has been accompanied by increased duplication and inefficiency, whereby multiple Commonwealth entities obtain advice on the same issues from a range of providers. The Review was made aware of a number of circumstances of duplication, while also noting that duplication is particularly difficult to identify in a decentralised system. Duplication of effort included entities separately deploying resources to produce guides, templates and training products on issues with whole-of-government relevance.

[S]eparate legal resources have to be purchased or sourced by each agency, and information that could be useful to other agencies is not routinely shared or accessible.

[T]he decentralised model does not encourage the organic or proactive sharing of information, knowledge and resources.

Another example of potential duplication was the double-handling or shadowing of outsourced work by in-house lawyers.

Lack of consistency and weakening of whole-of-government perspective

Many stakeholders acknowledged that in-house legal areas operate largely in isolation from one another. This decentralisation was seen by several stakeholders to have increased the risk of entities overlooking whole-of-government issues or taking inconsistent positions on legal issues. In general, stakeholders agreed with the Review’s observations that decentralisation has weakened the ability of the First Law Officer and the Second Law Officer of the Commonwealth to effectively monitor the Commonwealth’s legal priorities.

The overall public interests advanced and protected by the Commonwealth through the First Law Officer have been weakened through a system by which much Commonwealth legal work is now performed by different lawyers, with different skills, subject to different accountabilities, acting in different ways in support of different interests.

Lack of support for smaller in-house legal areas

For some entities, the current decentralised model has resulted in a lack of support and training. For example, smaller in-house legal areas may not have access or resources for tools such as legal software products or legal administrative support that contribute to effective legal practices.

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[T]here has been a lack of mentoring, training and support of in-house teams in small agencies which increases the risk of inconsistency in the quality of that legal service.

Not identifying and sharing good practice arrangements

Across the full range of issues considered by the Review, a diversity of approach between entities has emerged that tends to indicate that good practice arrangements are not being identified or shared with other entities. This diversity goes well beyond sensible tailoring of arrangements to meet specific entity needs.

[D]ecentralisation can create difficulties with the overall standardisation of the delivery of services.

For example, disparate approaches to training and professional development were noted by stakeholders as undermining consistency and the core capability of identifying and managing legal risk. Similarly, entities often did not have an opportunity to learn from the experiences of others in terms of the structure, funding or supporting infrastructure of their in-house legal areas, or in their approaches to purchasing external services.

Limited use of buying power

The Review understands that Commonwealth entities with large volumes of legal work can leverage their individual purchasing power to negotiate lower commercial rates for external services. However, as entities do not know what other entities are paying, the Commonwealth does not leverage these low rates for the benefit of all entities. Structurally, the Commonwealth is not in a position to obtain the full benefits of its purchasing power.

The critical elements of an effective and efficient legal services modelVery few stakeholders told the Review that there was no case for making any changes to the current arrangements and that the status quo was their preferred approach. There is an appetite for more coordinated measures and procedures driven from a central area to support in-house legal areas and enhance consistency and efficiency across the board. Measures to achieve these objectives should not compromise the ability of in-house legal areas to respond quickly to demands for legal services, including the ability to engage effectively with external legal service providers.

The Review has concluded that an effective model for Commonwealth legal services requires:

government lawyers who provide high quality legal services to their entity, meet core competencies and standards and understand their role within a broader Commonwealth legal services framework

General Counsel who are trusted advisers within their entity, contribute to identifying and managing whole-of-government priorities and provide a key leadership role in Commonwealth legal services

a central area of legal expertise which is aligned with the Commonwealth’s legal needs and priorities, and delivers excellent services, and

a coordination point to support the Attorney-General in his or her role as the First Law Officer, and facilitate collaboration and promote best practice across Commonwealth legal services.

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To achieve this outcome, the Review proposes:

a new model for Commonwealth legal services encompassing an overarching Australian Government Legal Service (AGLS), a clearer role for General Counsel and a clarification of the role of AGS (in this Chapter), and

mechanisms for better collaboration and coordination, particularly through the role of OLSC (explored in Chapter 3).

The Review acknowledges that the current model has delivered benefits for individual entities. A wholesale shift to a more centralised model is not necessary at this stage; many of the issues raised could be addressed by making incremental changes to the current model to address its weaknesses. There is broad-based stakeholder support for a properly resourced and centrally positioned entity to drive changes that would strengthen collaboration and coordination and result in a more joined-up approach to legal services. Establishing a robust overarching professional network of government lawyers is a key component of such a model.

The Australian Government Legal Service The concept of an overarching network or service of government lawyers features predominantly in those countries with a more centralised model of legal services (see figure 4 above). The functions of such a network or service can be plotted on a spectrum. At one end are functions relating to professional development where government lawyers are employees of individual entities and draw on the network as a support resource for lawyers and in-house legal areas. Submissions to the Review commonly referred to the current structures, including the AGLN, as not being sufficiently resourced or comprehensive.

Since its establishment the AGLN and its volunteer sub-committees, which include a Legal Practice Managers’ Forum, have taken some steps to build a sense of common purpose and identity among government lawyers. It has primarily done so through newsletters and information sharing events. While the Review found a core of lawyers were closely engaged with the AGLN, many others had limited engagement and some were unaware of its existence. AGS lawyers are not permitted to join the AGLN. The Review considers that the reach of the AGLN and its effectiveness are limited by its lack of resources and its reliance on volunteer effort. In order for such a network to be effective in reaching government lawyers and engendering their commitment to it, it must have a mandate and dedicated resources. A model with a robust governance structure, clear accountability for delivering its objectives and broad-based participation will be critical to its success.

A model in which government lawyers are employees of an overarching service that provides legal services to individual entities lies at the other end of the spectrum. This is the model operating in the UK, where the Government Legal Department (the GLD) which operates within the overarching Government Legal Service, is the largest provider of legal services to central and other government departments. The Review acknowledges that the centralised legal services model appears to have been adopted successfully in the UK. The GLD was implemented on an opt-in basis and the majority of central government departments and more than a hundred other government and public bodies have now chosen to opt into the GLD model.36

36 Government Legal Department, Business Plan 2016-17 <https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/533948/GLD_Business_Plan_2016-17.pdf>, 3.

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https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/533948/GLD_Business_Plan_2016-17.pdf

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/533948/GLD_Business_Plan_2016-17.pdf

Stakeholder submissions on a model whereby all or most government lawyers work for a central provider largely focused on the themes of service and responsiveness. While a number of stakeholders acknowledged the potential cost savings of this model, many stakeholders were of the view that the value of in-house legal services outweighed potential savings from a wholly centralised model. The ability of an in-house legal area to provide pragmatic legal solutions, identify legal risks and form an in-depth understanding of the operating environment were factors that were highly valued by the majority of stakeholders. Evidence from the UK suggests that, through careful implementation, these aims can also be met through out-posted lawyers from a central provider at a lower cost.

The Review considers that the Blunn and Krieger Review findings regarding the need to shift legal services from an entity-specific focus to a broader Commonwealth-wide perspective remain valid. However, moving to a fully centralised model would require very substantial structural and logistical changes across entities, which bring with them transitional risks. The Review considers there is an alternative to full centralisation that can also respond to the key issues identified by this Review. It is therefore not necessary to emulate the UK model to achieve a workable balance.

Openness to more coordinated measures and procedures driven from a central area was a prevailing theme with stakeholders who agreed with the Review’s observation that the current arrangement negatively impacts on identifying and maintaining a whole-of-government focus in the provision of legal services.

The Review recommends the establishment of an overarching AGLS with a primary purpose to support the delivery of high quality and joined-up legal services across the Commonwealth and its entities. The AGLS would replace the current AGLN model. A core function of the AGLS will be to galvanise government lawyers’ awareness of the whole-of-government context. The majority of stakeholders support such a model on the basis that it would enable:

entities to manage their own legal risk, but reinforce their obligation to identify and work together with other entities to manage risks arising from whole-of-government issues

opportunities for combined effort to better support in-house legal areas efficiently and consistently corporate knowledge that government lawyers hold about the Commonwealth to be harnessed and

further developed improvements in the skills and professionalism of government lawyers as a result of a more formal

network and joined-up approaches to training and professional development, and a reduction in duplication of the provision of legal advice and services.

Who is the AGLS?All government lawyers providing legal services to the Commonwealth would be automatically included in the AGLS as members. Government lawyers would remain employees of their entity, but their membership of AGLS would be described as a core part of their professional identity to foster active participation. AGS lawyers would also be part of the AGLS – to distance AGS from such a network would be a missed opportunity to share expertise and experience among all lawyers employed by Commonwealth entities. The Review also envisages that public servants who are qualified lawyers but are not practising would be able to opt-in to participate in some AGLS activities for the benefit of their professional development.

In a deliberate shift from a volunteer-based model, the AGLS would be supported by a team within OLSC with dedicated resources to work with entities to deliver key AGLS functions. As the head of the central Commonwealth legal department, the Secretary of AGD would, in consultation with entity heads and General

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Counsel, set the direction for the AGLS. General Counsel of all in-house legal areas would play an important leadership role by reinforcing the objectives of the AGLS to their in-house legal staff (see below for more detail on the role of General Counsel). The AGLS would replace the current AGLN, but would build on its work and the initiatives of its sub-committees.

What are the objectives of the AGLS?The AGLS would:

support the delivery of high quality consistent and joined-up legal services across the Commonwealth and its entities

build and promote a professional identity for government lawyers that supports their unique role and cultivates recognition that, in addition to being employees of their entity, they belong to a professional cohort

promote good practice in legal practice management facilitate more collegiate and collaborative arrangements across entities, and promote awareness of whole-of-government issues and draw a clear link between individual entity

legal functions and the broader Commonwealth.

How would the AGLS achieve its objectives?The AGLS would realise its objectives by:

providing a clear framework of the standards and responsibilities expected of government lawyers providing professional development and training products facilitating information sharing, collaboration and networking opportunities across Commonwealth

entities developing and sharing information and guidance on legal and practice management issues,

including engagement of external providers, and delivering an induction and core training program for government lawyers, building on a set of core

competencies.

These functions are explained in more detail in subsequent Chapters.

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The role of General CounselGeneral Counsel in each entity are key players in the Commonwealth legal services model.

The term ‘General Counsel’ should be read as including heads of legal areas who do not use the title ‘General Counsel’. In some cases, the elements of a General Counsel role may be split amongst multiple

officers – for example, one who manages the legal practice and one who is the senior legal expert in the entity but does not have management responsibility.37

Between them, General Counsel in Commonwealth entities:

have oversight and responsibility for the vast majority of legal issues arising in the Commonwealth manage, directly or indirectly, the majority of lawyers working in Commonwealth entities,38 including

identifying and developing legal competency and talent are at the centre of formal and informal networks of government lawyers are the gatekeepers for most of the Commonwealth’s legal knowledge are the primary connection point between their entities and the broader Commonwealth have responsibility for the structure, role and architecture of in-house legal areas are generally responsible for legal services procurement decisions in their entities, and are trusted legal advisers to entity heads across the Commonwealth.

37 The Review’s data collection survey identified about 110 SES lawyers across the 73 respondent entities with an in-house legal area.38 Of which the Review has identified over 1800, taking account of the data collection survey results and extrapolating internal legal services expenditure figures from non-responding entities.

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In this context, it is clear that the General Counsel cohort has a critical leadership role to play in Commonwealth legal services. Achieving consistency and alignment of the management of legal issues across the Commonwealth is impossible without the active engagement of this cohort.

Although rare, the Review did hear contrary views on this general point. One stakeholder suggested:

General Counsel will not be in the best position to ensure that the interests of the Commonwealth as a whole are maintained. This is a role that only the Attorney-General can fulfil.

The Review does not agree with this perceived limitation. The role of General Counsel should be to pursue the legal issues pertinent to their entity. However, it is incumbent on them to ensure this does not become a singular focus, at the loss of due regard to the Commonwealth’s interests as a whole. This was a point appreciated by many other stakeholders. While support for the First Law Officer may be driven from the centre, through OLSC, that can only succeed if General Counsel and OLSC are working with common understanding, perspectives and purpose on achieving best outcomes for the Commonwealth.

As the managers of legal practices in Commonwealth entities, the General Counsel cohort also has a key role to play in developing and contributing to good practice in legal practice management. As discussed later, in Chapter 4, approaches to in-house practice management vary across entities and have resulted in disparities in terms of quality and consistency of outcomes. The General Counsel cohort, working together, could drive changes that improve efficiency and work against duplication of effort and resources in in-house legal areas.

The Review has considered mechanisms to better harness the General Counsel cohort in support of both good practice and managing Commonwealth legal risk. In particular, the Review considers that the General Counsel cohort should be expected to:

identify and contribute to the coordinated management of whole-of-government issues, in partnership with OLSC and AGS

support and contribute to sharing information across the Commonwealth, including on informed purchasing and good in-house practice

lead and promote their entity’s engagement in the AGLS, including supporting their staff to participate in training, development and secondment opportunities, and

support their entity head to ensure their entity’s compliance with the Directions and manage any non-compliance.

Central employment of General Counsel One option for reform that was suggested to the Review and raised in Issues Paper Two was:

A model whereby all General Counsel in Commonwealth entities (or in a subset of critical entities such as portfolio departments) are employed by a central provider such as AGS. Under this model, General Counsel could either be seconded to an entity by the central provider, or the people filling the General Counsel position in Commonwealth entities would become employees of the central provider.39

39 Attorney General’s Department, AGD Secretary’s Review of Commonwealth Legal Services: Issues Paper Two (February 2016) <https://www.ag.gov.au/LegalSystem/Secretarys-Review/Documents/Secretarys-Review-Issues-Paper-2.pdf>, 15.

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The intention of this model would be to better link General Counsel as a leadership cohort through shared development frameworks and networks, access to substantial AGS knowledge management and resources, and a clear link to broader Commonwealth priorities. The centralised employment model may also create a clearer career path and increase mobility for senior government lawyers.

Stakeholders who supported this model indicated “it would help promote cohesion, collaboration and consistency among Commonwealth legal practices, particularly by imposing obligations on those employees to pursue cross-Government collaboration.”

However, the vast majority of stakeholders did not support the model with their primary concerns being:

impact on the loyalty or allegiance of the General Counsel to their entity – the model is inconsistent with maintaining a relationship of trust

the General Counsel would no longer focus on the entity’s goals or objectives or develop a medium/long-term vision for legal services in the entity

‘dual accountability’ would be problematic, and concerns about decision-making on engagement of external services if the General Counsel was

employed by AGS.

With the exception of the need to manage conflict of interest in engaging external services, which is somewhat complex but manageable, the Review considers these concerns to be overstated. They are also somewhat indicative of the issues that the Review is seeking to overcome, whereby General Counsel have difficulty reconciling their role within their entity with broader Commonwealth priorities and expectations.

The Review considers that it is the effectiveness of the individual and their approach to partnering with the entity’s executive, not the employment arrangement, which is the key indicator of their ability to be a trusted adviser within an entity. The view that multiple sources of accountability are incompatible with effective in-house legal areas is not supported. For example, as legal professionals (particularly for those who hold practising certificates), General Counsel already have dual accountabilities. There are a number of examples, in Commonwealth entities and in other jurisdictions, where General Counsel and other legal officers are provided by a central or external provider and are able to maintain a relationship of trust and prioritise the entity’s goals and objectives. A number of entities within the Commonwealth have also had success with long-term General Counsel secondments. The Review has concluded that meaningful improvements could be achieved through centralised employment of General Counsel.

However, in recognition that a shift to this model would be a substantial change to the current arrangements and would require careful logistical consideration, the Review has considered whether an alternative model may be effective in achieving the same objectives.

A shared understanding – a charter modelA number of other stakeholders suggested a need for better articulation of the role of General Counsel, as an alternative to the employment model:

If the issue is one of perceived loyalties, a much better way to address this would be to ensure that the legal obligations of the General Counsel are clearly articulated and understood (for example, there appears to be no consistent approach to the answer of “who is my client” when the employer is an independent statutory authority that is not subject to the direction of the relevant Minister).

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The Review notes that the observation of uncertainty about ‘who is my client’ is pertinent well beyond entities with statutory independence.

Another stakeholder suggested that the broader responsibilities of General Counsel be reflected through performance arrangements or amendments to the Directions:

General Counsel should be accountable for collaborating across government and acting in the best interests of the Commonwealth as a whole. Accountability could be through performance agreements or the Legal Services Directions (LSDs). Whilst behaviours are not easy to regulate, measures and standards could be developed. Similarly, AGD should be accountable to the General Counsel for what it delivers, and ensuring that the support services are relevant and high value.

The Review’s preferred model is the implementation of a charter sponsored by the Secretary of AGD that would:

identify General Counsel’s obligations as part of a broader leadership cohort in the AGLS, and articulate how AGD, through OLSC, would support General Counsel to meet those obligations.

The Review considers this approach, which is a ‘lighter touch’ than the central employment model, should be pursued. It would result in better articulation of the role of General Counsel, including an articulation of the interaction between their entity role and their broader Commonwealth role, and would support accountability for those broader responsibilities.

While this model links General Counsel with the centre to achieve the benefits outlined above, the Review envisages an important partnership with the GCWG. Its original purpose was to share information in order to drive reforms regarding informed purchaser capability.40 However, since its establishment in late 2010, the group has expanded in function to be a forum for broader strategic issues facing the Commonwealth legal services market to be discussed. In future, the Review considers that the group could undertake an advisory function for the AGLS, and that it has the potential to better support collaboration and share critical information if its program were focused around those priorities. However, further consideration of its membership would need to be undertaken as membership is currently based on legal services spending at a point in time, and a more representative membership would improve its effectiveness.

Clarifying the role of AGS Status of AGS post-consolidationOn 1 July 2015, AGS was brought back into AGD as a group with a distinct functional identity.41 Prior to this, AGS was a separate government agency, established as a statutory authority and a GBE.42 The purpose of the consolidation was to strengthen the capacity of AGS and AGD to “support the Attorney-General as First Law Officer and chief legal adviser to Cabinet by providing a comprehensive source of authoritative advice on key Commonwealth legal and legal policy issues.” It was also intended to “ensure that [AGD] and

40 Lateral Economics, Learning from experience: Purchasing legal services (2011) <https://www.ag.gov.au/LegalSystem/LegalServicesCoordination/Documents/Gruen%20Report.pdf>, 61.41The Judiciary Amendment Act 2015 (Cth) made legislative amendments to consolidate AGS into AGD. 42 As a result of the recommendations of the Logan Review, the Government passed the Judiciary Amendment Act 1999 (Cth), which commenced on 1 September 1999, establishing the AGS as a separate statutory authority.

41

https://www.legislation.gov.au/Details/C2015A00064

https://www.ag.gov.au/LegalSystem/LegalServicesCoordination/Documents/Gruen%20Report.pdf

AGS are well placed to deliver high quality legal services and legal policy advice on legal issues of importance to the Commonwealth and the most critical matters of state.”43

Part VIIIB of the Judiciary Act establishes AGS and, amongst other things, sets out its functions and powers. AGS is headed by the ‘Australian Government Solicitor’44 which is an office established by the Judiciary Act and occupied by an employee within AGD.45 AGS staff work under the direction and supervision of the Australian Government Solicitor. AGS may act for the Commonwealth, a Minister, a body established by a Commonwealth Act, an officer or person employed by the Commonwealth, and a range of other persons and bodies set out in s 55N of the Judiciary Act. AGS currently operates on a for-profit model46 other than for tied work, which is charged at cost recovery rates.

Key issues for AGSThe ongoing need for a central provider came through strongly in consultation on the Review. It was generally accepted that AGS’ role in tied work, its depth of Commonwealth legal knowledge and its support for managing whole-of-government issues remains critical, and cannot be replicated in the private sector or in individual entities. A central provider of Commonwealth legal services is a critical component of the Review’s proposed future model for government legal services. The future operating model for AGS needs to support the role of the First Law Officer and maintain deep expertise in matters of critical importance to the Commonwealth.

Within this context, the Review has identified three key issues for AGS:

What should the role of AGS be? What should the relationship of AGS to the market be? How should AGS be funded?

The role of AGSThe current business model of AGS is to operate as a ‘full-service’ law firm focused on providing services to Commonwealth entities as an external legal services provider. However, there are a number of aspects of its work that are distinct from other external legal services providers. It shares with those other providers the objective of succeeding as a competitive legal services provider, but its objectives also require it to support the Attorney-General in the role of First Law Officer,47 including by maintaining:

a whole-of-government approach the corporate memory of Commonwealth legal practice, and the ability to meet the unique legal services needs of the Commonwealth.

The Commonwealth-specific nature of AGS’ practice is also apparent from how it characterises itself to potential clients – they emphasise that AGS has been “set up to act in the national interest”, are the “custodians of the Commonwealth’s legal corporate memory” and “have limited conflicts of interests with our

43 Mr Billson, Second Reading speech: Judiciary Amendment Bill 2015 (Cth), 28 May 2015, <http://parlinfo.aph.gov.au/parlInfo/genpdf/chamber/hansardr/832d97e7-5731-4e03-b7e4-02ee76be9d56/0040/hansard_frag.pdf;fileType=application%2Fpdf>. 44 In this report, ‘AGS’ refers to the organisational unit while ‘the Australian Government Solicitor’ refers to the position at the head of the organisational unit.45 Judiciary Act 1903 (Cth) s 55J.46 Section 55P of the Judiciary Act 1903 (Cth) provides that the AGS is entitled to charge for services. 47 Australian Government Solicitor, Governance <http://ags.gov.au/aboutus/governance.html>.

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http://ags.gov.au/aboutus/governance.html

clients”.48 It is not realistic that these features could ever be guaranteed by the private sector. Unlike private firms, senior lawyers in AGS also undertake non-billable activity directly associated with the public interest imperative of AGS.

There also remains an expectation that AGS will maintain expertise in the full scope of Commonwealth legal issues. This was identified by the Logan Review:

In some areas of law, the Commonwealth is, and will remain, the major purchaser. Some of these are unique and only rarely required by it…it has not in the past been economic for private sector providers to invest in the development of this expertise. Only the Commonwealth has an interest in doing so…These specialist services are often provided on issues of high risk for the Commonwealth.49

The Review has heard a number of views about the importance and scope of AGS’ role. Stakeholders generally viewed AGS’ public law and litigation work as very high quality and essential services for the Commonwealth.

There were more mixed views on AGS’ work in areas of law that are less centrally connected to public law issues or Commonwealth priorities. For example:

some entities had found AGS less effective in large-scale commercial matters and suggested they had less experience and market exposure than private firms with extensive commercial practices

others preferred to use AGS as it was seen as more committed to protecting Commonwealth interests in these matters, compared to private firms which needed to maintain relationships with potential private sector clients, and

a small number of stakeholders identified a preference for both AGS and private firms, in partnership, to ensure legal services were closely aligned to Commonwealth interests and reflected specialist private sector commercial skills.

In contrast, some private sector stakeholder providers doubted the need for a Commonwealth central provider beyond tied work functions.

The Review has reflected on this feedback in the context of one of the key contestability questions: Does the function align with the Commonwealth Government’s core role and priorities? With this lens, and noting that AGS is no longer a GBE, a shift away from the full service model would better align with the Commonwealth’s expectations of AGS. Feedback from entities emphasised the special value and role of AGS in areas of law central to the core role and priorities of government and public administration. By contrast, there are areas of Commonwealth legal work that are similar or identical to the needs of private sector businesses and the community, and less closely connected to statutory functions and the business of government. Sufficient capability exists in the private sector to meet these other legal needs on an ongoing basis.

A revised remit for AGS should arise from this Review: it has a special role to support the First Law Officer and the Commonwealth more generally. The Review concludes that, in addition to tied work, management of Commonwealth legal risk is best served by having a government provider (AGS) with extensive expertise in:

complex, systemic or precedential issues for the Commonwealth,50 and 48 Australian Government Solicitor, Why Use AGS? <http://ags.gov.au/aboutus/why - use - AGS.html >. 49 Logan, above n 18, 9.16.50 This is not limited to public law matters – for example, strategic commercial legal issues, particularly as they relate to establishing whole-of-government positions, may raise systemic issues for the Commonwealth.

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http://ags.gov.au/aboutus/why-use-AGS.html

areas of law that are closely related to Commonwealth or public sector-specific powers and activities – for example: taxation, regulatory functions, public administration, administrative law, defence, immigration.

An AGS dedicated to the delivery of high quality legal services within defined priorities based on these categories would better meet the Commonwealth’s legal needs. These priorities should be set by the Secretary of AGD, in consultation with the Attorney-General, the Australian Government Solicitor and heads of Commonwealth entities. The priorities would be published and would be periodically updated to ensure new or emerging areas of priority Commonwealth work were captured. The practical impact of this change would primarily be a shift in orientation, rather than a substantial change to the size and scope of AGS practice.

An important part of this shift in orientation is that AGS, as part of AGD, is no longer just another ‘external’ legal service provider to government. Rather AGS would be a centre of excellence – an internal service provider – for the Commonwealth and, in that role, be an integral part of the AGLS.

The relationship of AGS to the market The Review considers AGS should complement and work with in-house legal areas, within a contestable framework for Commonwealth legal services.

Under this new way of working, AGS would effectively (apart from tied work) still be competing with both in-house legal areas and external firms to provide the best value service in its areas of defined priority. As such, there should be no reduction in AGS’ drive for excellence in service levels, timeliness and responsiveness. AGS would still have an incentive to deliver high quality, client-focused legal services and put arrangements in place to attract and retain high quality lawyers. Continuing to have AGS operating in a competitive environment, but also as a key part of the AGLS, would assist the Commonwealth to maintain value for services from external providers (who as a matter of practice already compete with in-house legal areas).

In the contestability context, the Review needs to consider: can the function be done better and cheaper, in whole or in part by someone else? In the legal services context, this aspect of contestability is already realised in the Commonwealth legal market where AGS competes with other providers for legal work. The question for entities to ask themselves is whether the best value is represented by doing the work in-house, using a private sector provider or using AGS.51 A value assessment requires weighing up the cost, expertise and service levels of the potential providers and, within the context of the particular matter, choosing the provider which is best suited in the circumstances.

Within the envisaged form of a competitive market, AGS would not be the selected provider as of right – it would obtain work on the basis of the client’s value assessment, the same criterion that applies to the in-house provider and the private sector. AGS has a number of competitive advantages and disadvantages that mean its value proposition is inherently different to that of external providers. Its competitive advantages include:

access to detailed Commonwealth legal infrastructure, including the opinions database

51 Opportunities to better test the market, obtain better value from the private sector and ensure contestability in practice are further examined in Chapters 4 and 6.

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strong ongoing knowledge of government business and public administration – one stakeholder commented “we often make assumptions about AGS’ technical expertise and their understanding of political sensitivities. This stems from AGS’ history and intimate knowledge of the Commonwealth government sector.”

limited conflicts of interests and a formal process to manage any conflicts,52 and its tied work creates a minimum baseline of work and opportunity to build related expertise.

Among AGS’ competitive disadvantages:

an expectation that it will maintain a practice throughout Australia regardless of relative profitability a constitutionally-restricted client pool, which limits its ability to grow the practice and build private

sector expertise, and working under the public sector administration framework which creates obligations that do not

apply to the private sector, including expectations of public sector employment conditions.

Therefore, the Review considers that AGS is not interchangeable with other external providers, and any discussion about competition should proceed on the assumption that AGS will also have some key differences in its role and approach.

Some stakeholders take the view that, within the competitive model, application of competitive neutrality to AGS is necessary and its removal would “unfairly advantage AGS and act as a disincentive to private sector legal service providers in their investment and commitment to the provision of legal services to Commonwealth entities.” On the other hand, the Review notes that:

under the revised scope for AGS work, its functions would be more closely tied to Commonwealth priorities rather than the ‘full service’ firm model

AGS only provides services to the Commonwealth and its entities (with limited exceptions) application of competitive neutrality arguably has a perverse outcome if its impact is that the value

assessment is skewed through inflating the price of the government provider due to the factors identified above, AGS’ value proposition can never be truly neutral with the

private sector, and looking at the market, AGS is also in competition with in-house legal areas (ie other government

lawyers) but competitive neutrality does not apply to those practices – one stakeholder suggested “AGS should be treated as an internal rather than external service provider for government. Fees should be set on a cost recovery basis.”

The Government has made a commitment to review its competitive neutrality policy.53 The most recent Finance Circular, which dates from 2004 and is archived, says the policy “aims to ensure that significant government businesses do not enjoy net competitive advantages over competitors simply by virtue of their public ownership.”54

52 Judiciary Act 1903 (Cth) s 55R(6).53 Australian Government, Australian Government Response to the Competition Policy Review (2015) <http://www.treasury.gov.au/~/media/Treasury/Publications%20and%20Media/Publications/2015/Government%20response%20to%20the%20Competition%20Policy%20Review/Downloads/PDF/Govt_response_CPR.ashx>, response to recommendation 15.54 Department of Finance, Circular 2004/01: Australian Government Competitive Neutrality Guidelines for Managers, (February 2004) <https://www.finance.gov.au/archive/publications/finance-circulars/2004/01.html>. The most recent public document is from 2004 and is archived on the Department of Finance website.

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https://www.finance.gov.au/archive/publications/finance-circulars/2004/01.html

http://www.treasury.gov.au/~/media/Treasury/Publications%20and%20Media/Publications/2015/Government%20response%20to%20the%20Competition%20Policy%20Review/Downloads/PDF/Govt_response_CPR.ashx

http://www.treasury.gov.au/~/media/Treasury/Publications%20and%20Media/Publications/2015/Government%20response%20to%20the%20Competition%20Policy%20Review/Downloads/PDF/Govt_response_CPR.ashx

The Review considers that the question of competition as it relates to AGS should be simplified to: is it better value (incorporating quality and price) for a government provider to do this work or to engage the private sector? The Review concludes that AGS should operate in a competitive environment for everything other than tied work, but that AGS should not be expected to make a profit as part of that arrangement.

In essence, the key point is that the Commonwealth should access legal services within a contestable framework, according to an assessment of which provider offers the best value:55 in-house legal areas, AGS or an external provider. That assessment does not require all of those providers to function in the same market based on competitively neutrality. That is clearly not the case at present. Each provider can be an important contributor to the Commonwealth’s overall legal services strategy, drawing on the best that each has to offer.

AGS funding model Following the conclusion that AGS should not be required to operate on a for-profit basis in future, the Review has given further consideration to a number of issues about the AGS funding model.

Consistent with maintaining competition in the market, the alternative approach proposed by the Review is a cost recovery model. This raises a number of further issues for consideration:

setting cost-recovery levels negotiating with entities (volume work and service levels) retaining legal talent, and the approach to tied work.

Setting cost recovery levels

As AGS already operates on a cost recovery basis for tied work, entities were able to comment on their experience of current cost recovery arrangements. A recurring theme in submissions and consultation was support for closer scrutiny of the basis for those rates:

Recent experience of AGS cost recovery rates … indicates a need to focus on the AGS corporate cost structure more than any other factor.

[S]ome serious consideration of AGS’s costs structures is warranted…given the comparatively small margin that has been removed as part of the recent revision of tied work rates when compared with non-tied work rates.

The Review has been unable to reconcile the wide range of comments about AGS’ rates generally, with some entities indicating they found AGS was very well priced and others suggesting they found the cost of AGS higher than it should be. Noting the inconsistent feedback and the lack of transparency on this issue (which is consistent with broader price transparency issues in the Commonwealth legal services market), the Review considers that some independent input should be sought in setting future cost recovery arrangements. This is particularly the case for tied work, where there is no direct competitive pressure, but there would be value in providing that assurance more broadly. The Review recommends that the Secretary of AGD periodically examine AGS’ cost structure supported by advice from an independent expert.

55 Subject to tied work and restrictions on in-house practices undertaking certain work under the Directions.

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Negotiating with entitiesThere needs to be more transparency and consistency of the fees charged by AGS across the Commonwealth, particularly in areas of high volume work, rather than charging on an Agency by Agency basis.

As the profit incentive would be removed, there would be no basis on which some entities could get a better deal at the expense of others. This would complement reforms recommended in Chapter 6 of this Report to generally improve price transparency of external legal services. It would also assist to reduce AGS’ administrative costs from a model where different billing arrangements apply to different clients.

In implementing cost recovery, AGS would still need to be able to negotiate with entities to scope work, to take account of further economies of scale in large or high volume matters, and to respond to service level needs. However, price transparency (as set out in Chapter 6) would still apply to these arrangements.

Retaining legal talent

The Review has heard some concerns that a cost recovery model for AGS would prevent it from offering employment conditions that enable it to attract and retain highly specialised Commonwealth legal experts. This was also a factor in the Logan Review’s recommendations about the structure of AGS.56 However, since Logan, the ability of public sector employment arrangements to be tailored to specific entity needs have increased substantially.57 The Review considers that cost recovery arrangements can co-exist with employment conditions that reward high performance to attract, develop and retain a skilled workforce.

Funding of tied work

One further option raised by some stakeholders was that “[as] tied work is not contestable, it should be taken outside the fee structure altogether and AGS should now be directly appropriated to fund tied work.”

There are some potential benefits to this approach. It would support the view that tied work is a priority of the Commonwealth as a whole, rather than of individual entities. It would also create an incentive for entities to identify tied work early. For example, the Review noted that jurisdictions where tied work (or its equivalent) was budget funded rarely had tied work issues identified late or disagreements about whether a matter was tied.

However, there are also some risks inherent in the approach. The total volume of tied work can fluctuate substantially from year to year – for example, a consequence of the Williams matters58 was both an immediate increase in volume of urgent constitutional law work and an ongoing increase in the number and complexity of constitutional risk assessments. A fixed funding amount for tied work may leave AGS unable to quickly respond to those changes in demand. Budget funding of tied work would also reduce the incentive for individual entities to strive for efficiency in tied work, and for AGS to retain high levels of responsiveness and client focus.

On balance, the Review recommends that AGS tied work continue to be handled on a cost recovery basis.

56 Logan, above n 18, 10.1257 Australian Public Service Commission, A History in Three Acts, Evolution of the Public Service Act 1999 <https://resources.apsc.gov.au/2007/history3acts.pdf>, 144. This ability has been increased particularly by the changes brought about through the Public Service Act 1999. 58 Williams v Commonwealth of Australia [2012] HCA 23; Williams v Commonwealth of Australia [2014] HCA 23 (Williams (No 2)).

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https://resources.apsc.gov.au/2007/history3acts.pdf

The Office of Legal Services Coordination Unlike the other elements of the Commonwealth legal services arrangements, OLSC is not a legal services provider. However it performs key functions in the overall Commonwealth legal services model – it is a mechanism to bring the disparate parts together in support of a consistent and coherent Commonwealth legal position.

OLSC, a business unit within AGD, was created in response to a recommendation of the Logan Review that an office should be established within AGD to support the Attorney-General in relation to his or her responsibilities for legal services for the Commonwealth.59 OLSC’s responsibilities for monitoring and coordinating the delivery of legal services to the Commonwealth include:

administering the Directions administering aspects of the Judiciary Act providing support as required for the Attorney-General as First Law Officer and the Solicitor-General

as Second Law Officer60

providing secretariat support to the GCWG, AGLN Board and Significant Legal Issues Committee (SLIC), and

coordinating and publishing the annual Commonwealth Legal Services Expenditure Report.

Stakeholder consultation suggests that Commonwealth entities see value and further potential in the role of OLSC. There is broad support and clear need for coordination and facilitation functions that aim to support the management of critical whole-of-government issues and a sense that OLSC should serve this role.

The recommendation on the role of OLSC in Chapter 3 reflects that OLSC will have a critical coordinating, facilitative and delivery role for several recommendations in the Review, including, for recommendations in this Chapter:

responsibility for work to establish and support the AGLS, and assisting the AGD Secretary to support the charter for General Counsel.

OLSC will also be a vital component of achieving greater consistency and reducing duplication in Commonwealth legal work through the mechanisms for coordination and collaboration in Chapter 3 and the procurement arrangements in Chapter 6.

59 Logan, above n 18, 10.29.60 This includes considering correspondence, providing briefing material, supporting the appointment of Commonwealth’s Queen’s Counsel and a range of administrative support functions.

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Recommendations1. ESTABLISHMENT OF THE AUSTRALIAN GOVERNMENT LEGAL SERVICE That an Australian Government Legal Service (AGLS) be established to support coherent and consistent legal services across the Commonwealth. All lawyers in Commonwealth entities, including AGS lawyers, would be members of the AGLS but also remain employees of their entity. The AGLS would:

have the primary purpose of supporting the delivery of high quality and joined-up legal services across the Commonwealth and its entities

facilitate information sharing, collaboration and networking across Commonwealth entities at all levels

develop and circulate information and guidance on legal and practice management issues, including engagement of external providers

develop and implement AGLS professional standards, and coordinate core training programs for AGLS staff.

The AGLS would be supported through a dedicated team in OLSC.

2. ROLE OF GENERAL COUNSELa) That the role of General Counsel should include:

responsibility for identifying and contributing to the coordinated management of whole-of-government issues

a leadership role on coordination of legal issues and services in the portfolio, and responsibility for sharing information across the Commonwealth, including on informed

purchasing and good in-house practice.

The expanded role would be supported through a charter for General Counsel to be sponsored by the Secretary of AGD.

b) That all General Counsel across the Commonwealth would have responsibility for leading their entity’s engagement in the AGLS, supporting their entity head to ensure their entity’s compliance with the Directions and managing any non-compliance.

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3. ROLE OF AGSThat the role of AGS be redefined as a centre of excellence within the AGLS. Its defined priorities will be the delivery of high quality legal services in the areas of tied work, complex, systemic or precedential issues for the Commonwealth and Commonwealth-specific areas of law. The scope of these defined priorities will be set by the Secretary of AGD. As part of this:

AGS would operate on a cost-recovery basis only and would no longer seek to make a profit on non-tied work

the Secretary of AGD would review AGS’ cost structure every two years and any increase in costs would need to be approved by the Secretary with advice from an independent expert, and

AGS would invest in legal capability in areas directly connected to its defined priorities.

Chapter 3 – Mechanisms for collaboration and coordinationChapter 2 looked at the overall structure of Commonwealth legal services, and the future role of each of the constituent parts of that structure in ensuring appropriately coordinated and aligned legal services. This Chapter considers the supporting mechanisms, through the Directions, the AGLS and OLSC, which direct or facilitate coordination and collaboration between the various parts of the Commonwealth legal services system.

Consistent with the Terms of Reference, the purpose of these mechanisms is to ensure appropriately coordinated and aligned Commonwealth legal services to identify and manage Commonwealth legal risks, take account of whole-of-government issues and avoid duplication. Within this context, several of the mechanisms are closely linked to supporting the First Law Officer and Second Law Officer by providing information and facilitating oversight of key legal matters and by setting standards for conduct of Commonwealth legal work.

This Chapter considers:

options to increase information sharing to make more effective use of the combined weight of legal knowledge and resources held by the Commonwealth

the general effectiveness of the Directions effectiveness of key coordination, collaboration and consistency measures within the Directions, and future priorities and opportunities for OLSC in the context of the findings in this Chapter on

coordination and collaboration mechanisms.

Information sharingThe majority of stakeholders agree that sharing information effectively can maximise efficiencies, reduce duplication and minimise the potential for inconsistent advice and action on legal issues of common interest. The proposals put forward by the Review build upon this consensus and the principle that every entity forms a part of the Commonwealth and information is foremost a Commonwealth resource. As such, the expectation of participation in overarching solutions applies to every entity.

The Review has considered how the Commonwealth could make better use of the information that it holds. Stakeholders made a number of suggestions to the Review about the types of information that would be beneficial if shared between government lawyers. Legal advice was a key category of information in this context, but other relevant information included contract templates, common court documents, sample procedures, training material and legal procurement templates and guidance.

Stakeholders agree on the need to improve information sharing, gain better access to resources and overcome barriers preventing good collaboration between government lawyers. The Review considers improved collaboration and coordination requires a cultural shift in the way entities conceptualise and value ‘information’.

How legal information is obtained, stored and shared are questions that have largely been defined by the perspectives of the individual entity rather than the Commonwealth as a whole. As a consequence, the

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measures that have been developed to date have either failed or succeeded on the basis of whether the individual entity sees value in sharing the information and if so, how effectively and easily they can share it.

Current approaches to sharing informationAcross the Commonwealth, there are a number of groups and forums that provide opportunities to share information about important legal issues affecting entities and the Commonwealth more broadly. In addition to the GCWG, AGLN and Legal Practice Managers’ Forum within the AGLN,61 which are mentioned in Chapter 2, the Review also acknowledges other networks such as the Corporate Commonwealth Entities Legal Network (CCELN) organised by AGS, the Office of the Australian Information Commissioner’s (OAIC) Information Contact Officer Network, and the Commonwealth Ombudsman’s Public Interest Disclosure Communities of Practice. These networks contribute to informal learning and developing an understanding of whole of Commonwealth legal issues.

A more formal mechanism is paragraph 10 of the Directions which requires non-corporate Commonwealth entities (NCCEs) wishing to obtain legal advice on the interpretation of legislation administered by another NCCE to consult with and provide a copy of the legal advice to the responsible entity, other than where it relates to a routine matter. This provision is intended to reduce the incidence of duplication in advices obtained by agencies and facilitate a whole-of-government approach on interpretation of legislation. Paragraph 10 is one of the most common areas of non-compliance with the Directions, and entities have indicated that they find it difficult to identify whether or not a matter is routine.

The effectiveness of existing mechanisms, and the ability of Commonwealth entities more generally to share information and collaborate effectively are often undermined by two factors:

the ability of entities to readily access information both in terms of knowing what information exists and knowing how to get it, and

a general apprehension or sensitivities about risk that curb opportunities for better coordination and collaboration.

Accessibility

The current model does not foster information sharing. The degree to which entities connect, share and collaborate with other entities varies. Whenever separate entities seek advice in relation to the same issue there is duplication of effort and resources and an increased risk that Commonwealth entities will take inconsistent positions on the same issues.

Why pay many times over for the same questions to be answered and the same advice given to different entities, when the broad answer given to one can be disseminated to others?

As a result of the current model, when entities do obtain legal advice, they do it on the basis that the entity needs the information for its own purposes. There is no particular imperative to share that advice, and even if there was such an imperative, there is no convenient mechanism or resource available to help them share it. Informal relationships between entities might form the basis for some information to be shared but an opportunity to benefit the broader community of in-house legal areas is lost. To help address this problem, a

61 As discussed in Chapter 2, the AGLN and GCWG were established following recommendations in the Blunn and Krieger Review to promote information sharing and to establish a professional ethos amongst government lawyers. Chapter 5 provides further discussion on the impact of the GCWG and AGLN on professional identity of government lawyers.

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majority of stakeholders identified the need for an entity to coordinate information sharing from the centre. Some stakeholders indicated that OLSC or AGD are well placed to undertake this function given OLSC already collects some information under the Directions.

Sensitivities

A general cautiousness about sharing information compounds the structural problem outlined above. In submissions to the Review, stakeholders conveyed concerns about loss of control over information once it was ‘handed over’, the potential for it to be used out of context or ‘leaked’. These concerns reinforce the notion that government lawyers obtain advice primarily for the benefit of the individual entity and therefore consider that it is owned by that entity. An entity-focused approach undermines the fact that the information pertains to the Commonwealth and that when it comes to sharing information, government lawyers share a common understanding of their obligations and will have regard to protecting the Commonwealth’s interests.

Similarly, the Review heard concerns about legal professional privilege as impeding information sharing between entities. However, while this is a concern, it can be overcome with better guidance and support for entities.

Potential waiver of legal professional privilege is often quoted as being a barrier to sharing information. This is not accurate. Sharing advice within the Commonwealth does not waive legal professional privilege.

A barrier to sharing may be misconceptions about the impact on legal professional privilege. Whole-of-government guidance clarifying the legal position on this would encourage greater sharing.

The Review acknowledges that the operation of secrecy laws will prevent the disclosure of certain information contained in legal advice and opinions. Sharing of classified, national security or Cabinet material will also be more limited. However, the Review considers that information sharing solutions that emphasise a whole-of-government approach, have appropriate security protocols in place, and reinforce the existing professional obligations of government lawyers will encourage entities to be more open to participating in information sharing.

Opportunities to improve information sharingWhile a majority of stakeholders saw benefit in coordinating information sharing from the centre, a large number of entities indicated that an IT solution was necessary to deliver this service given the size of the Commonwealth and the logistics involved. While the Review agrees that an IT solution is necessary, it will not on its own improve information sharing across entities. Any viable and sustainable information sharing solution must:

capture important information of relevance to the broader Commonwealth, and share it accessibly and efficiently.

Developing an information sharing solution that delivers on these key features may seem obvious, but there are challenges. The breadth of information that could be captured can be very significant and unwieldy given the size of the Commonwealth and the diversity of the work undertaken across in-house legal areas. In the first instance, the Review recommends a solution that focuses upon legal advice as a key category of information.

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The Review considered a range of options for a database of legal advices, from providing access to the existing AGS Opinions database of legal advice to capturing all of the advices held by in-house legal areas across the Commonwealth and providing access to them. Access to the AGS database would take advantage of existing infrastructure but it does not create incentives for entities to contribute the in-house or external legal advice that they hold. The AGS database only captures a relatively small subset of advices, noting that AGS is 14% of the total legal services market. The existing AGS database is also not well adapted to broader use, with its content tailored to AGS practice needs. This option would not achieve the same level of information-sharing as a whole-of-government database.

A database of all legal advices produced by and for Commonwealth entities could increase consistency in advice and reduce duplication of work. However, this option would be expensive, require significant resources to manage data input and ensure the quality of the advices and may duplicate internal effort without meeting entity-specific needs. The Review considers that the more comprehensive the database model the greater the administrative burden and the likelihood it becomes unwieldy and difficult to navigate.

Targeted legal advice database

Overall, entities, including most portfolio departments, welcomed the creation of a targeted online centralised database of legal advices62 with appropriate safeguards and supported by a central coordination area.

[A] whole-of-government legal database should be developed to ensure advices can be shared amongst agencies without the need for agencies to actively request that information. A shared system would facilitate collaboration and trust amongst Commonwealth agencies and would also provide a platform for professional engagement and relationship development.

A number of stakeholders identified the need for the database to be managed centrally. Stakeholders generally accepted that the quality and utility of a database solution is contingent on an appropriate level of resources to manage it effectively. The Review agrees with a number of stakeholders who indicated that OLSC is best placed to undertake this function.

We consider that OLSC could play a greater central role, particularly in relation to the procurement and dissemination of legal advice which applies across the whole of the Commonwealth.

In terms of the scope of the database, the Review proposes that the primary criterion is whether the advice has broader relevance to Commonwealth entities. This would include advice from AGS, other external providers and in-house lawyers. Much of the advice produced for the Commonwealth is not expected to be included on the database, to avoid the system becoming unwieldy to navigate or repetitive. For example, advice about very niche legislation would not generally be a priority for sharing, but should be shared if it sheds light on a broader issue of relevance such as administrative law principles, particular categories of statutory powers, or arrangements for statutory office holders.

Other features of a database should include:

62 The term ‘advice’ refers primarily to privileged information in the form of legal advices, but also encompasses legal opinions in other forms.

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Incremental establishment:

OLSC would work with General Counsel to identify priority topics for testing of the database. The database would primarily capture existing advices using the criteria outlined above. In addition to existing advices, administering entities (ie those having carriage of the substantive legal issue) would commission whole-of-government advice for general circulation where there is an identified need.

Processes to ensure appropriate handling of material

Material for inclusion would be checked by the responsible entity to identify where legislative or judicial developments require updates to existing advices. This may include periodically confirming that advices remain relevant. Responsible entities would be able to request removal of out-of-date or incorrect advice.

Access would be limited to those government lawyers with a need to know, with necessary caveats to protect the integrity of the database, including mandatory training, terms of use and access controls.

The recommended solution is a whole-of-government approach that will require an upfront investment and ongoing funding in order to deliver future efficiency. In light of the whole-of-government benefits to be gained, further consideration will need to be given to the most appropriate funding solution.

The proposed solution forms part of a broader package of recommendations, including the establishment of the AGLS, which will facilitate and influence information sharing practices between entities. The success of a database solution will be contingent on entities’ active participation in sharing of advice.

Second stage of a database solution

Following implementation of a central database of legal advice, the Review considers that there is merit in either building upon this database or establishing a separate mechanism to enable sharing of templates, common court documents, guidance notes, procurement material and sample policy documents. Through consultations and submissions with stakeholders, the Review has formed the view that both in terms of consistency and reducing duplication of effort, there are significant gains to be made by sharing this type of information.

A shift towards more standardised documents accords with the recommendations in the Belcher Review which found that such an approach lessens the burden of compliance with whole-of-government policies and builds corporate knowledge.63 Smaller in-house legal areas and entities with no in-house legal capability particularly stand to gain from access to quality resources that have been developed by other larger and better resourced practices.

Inter-governmental forums

Stakeholders indicated the lack of a peer network or an accurate contact list hampered their ability to know who to contact in another in-house legal area to inquire about advices or information and talk about emerging legal risks. There is an opportunity here for the AGLS, as an overarching professional network, to bring government lawyers together to discuss strategic legal priorities, issues and risks. The AGLS could assist

63 Belcher, above n 14, vol 1, 17.

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in identifying and developing material for the database and this information could form the basis for discussion groups and communities of practice (including State and regional based forums).

Legal Services Directions The Directions are a set of binding rules issued by the Attorney-General about the performance of Commonwealth legal work.64

The Directions are the key mechanism for the Attorney-General to ensure there is a whole-of-government, coordinated and consistent approach to the way in which the Commonwealth conducts its legal work. The precursor to the current Directions were first issued when work limited to the Attorney-General’s Legal Practice was opened up to other providers. The Directions codify important obligations on the Commonwealth when conducting litigation or handling claims.

The Directions are also intended to set out the requirements for sound practice in the provision of legal services to the Australian Government and to offer tools to manage legal, financial and reputational risks to the Australian Government’s interests. They seek to allow Commonwealth entities the freedom to manage their particular risks while providing a supportive framework of good practice, and a mechanism for collecting key information about legal issues and legal services.

Clearer and simpler DirectionsThere has been recognition for some time that the Directions would benefit from more direct drafting language.65 In particular, stakeholders supported:

streamlining the Directions, focussing on clearly identifying key obligations and processes a more proportionate relationship between the importance of particular obligations and the related

breaches, and more and better guidance material to clarify entities’ obligations, including the requirement to seek

advice on the interpretation of legislation by another government entity, tied work, settlement of significant issues, and model litigant obligations.

The Review agrees that a move to a more streamlined, principles-based document would place emphasis on core obligations whilst removing unnecessary red tape in line with the Government’s Regulatory Reform Agenda. Clearer and simpler Directions, supported by comprehensive guidance material, would improve understanding, clarify responsibilities, and assist entities to meet their obligations.

Strengthening the Compliance Framework OLSC’s current compliance approach focuses on encouraging and supporting entities to comply with the Directions rather than a strict regulatory approach.66

64 The Legal Services Directions 2005 (Cth) are issued by the Attorney-General under s 55ZF of the Judiciary Act 1903 (Cth).65 The Review has drawn primarily on comments provided by entities on an earlier draft revision to the Directions which did not proceed, as well as input provided through the issues papers and consultation.66 Attorney-General’s Department, Guidance Note 3: Compliance with the Legal Services Directions 2005 (2015) <https://www.ag.gov.au/LegalSystem/LegalServicesCoordination/Documents/Compliance - with - the - Legal - Services - Directi ons - 2005.pdf >.

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https://www.ag.gov.au/LegalSystem/LegalServicesCoordination/Documents/Compliance-with-the-Legal-Services-Directions-2005.pdf

https://www.ag.gov.au/LegalSystem/LegalServicesCoordination/Documents/Compliance-with-the-Legal-Services-Directions-2005.pdf

The Directions Compliance Framework requires that entities notify OLSC as soon as they become aware of any possible or actual non-compliance with the Directions.67 Entities are expected to have arrangements in place to appropriately consider and respond to complaints or allegations of non-compliance with the Directions, including capability to self-assess compliance on some aspects of the Directions. The accountable authority of entities must also provide an annual certificate setting out the extent to which they believe the entity has complied with the Directions.68

Issues raised about the existing Compliance Framework include:

uncertainty around what constitutes a breach of the Directions little distinction in the identification and reporting of serious, substantive breaches (eg of the model

litigant obligation or tied work rules) as against technical breaches (failing to meet the legal services expenditure reporting deadline)

an absence of clearly and consistently articulated consequences for non-compliance, and uncertainty around OLSC’s ability to enforce compliance.

Issues Paper Two sought submissions on what regulatory role OLSC should play in relation to compliance with the Directions. Most entities supported a risk-based and proportionate approach, with a focus on self-assessment, less onerous reporting requirements and increased education and training. For example:

Any enforcement activity by OLSC should only be where there are serious, systemic or wilful non-compliance by agencies.

[OLSC should] ensure that any compliance mechanisms and sanctions are appropriately tailored to the type of breach…[and] ensure that compliance processes are not administratively burdensome.

A move to a self-assessment model may enable OLSC to focus their limited resources on particular areas of concern.

In response, the Review considers that there is considerable advantage in OLSC undertaking a more robust and risk management based approach to compliance with the Directions. This approach is consistent with the Belcher Review insofar as it reduces red tape and allows for a more consistent and proportionate approach, focussing on remedial action for high risk breaches, including those relating to tied work and significant issues.

There is also an opportunity to provide greater certainty of OLSC’s authority to enforce compliance and clearer consequences for non-compliance. Such measures would counterbalance the risks that would arise from a risk-management based approach where entities self-assess compliance performance. A new approach would include:

prioritising areas of the Directions for closer examination while increasing ability for entities to self-assess lower level compliance issues

auditing entities where substantial or systemic compliance issues are identified or suspected, and consequences for serious non-compliance, which could include termination or amendment of

exemptions, directing an entity to use a particular provider or amendment of reporting obligations.

67 Paragraph 11.2 of the Legal Services Directions 2005 provides for this obligation to apply to non-corporate Commonwealth entities and entities that were ‘agencies’ within the meaning of the Financial Management and Accountability Act 1997 on 30 June 2014.68 Legal Services Directions 2005 (Cth) para 11.2.

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The objectives of these measures could be reflected in the charter for General Counsel as discussed in Chapter 2, and in the statement of roles and responsibilities for government lawyers discussed in Chapter 5.

Application of the DirectionsThe Directions apply to NCCEs. Only certain parts of the Directions apply to corporate Commonwealth entities (CCEs), as set out at paragraph 12.3 of the Directions.69 The Dictionary to the Directions also extend the definition of NCCE to entities who were agencies within the meaning of the Financial Management and Accountability Act 1997 at the time the PGPA Act commenced, but became CCEs rather than NCCEs after that date.70

Paragraph 12.4 of the Directions also provides that the Attorney-General may decide that a particular body or person is to comply with some or all of the Directions that apply to NCCEs. The Attorney-General’s power to issue directions under the Judiciary Act is broader than the application of the current Directions, including directions to apply generally to Commonwealth legal work or work in relation to a particular matter. The obligation to comply extends to any Commonwealth entity or external service provider undertaking Commonwealth legal work.71 Paragraph 13 of the Directions provides for the Attorney-General to exempt an entity from complying with the Directions or require an entity to comply with modified directions. In practice, the power to grant some exemptions is delegated to OLSC, and OLSC also assists the Attorney-General to consider exemption requests for non-delegated functions.

Two closely related issues arose for the Review in considering the application of the Directions:

Are the current distinctions based on the PGPA Act serving the intention of the Directions? Are there any aspects of the Directions that should not apply or should apply differently to entities

with regulatory functions?

In terms of application to CCEs, a number of stakeholders supported extending aspects of the Directions including:

being subject to the tied work rules in the same way that all NCCEs (and some CCEs72) are, while retaining capacity for one-off or ongoing exemptions (paragraph 2)

the requirement to report on significant issues (paragraph 3.1), and the requirement to share advice on legislation administered by another entity (paragraph 10)

There were several CCEs who opposed any extension of requirements for reasons relating to statutory independence and inconsistency with the entity’s legislation. However, there were no policy bases advanced for that view that applied to the CCE group as a whole rather than the nature of the individual entity. The Review concludes that there is no apparent policy basis for the current distinction in the Directions, other than a general impression that there is a greater distance between government and CCEs compared to NCCEs.69 In addition, under para 12.2 of the Legal Services Directions 2005 (Cth), all entities that are handling claims or conducting litigation in the name of the Commonwealth must comply with all of the Directions in the handling of those matters. However, the Review understands it is very rare that para 12.2 in practice extends the effect of the Directions to additional entities.70 Legal Services Directions 2005 (Cth) para 15.71 Judiciary Act 1903 (Cth) ss 55ZF, 55ZG. Under the Legal Services Multi-Use List Deed, external legal service providers are also required to comply with the Legal Services Directions 2005 (Cth) and to ensure their client entities comply. See Clauses 8.1.1 and 16.7.1(o) of Schedule 4 of the Legal Services Multi-Use List Deed.72 Specifically, those entities that were ‘agencies’ within the meaning of the Financial Management and Accountability Act 1997 on 30 June 2014.

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Arguments about the extent to which the Directions should apply to NCCEs with statutory independence and regulatory responsibilities were also raised. For example:

As a statutory independent agency there is an inherent tension between the premise…that the [Attorney-General] as First Law Officer of the Commonwealth has responsibility for the conduct of all legal actions involving the Commonwealth and the role of independent statutory officers being accountable for legal services and outcomes specific to the agency.

One suggestion was that certain obligations under the Directions should not apply to ‘regulators’. However, the Review notes that there was no clear criterion by which a regulator could be identified. Rather, entities relied on a range of factors, including independence from ministerial oversight in their policy responsibilities and importance of a reputation and perception of independence. The Review notes that these factors are not necessarily unique to regulatory functions. In addition, there is enormous variation in the source and nature of the statutory or other independence of those entities, reflecting the diversity of purposes for which the entities were established.

Fundamentally, the responsibility of the Attorney-General for the performance of Commonwealth legal work, including the proper conduct of litigation, need not conflict with the responsibility of entities to perform their regulatory, investigatory or other functions with independence and rigour. The Directions set standards for legal work undertaken by Commonwealth entities much in the same way as other legislative instruments such as court rules and the Judiciary Act. Similarly a range of other legislative frameworks and government policies also apply to the business of Commonwealth entities, from the PGPA Act, the Public Service Act 1999 to the Australian Public Service Commissioner's Directions 2013.73 Effective administration of the Directions requires an awareness of the context, legislation and functions of the particular entity, and exemptions will sometimes be appropriate, but this is better addressed through consideration of specific entity circumstances rather than generic rules.

The Review considers that there would be benefit in generally standardising the Directions to apply to both CCEs and NCCEs, with the need for exemptions or a different approach being on the basis of the particular circumstances of the entity rather than how they are categorised under the PGPA Act. The Review proposes that future revisions of the Directions consider the merits of expanding their application.

Additional guidance from OLSC could be provided on the exemption process to assist entities to apply for a modification or exemption from the Directions where appropriate. The process of seeking an exemption should prompt a constructive dialogue between OLSC and the applying entities; regardless of the exemption outcome, that is an opportunity to reinforce the objectives of the Directions while taking account of the circumstances of individual entities.

Tied Work It has long been recognised that certain categories of Commonwealth legal work are so critical to government that only a limited number of government legal services providers are able to advise on them. This concept of ‘tied work’ is an exception to the general expectation that legal services are contestable. The ongoing need for tied work has been recognised in previous reviews,74 and was also recognised by the vast majority of stakeholders.

73 Australian Public Service Commissioner’s Directions 2013 (Cth).74 Logan, above n 18, 0.19. Blunn and Krieger, above n 26, 18.

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The core principles underpinning tied work, as set out in the Explanatory Statement to the Directions, are to:

“ensure that the Commonwealth minimises the risk that portfolio-specific approaches to questions of public international law or constitutional law (for instance) will impair the Commonwealth advancing and maintaining a consistent and clear position on such matters”, and

recognise that certain kinds of work “have particular sensitivities, create particular risks or are otherwise so bound to the work of the executive that it is appropriate that they be subject to centralised legal service provision”.75

Tied providers are also well placed to invest in relevant expertise, retain key corporate knowledge about an area of law and bring a whole-of-government perspective to matters.

Tied work, despite representing some of the most critical Commonwealth legal work, remains a relatively small proportion of Commonwealth legal work. For example, tied work generally constitutes approximately 10-15% of AGS’s work each year.

The requirement that certain critical government legal work be performed by a central provider is also common in other Australian jurisdictions76 and in many overseas jurisdictions.77

The key issues for future tied work that were raised during the Review are:

categories of tied work identifying tied matters, and performance of tied work.

Categories of tied work The Review considered whether the current scope of tied work meets the balance between managing legal risk in critical areas of law and ensuring contestability where appropriate. Paragraph 2 of the Directions sets out the categories of work that are tied to government providers of legal services, to the extent that these types of work are undertaken for an NCCE.78 The categories of tied work are:

Constitutional Cabinet national security

75 Explanatory Statement, Legal Services Directions 2005 (Cth) <https://www.legislation.gov.au/Details/F2006L00320/Explanatory%20Statement/Text>. 76 For example, in New South Wales, ‘core legal work’ is required to be referred to the Crown Solicitor’s Office (see NSW Department of Justice, Core Legal Work (13 January 2015) <http://www.justice.nsw.gov.au/legal - services - coordination/Pages/info - for - govt - agencies/core - legal - work.aspx >). In Victoria, the Victorian Government Solicitor’s Office performs a range of exclusive services (see Department of Justice and Regulation (VIC), Victorian Government Solicitor’s Office Exclusive Services (21 March 2015), <http://www.justice.vic.gov.au/home/justice+system/laws+and+regulation/regulation+of+legal+services/victorian+government+solicitors+office+exclusive+services)>. In Queensland, ‘tied work’ must be performed by Crown Law (a self-funded business unit in the Department of Justice and Attorney-General) (see Department of Justice and Attorney-General (QLD), Tied Work Guidelines (19 December 2014), Legal Services Coordination Unit <http://www.justice.qld.gov.au/justice - services/legal - services - coordination - unit/legal - service - directions - and - guidelines/ tied - work - guidelines >).77 Either because the relevant jurisdiction has a centralised model for the provision of legal services to government, or because it ‘ties’ some work to a particular provider.78 Paragraph 2 of the Legal Services Directions 2005 (Cth) provide that the tied work rules do not generally apply to CCEs.

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http://www.justice.qld.gov.au/justice-services/legal-services-coordination-unit/legal-service-directions-and-guidelines/tied-work-guidelines

http://www.justice.qld.gov.au/justice-services/legal-services-coordination-unit/legal-service-directions-and-guidelines/tied-work-guidelines

http://www.justice.vic.gov.au/home/justice+system/laws+and+regulation/regulation+of+legal+services/victorian+government+solicitors+office+exclusive+services

http://www.justice.vic.gov.au/home/justice+system/laws+and+regulation/regulation+of+legal+services/victorian+government+solicitors+office+exclusive+services

http://www.justice.nsw.gov.au/legal-services-coordination/Pages/info-for-govt-agencies/core-legal-work.aspx

https://www.legislation.gov.au/Details/F2006L00320/Explanatory%20Statement/Text

public international law, and most drafting work.

These categories of tied work have been in place since 1999, but before that a larger category of matters had been tied. For example, under the Directions for the Provision of Legal Services to Government Departments and Agencies – June 1994, work that could only be performed by AGD included litigation in courts by or against the Commonwealth, questions of statutory interpretation of legislation affecting more than one Commonwealth Department or agency, and both domestic and international government to government work.79

Most stakeholders agreed that all of the current categories of tied work should remain, and the Review agrees with this conclusion. A subset of stakeholders suggested that it would be desirable to limit those categories, but no compelling reasons for limiting any particular category were provided.

The Review also sought views on adding a range of categories of tied work that are of broad relevance to the Commonwealth. Most stakeholders were not supportive of expanding the scope of tied work. There was a perception that expansion would be inconsistent with contestability and a concern that an absence of competition may have an adverse effect on the level of service and quality of advice received.

However, some stakeholders saw merit in tying areas of central Commonwealth law or acts of general application.

[T]ying whole-of-government legal issues to a particular provider would help to ensure that Commonwealth entities administered Commonwealth laws in a fair and consistent manner.

Consistent with the core policy principles of tied work and in the interests of promoting alignment across the Commonwealth, the Review considers that there are other areas of law that warrant inclusion. In particular, the Review considers the categories of tied work should be expanded to include significant or precedential issues arising from key legal frameworks for public administration. This is consistent with the recommendation in Chapter 2 that the role of AGS should be defined to focus its extensive expertise on complex, systemic or precedential issues for the Commonwealth and areas of law that are closely related to Commonwealth activity.

For example, under the Freedom of Information Act 1982 (FOI Act), a consistent approach to Cabinet-related material, incoming government briefing or sensitive material held by ministers is essential to maintaining the Commonwealth’s position with respect to claims over this material. The additional categories suggested are:

FOI Act PGPA Act Privacy Act 1988 Public Service Act 1999 Public Interest Disclosure Act 2013 Machinery of Government changes, and public interest immunities.

79 Directions for the Provision of Legal Services to Government Departments and Agencies 1994, paras 11, 13.

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The Review accepts that it is not practical or desirable to capture every issue arising within these categories, which is why it is proposed to limit them to significant or precedential issues.80 Indeed, some of the work under these categories is low-level, non-contentious, or even transactional in nature. Therefore, the extended tied work categories would need to be supported by regularly updated guidance material to assist entities to identify whether the issues they are dealing with are significant or precedential.

Identifying tied mattersIn Issues Paper Two, the Review noted that the lateness with which tied matters are sometimes identified by entities (including where the issue is raised by OLSC) suggests that:

some entities either lack the requisite skills or are reluctant to identify at an early stage whether matters involve tied issues, or

there is some ambiguity about the scope of the various categories of tied work.

The result is that not all tied matters are identified and referred to a tied provider in a timely fashion. This can make it difficult for the tied provider to become familiar with the matter and perform the work within relevant timeframes. Costs may also be wasted as previous work on the matter may need to be repeated by the tied provider to meet their professional responsibilities.

Stakeholders supported increased education and guidance on the scope of tied work to assist them to identify tied work issues early.

[S]ome of the current categories are ambiguous, and it is possible that some agencies may not refer work to a tied provider because it is not clear to them that the work falls into a category of tied work. Improved definitions would go some way to addressing this.

OLSC should provide clear guidance to agencies on the scope of the tied work categories, especially those that are uncertain. Such guidance should extend to answering specific requests and questions from agencies about whether a matter is tied, as well as more general guidance material like that published by the Department of Finance on PGPA matters.

The Review proposes that the tied work requirements be considered as part of the broader streamlining of the Directions. It is expected that clearer Directions, supported by up-to-date guidance material, will improve entities’ understanding and assist them to meet their tied work obligations.

A number of entities also noted that there should be a stronger governance structure for decisions about whether work is to be treated as tied. The Review notes the importance of providing certainty to entities in circumstances where the applicability of the tied work categories to a particular matter is ambiguous. Providing OLSC with the power to make a decision in those circumstances would provide clarity and allow the issue to be resolved promptly where it arises.

80 However, these new categories would not operate to limit the scope of the existing categories. For example, a matter raising national security issues in the context of a public interest immunity claim would be tied in its entirety, rather than applying the ‘significant or precedential’ test. Similarly, the matter would be tied if a constitutional issue was raised as part of Machinery of Government claim, even if the Machinery of Government issue was not significant or precedential.

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Performance of tied workThe current tied providers are (depending on the type of work) AGS, AGD, DFAT and OPC. Under the Directions, the Attorney-General may also give (conditional or non-conditional) approval for a legal services provider other than a tied provider to undertake tied work.81

Exemptions to the tied work scheme can include ongoing exemptions in clearly defined and particular circumstances, as well as case-specific exemptions that arise on an ad hoc basis. International law work can also be undertaken by non-tied work providers where the Attorney-General has approved the use of the entity’s in-house legal area in the performance of that work.82

There are three issues about performance of tied work that the Review considers warrant further attention:

whether having multiple tied work providers in a given category is desirable handling of matters where both tied and non-tied issues are substantively raised, and funding of tied work.

Multiple providers

The tied work rules are a means of facilitating and enhancing coordination, collaboration and alignment across government. The Review has considered how this operates where there is more than one provider for one category of tied work.

For example, there are three tied providers for public international law work – the Office of International Law (OIL) within AGD, DFAT and AGS. These providers do not always have access to the same materials and take different approaches to charging for work.83 Some stakeholders commented that it is often not clear which provider is best placed to advise on particular issues or how to ensure consistency across providers.

The issue of multiple providers is less apparent in other areas of law, as the AGD tied providers84 tend to provide a policy oversight role in connection with the Commonwealth’s legal position, rather than providing legal services to other entities as AGS does. The Review considers that these policy functions should continue and are critical to setting a consistent Commonwealth direction, but that the relevant areas are not required to be designated as a tied provider to achieve that. Instead, as AGS is now within AGD, the Directions could tie the work to AGD and as a matter of practice AGS would be the area of AGD responsible for performing the relevant tied work. This would also have the benefit of simplifying the Directions and ensuring they better reflect actual practice.

While acknowledging the collaborative efforts of the tied providers in the public international law space, the Review considers the current arrangements should be revised to ensure the key objective of consistency for tied work. The current arrangements encourage duplication of effort where role clarity is not achieved. There is also a requirement under the Directions that AGS consult OIL on public international law matters but there is no equivalent requirement for DFAT to consult with AGS or OIL, although the Review notes that, in practice, there is regular consultation between DFAT and OIL.

81 Legal Services Directions 2005 (Cth) para 3B of Appendix A. The Attorney-General has delegated this power to people occupying particular positions within AGD (including a number of positions within OLSC).82 Legal Services Directions 2005 (Cth) para 5(c).83 AGS is the only provider that always charges for public international law work. 84 Such as the Office of Constitutional Law and the National Security Division within AGD.

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The single tied provider approach proposed for other areas of law was considered by the Review for public international law. However, under the Administrative Arrangements Order, AGD has responsibility for international law and DFAT has responsibility for treaties.85 Uniting the legal aspects of these functions in a single tied provider would raise practical challenges.

Nevertheless, it is also necessary to ensure that the Attorney-General is properly briefed on all matters relating to international law. Without clearer collaboration, international legal advice might be provided without the Attorney-General’s awareness.

The Review recommends that the Directions require all providers of public international law (whether tied provider or an entity providing advice under exemption) to notify OIL of all requests for advice provided in relation to public international law. In addition, arrangements should be clarified to promote better collaboration between providers. For example, allowing OIL to identify trends or overlap in work will ensure issues are handled consistently and duplication of effort is avoided. This would be supported by a formalised approach to collaboration between tied service providers (for example through regular meetings). It would also be complemented by the proposal that OIL cease charging for most tied international legal services, as discussed below, so that DFAT and OIL would have a consistent approach to charging. These adjustments would simplify entities’ engagement with tied providers on public international law and better support the underlying objectives of tied work.

Increased flexibility

Under the current framework, where it is clear that a matter involves tied work, there is a presumption that all legal work on the matter must be carried out by a tied provider unless OLSC or the Attorney-General issues an exemption. Matters are often tied even though the tied issues are only a small component of the overall litigation.

In some cases it is entirely predictable that Cabinet consideration, National Security or Constitutional issues arise. In other cases it emerges only down the track. Sometimes the tied area will be self-contained and can stand apart from the work done by a private firm. In other cases it cannot and in those cases there is little to be done but to transfer the work and for the Commonwealth to meet the costs of doing so.

The vast majority of stakeholders, both Commonwealth entities and external providers, suggested that there is a need for greater flexibility in the handling of matters that only involve a small proportion of tied work. They suggested that it is not always appropriate for an entire matter to be handed over to a tied provider when a tied issue arises, particularly if an external provider or in-house legal area has already invested a significant amount of time working on the matter.

It is not efficient or equitable that a matter, of which only a small component consists of tied work, has to be handed over in its entirely to the tied-work provider. It arguably adds to the cost of the advice and is a significant brake on competition by other providers.

There is scope for greater flexibility in the handling of matters with a small tied work component, which would suggest the most efficient approach would be to maintain the existing service provider and have the tied component provided on a specific basis...

85 For the Administrative Arrangements Order as at 1 September 2016 <http://www.dpmc.gov.au/resource - centre/government/administrative - arrangements - order - 1 - september - 2016 >.

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Some stakeholders held a contrary view, noting that:

a tied work issue that appears to be relatively tangential or insignificant…can be the point on which the Commonwealth wins or loses a case…‘Splitting’ the conduct of a matter between a tied provider and another external provider will often result in duplication, cost-inefficiencies and other complexities.

However, most stakeholders considered that these risks could be managed.

On balance, the Review agrees that where a tied issue is only a component of a matter, it may be more efficient to use the existing provider together with the tied provider, particularly if work on the matter is at an advanced stage. To deliver the benefits of tied work, it is necessary for entities to identify tied work issues as early as possible to allow them to be actively managed. Greater flexibility in matters involving tied work avoids a disincentive for providers or clients to identify potential tied work issues at an early stage.

The Review considers that where a tied issue arises in a legal proceeding but is not the primary issue in the proceeding, the presumption should be that the instructing entity or entities have the option of continuing to have the non-tied aspects of the work performed by the existing provider. A protocol would need to be developed to ensure the role of the tied provider is understood and the tied work aspects are appropriately and consistently handled. This would include an acceptance that the tied provider may need to repeat, have input into or double-check work undertaken for other aspects of the matter where it is also relevant to the tied issue. In the event that the entity or the tied provider considered that the arrangements were not workable for a particular matter, the matter would be brought to OLSC for a decision on how it should be handled.

Funding of tied work

Practices on funding of tied work are inconsistent across the Commonwealth, often for good reason. AGS charges cost recovery rates for its tied work and, as discussed in Chapter 2, the Review considers this remains appropriate. OPC is budget funded for its tied responsibilities – this is also appropriate as it ensure OPC’s resources are directed to the legislative matters that are the highest priorities across the whole-of-government. In contrast, the Review considers that the arrangements in OIL are not currently effective.

OIL charges other entities for a subset of its functions, which include advice on:

implementation of international law in Australia legal scrutiny of draft legislation international law and its implementation where the advice is provided for the purposes of domestic

litigation, and domestic law, including statutes, regulations and the common law.

The range of work performed by OIL without charge includes advice on the negotiation of multilateral treaties, and advice provided for the primary purpose of supporting the Attorney-General or providing policy support to government (for example, advice sought in the context of Cabinet consideration).

The Review does not think this arrangement should be maintained. Due to the broadly stated exclusions, in practice OIL only undertakes hourly billing for a small fraction of its total work – less than $300,000 per annum in both 2013-14 and 2014-15. The estimated administration cost is $100,000 per annum, which is not

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good value. OIL’s billing arrangements can also serve as a deterrent to entities seeking timely international law advice. The nature of the exclusions means entities may use interdepartmental committees or Cabinet processes as a mechanism to bring a matter within a non-billable category, which incentivises delays in seeking advice.

Due to the mixed policy and legal functions performed by OIL, it is not plausible to resolve these issues by expecting OIL to charge for all of its work.

For international litigation matters, OIL recovers the cost of personnel and disbursements rather than billing at hourly rates. OIL also seconds officers to Commonwealth departments with which it has established agreements, with those departments covering the salary cost. This is generally considered good value and simple to administer.

The Review considers that OIL should continue its practice of recovering personnel and disbursement costs for its international litigation teams and for secondments, but should cease charging for other advice functions as the practice is inefficient, acts as a deterrent to seeking timely advice and creates confusion for tied work clients.

Significant Legal IssuesThe significant legal issues reporting framework was developed to “facilitate the development of a whole of government approach to matters of broad legal or policy significance”.86 It is also intended to ensure that the Attorney-General, as First Law Officer, and the Solicitor-General, as Second Law Officer, are appropriately informed of the most important legal issues affecting the Commonwealth and ensure that the whole-of-government interests of the Commonwealth are protected.87

Paragraph 3 of the Directions establishes the framework and requires NCCEs to report to the Attorney-General or OLSC on significant issues arising in the provision of legal services as soon as possible. The requirement to report is not restricted to litigated matters and includes the early reporting of all significant issues that arise in the provision of legal services. The Directions set out broad criteria to assist entities to identify matters that may contain significant legal issues, such as matters:

which due to their size or nature may give rise to legal, political or policy issues that involve disputes between Commonwealth entities, or disputes with an agency of a State or

Territory government that require a significant level of coordination between different agencies, or where a significant precedent could be established.88

In addition, OLSC has issued guidance to assist entities to identify significant issues, including where matters involve:

an application to or that are before the High Court of Australia constitutional issues, and the tort of misfeasance in public office.

86 Explanatory Statement, Legal Services Directions 2005 (Cth), above n 75. 87 Attorney-General’s Department, Guidance Note 7: Reporting and Settlement of Significant issues (2015) <https://www.ag.gov.au/LegalSystem/LegalServicesCoordination/Documents/Reporting-and-settlement-of-significant-issues.pdf>, 1.88 Legal Services Directions 2005 (Cth) para 3.

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Entities report potential significant issues to OLSC using a template available on the AGD website.89 Once OLSC receives a report, it engages with the entity to gather further critical information. If appropriate, OLSC may consult with relevant policy areas of AGD and the Office of the Solicitor-General, before deciding whether the matter should be treated as a significant issue.

The consequence of an issue being identified as significant is that:

entities are required to provide regular updates to OLSC, which are then collated and provided to the Attorney-General and the Solicitor-General – for most matters, updates are required quarterly with a small proportion of matters requiring fortnightly updates

if a significant development arises between reporting deadlines, the entity must provide an update to OLSC as soon as it becomes aware of the development

the matter may be placed on the agenda for the Significant Legal Issues Committee (SLIC), and a claim may not be settled without the agreement of OLSC or the Attorney-General.

These requirements remain until both OLSC and the entity reach agreement that the matter is no longer significant.

The settlement framework for significant issues operates in parallel to the general requirements for the settlement of claims by or against the Commonwealth as set out in paragraph 4 of the Directions.90

Significant Legal Issues Committee (SLIC)SLIC is a regular forum for the most senior legal advisors to Government to discuss significant Commonwealth legal issues and litigation. It was established following a recommendation of the Blunn and Krieger Review that “measures be introduced to reinforce and assist agencies to meet their obligation to ensure that the Solicitor-General and/or the Attorney-General, as appropriate, are informed in a timely manner of potentially significant emerging issues.”91 Under its Terms of Reference, SLIC’s functions are to:

consider significant legal issues involving the Commonwealth provide a forum for discussion of high profile and complex significant legal issues, and make recommendations to ensure a coordinated, whole-of-government approach is taken to the

management of significant legal issues involving the Commonwealth.

SLIC is not responsible for the day-to-day management or conduct of matters identified as significant. Through consideration of a matter, SLIC seeks to provide insights to the responsible entities to help them manage the matter. Responsibility for the conduct of those matters remains with the relevant entity.

SLIC is chaired by the Secretary of AGD. The permanent members of SLIC are the Solicitor-General, the Australian Government Solicitor and the First Parliamentary Counsel of OPC and relevant deputy secretaries of AGD and the Department of Finance. The Committee is also supported by Counsel Assisting the Solicitor-General and a group of senior advisors from AGD, AGS and the Department of Finance.

89 Attorney-General’s Department, Compliance and reporting <https://www.ag.gov.au/LegalSystem/LegalServicesCoordination/Pages/Complianceandreporting.aspx>.90 See Monetary Claims and Settlement section previously in this Chapter.91 Blunn and Krieger, above n 26, 13.

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https://www.ag.gov.au/LegalSystem/LegalServicesCoordination/Pages/Complianceandreporting.aspx

Effectiveness of current arrangementsSeveral entities expressed dissatisfaction with the existing framework arguing that the effort and resources they invest into reporting on significant legal issues is disproportionate to the value they receive. For example, one entity stated that:

It is unclear what the purpose of significant issues reporting is used for and without clear objectives and purpose, reporting of significant issues is an exercise in agencies complying with their obligations under the [Directions] with no broader purpose.

Among entities dissatisfied with current arrangements there was a desire for more information from OLSC, particularly on the scope of the reporting requirement and on how to identify a significant issue. Some entities also expressed concern that the lack of information may be causing ineffective reporting practices, resulting in both over and under-reporting.

The Review observed that these criticisms were primarily focused on the perceived value of the arrangements to the particular entity, rather than the value to the Commonwealth. The information collected through significant issues reporting is highly valued by the Attorney-General and Solicitor-General, and is seen as critical to them in the performance of their roles as the First and Second Law Officers. The information also allows OLSC to identify emerging trends and areas where a multi-entity or whole-of-government strategy might be required. In that sense, feedback from entities on the significant issues process may be indicative of a focus on entity-specific benefits rather than whole-of-government outcomes.

The Review also notes that, while a small number of entities have substantial significant issues reporting obligations, the vast majority of entities currently have fewer than two active issues. It is difficult to sustain an argument that the arrangements are too burdensome for most entities, although it will be important to ensure efficiency for the few entities with high volumes of reporting.

The Review notes the desire for more and better information to assist entities to engage with and gain benefits from the significant issues process. Amongst entities that are generally supportive of current arrangements, there is also a strong desire for more information and feedback from OLSC to assist entities to develop a better understanding of the significant legal issues framework and current issues. Current feedback mechanisms are limited to feedback to a specific entity, as required, and fairly general updates to GCWG (which is itself a relatively small group).

Entities suggested a range of ways in which information about significant legal issues could be more effectively disseminated including a general summary of current and ongoing significant legal issues, with appropriate redactions, and that:

OLSC could play a central role in coordinating and facilitating relationships between relevant departments and entities….networking and discussion could be based on what issues are of particular concern to the Attorney-General and Solicitor-General to focus entities’ attention on reporting on these issues.

The Review generally agrees that a more extensive information and feedback mechanism for significant legal issues has the potential to both improve entities engagement with significant legal issues and make better use of the material gathered.

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Some practical restrictions will need to be overcome to deliver this outcome. Entities will need to become comfortable with some of the information they provide to OLSC being shared with a wider audience, noting there will be circumstances where sharing is not appropriate. In addition, further information sharing about significant legal issues for the benefit of entities requires resources beyond those currently available to OLSC.

Feedback on the settlement restriction for significant legal issues included a perception from some entities that OLSC approval reflected unnecessary red tape which may prompt under-reporting of significant legal issues. However, the Review understands that OLSC oversight of significant legal issues settlements has resulted in substantial financial savings to the Commonwealth in some cases, and that OLSC is generally able to provide relevant approvals in a very short timeframe when required. The process also collects information that is valuable for the Attorney-General, Solicitor-General and the SLIC to effectively undertake their functions.

Opportunities for improvementThe Review considers that the current significant issues requirements are a critical component of supporting the First and Second Law Officers, and identifying issues of broader interest across the Commonwealth. This would be strengthened if the obligation were applied to CCEs, as discussed above in this Chapter.

The Review has identified opportunities to make better use of the information collected by OLSC, provided there is a level of comfort among entities in sharing that information (subject to appropriate restrictions) among a larger group of entities. Including representatives from the wider General Counsel cohort on the SLIC, on a rotating basis, would also assist to demonstrate the whole-of-government value of the process and build understanding amongst the General Counsel cohort.

An increased emphasis on collaborative information gathering and sharing would also be of benefit, through treating the formal reporting requirements as a supplement to an ongoing collaborative relationship between entities and OLSC. As capacity appears to be the key impediment in this context, the Review notes that both greater information sharing and a more collaborative approach on significant issues rely on resourcing OLSC to deliver those priorities.

Solicitor on the recordThe solicitor on the record is an important role that embodies paramount duties all lawyers have to the court. The solicitor on the record is identified as the person responsible for documents filed and steps taken in litigation. They are responsible to the court for the proper conduct of the litigation and are answerable to the court should anything inappropriate occur in the litigation. Non-delegable obligations and expectations are attached to the role and as such, “the solicitor on the record is the only person whom the court will recognise as the solicitor acting in the case”92.

For these reasons, certain risks and challenges for the Commonwealth can arise when an in-house legal area undertakes litigation work directly and an in-house lawyer performs the role of solicitor on the record.

Paragraph 5 of the Directions restrict NCCEs from using in-house lawyers as solicitors on the record or as counsel for litigation without the approval of the Attorney-General. The rationale behind the restriction is to provide:

92 Ex parte Browne (1913)13 SR (NSW) 593, 597.

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…assurance, first, that independent legal advice is being obtained by agencies. Second by requiring (in effect) the use of specialist litigators, the provision is aimed at maintaining a high level of quality litigation assistance. 93

The relevant criteria which the Attorney-General may take into account when granting an ongoing or one-off approval for entities to undertake the solicitor on the record role are:94

whether the entity is able to demonstrate a capacity to conduct litigation properly and efficiently the ability of the entity to conduct litigation at a lower cost than using external providers,95 and whether the entity has a statutory charter which gives it an operation independent of government.

OLSC provides guidance on making an application to the Attorney-General for an exemption, including the following suggested supporting information:96

key characteristics of the in-house legal area including its size and the nature of its legal services essential infrastructure such as knowledge management tools and litigation software, and the nature of the supervisory arrangements for the entity’s lawyers to ensure consistency and high

work standards.

In practice, once OLSC receives an application, a submission is prepared for the Attorney-General’s consideration. Currently, a small number of entities have exemptions, mostly for a fixed period of time.97

Effectiveness of current arrangementsThe Review sought stakeholder views on the solicitor on the record requirements in Issues Paper Two. The majority of responses echoed the Blunn and Krieger Review’s recommendation to maintain the restriction98 and expressed support for the underlying policies. As articulated by one stakeholder:

[T]he current limitations on in-house lawyers of non-corporate Commonwealth entities acting as solicitor on the record or as counsel are appropriate. The current arrangements ensure that litigation is undertaken by lawyers who have the requisite independence, expertise and support to properly advance the Commonwealth’s case and to maintain a clear and consistent position on whole-of-government issues.

The importance of independence was further highlighted by stakeholders who advised the Review of instances where the client instructor also undertook the solicitor on the record role. Stakeholders noted that such arrangements often increased the risk of conflicts of interest and reduced levels of independence. One entity with an exemption stressed that “distinguishing between the client and the solicitor [is] also an important factor. The [entity]…has taken further steps to re-structure the handling of disputes to ensure even greater independence.”

93 Explanatory Statement, Legal Services Directions 2005 (Cth), above n 75. 94 Paragraph 5.2 of the Legal Services Directions 2005 (Cth) provide that the approval can be given to in-house lawyers “either in specific cases or generally, subject to compliance with conditions specified by the Attorney-General”. 95 Subparagraph 5.1(b) of the Legal Services Directions 2005 (Cth) requires a consideration of various methods to ensure a true cost comparison. 96 Attorney-General’s Department, Guidance Note 2: Use of in-house lawyers for court litigation (2015) <https://www.ag.gov.au/LegalSystem/LegalServicesCoordination/Documents/Use-of-in-house-lawyers-for-court-litigation.pdf>.97 As at 30 June 2016, exemptions were in place for eight entities. 98 Blunn and Krieger, above n 26, 41.

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Relatively few entities called for the removal of the restriction. Entities that did, argued that existing oversight mechanisms such as the Judiciary Act and in-house legal area frameworks should be sufficient. One entity proposed that “consideration should be given to allowing Commonwealth agencies to appear as solicitor on the record and as advocate in proceedings should they consider it appropriate.”

The Review recommends against such an approach as existing oversight mechanisms cannot provide a similar level of consistency and overall risk management for the Commonwealth as the requirement for a specific approval. The current restriction allows for a specific assessment of key criteria by the Attorney-General as the government’s chief legal adviser to ensure that at key points in legal disputes the Commonwealth is using highly skilled litigators and obtaining independent legal advice.

Some stakeholders who were generally supportive of the restriction suggested there was room to improve the approach to exemptions. A few entities described the process as resource intensive and another stakeholder observed that the restrictions should be “strengthened by fuller articulation of the criteria relevant to grant of any exemptions.”

The Review notes that the existing guidance materials, as discussed above, have not been updated in some time and there is little practical information available to entities about the financial, time and capability investment required to develop and maintain solicitor on the record capability. Further information from OLSC about good practice and the criteria for exemptions could assist in-house legal areas to better assess the value in seeking an exemption.

Opportunities for improvementThe Review considers the current restrictions on NCCE in-house legal areas conducting litigation as solicitor on the record should be maintained. Concerns with respect to existing processes can be addressed through updated guidance on how to apply for an exemption and the criteria by which OLSC assesses applications. This could be coupled with information about what constitutes good practice within in-house legal areas that have been granted an exemption. These updates would provide greater transparency to the process and certainty for entities.

Monetary Claims and SettlementsThe Directions provide a framework for the handling of monetary claims by or against the Commonwealth or an NCCE for which no other separate legislative framework99 or contractual mechanism applies.100 The purpose of the framework is to ensure that the Commonwealth develops and maintains a consistent approach to handling monetary claims. It also helps to manage the longer-term legal and financial risks for the Commonwealth that can be attached to monetary claims.

Appendix C of the Direction sets out the framework and provides that:

all claims are to be settled in accordance with legal principle and practice (ie there must be at least a meaningful prospect of liability being established)

any claim exceeding $25 000 is to be treated as a ‘major claim’ and can only be settled if written advice is obtained from an external legal adviser or AGS that the settlement is in accordance with legal principle and practice, and

99 For example, the policy would not apply to Comcare benefits. 100 For example, the policy would not apply where a dispute over a contractual right is being resolved via an arbitration mechanism provided by the contract.

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An NCCE may seek permission to depart from these rules.

The framework also applies to matters resolved through alternative dispute resolution mechanisms. OLSC monitors compliance with the monetary claims and settlements framework as part of its broader compliance framework. However, a separate settlement regime applies to matters identified as containing significant legal issues, as described under paragraph 3 of the Directions.

Effectiveness of current arrangementsIn Issues Paper Two, the Review sought stakeholder views on the $25 000 threshold specifically and the framework more generally. All stakeholders supported the general principle that monetary claims should be settled in accordance with legal principle and practice. The main source of concern was determining the point at which it would be sensible and useful for the Commonwealth to engage external legal advice.

The majority of NCCEs who responded proposed an increase to the existing threshold of $25 000 but otherwise supported the current framework. One entity advised that:

…claims involving court litigation which requires the use of external legal service providers will almost invariably cost the Commonwealth greater than $25 000 in legal fees and disbursements.

Entities also argued that the threshold is no longer appropriate when compared with current financial delegations and that in-house legal areas had the skills required to handle many of these matters. These views are consistent with the findings of the Blunn and Krieger Review.101

More broadly, the threshold also appears to be generating increased costs and unnecessary red tape for entities who engage with the system regularly. One such entity advised “that the costs and delay involved in obtaining legal advice is disproportionate to the benefit of receiving the advice.”

Opportunities for improvementThe Review recommends a simple increase of the threshold to $100 000 as part of a broader update to the Directions. This would reflect current realities of what constitutes a ‘major’ claim warranting external advice and remove unnecessary red tape. Increasing the threshold would also provide entities with more flexibility to manage routine and low value matters.

The future role of OLSCThe Review has made a number of recommendations intended to improve the existing supporting mechanisms which direct or facilitate coordination and collaboration between various parts of the Commonwealth legal system. OLSC is central to most of these mechanisms and introducing changes to sharpen its focus are necessary to successfully implement the Review’s recommendations.

Across the board, Commonwealth entities agree that there is an ongoing need for coordination but there is also agreement that there is room for improvement in the delivery of that function. In particular, there is support for a greater level of facilitation between and stronger engagement with in-house legal areas. Consultation shows a strong appetite for more from OLSC, including greater facilitation, more sharing of information and analysis from the centre. For example:

101 Blunn and Krieger, above n 26, 40, para 111-112.

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There is considerable value in having a strong centralised OLSC with experience in, and focus on, the operational needs of legal practices operating within agencies. Ideally, a stronger OLSC, with additional resources and, potentially, ongoing secondment from various agencies, could assist agencies to create centrally-coordinated training more actively and also provide a stronger coordination presence on major issues, as required.

Drawing on feedback explored in this Chapter, it is apparent that there are opportunities to better focus OLSC’s priorities and to improve its contribution to a joined-up Commonwealth approach. OLSC is currently heavily focused on its process, reporting and compliance obligations, with comparatively little focus on contributing to information sharing, collaboration and facilitation of whole-of-government approaches. This primarily results from the current drafting of the Directions, the relatively limited resources available to OLSC, and the absence of some key capability within OLSC.

The Review considers that OLSC should direct its efforts to achieving the following priorities:

facilitating collaboration between entities in order to deliver high quality and joined-up legal services across the Commonwealth

promoting and coordinating information sharing to make effective use of the combined legal knowledge held by the Commonwealth, and

supporting the First Law Officer and Second Law Officer in dealing with high priority and whole-of-government legal issues.

With effective collaborative partnerships and a strong service delivery focus, OLSC can work with entities across the Commonwealth to deliver on its priorities.

In undertaking a more facilitative role than a regulatory one, OLSC could transition to functions that monitor and co-ordinate the delivery of legal services to the Commonwealth.

A stronger emphasis on helping entities resolve complex compliance issues is consistent with the recommended shift towards a more proportionate and risk-management based approach, but it will also promote better collaboration between entities. OLSC will be an important driver in the shift away from an entity-based focus and move to a more whole-of-government approach. Supporting the AGLS and administering the charter for General Counsel will also enable this change.

OLSC should have a strong service delivery focus that underpins its role as the central point for coordination and dissemination of critical information to in-house legal areas and legal service providers. OLSC’s key service delivery priorities will be working with entities to identify issues with whole-of-government relevance, identifying or developing products that provide accurate and quality information and disseminating them effectively.

The key functions that should be undertaken by OLSC outlined in Figure 6 below.

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If it is to deliver on the proposed priority functions that are central to several recommendations of this Review, OLSC will require additional resources, both staffing resources and ability to engage external services (for example to deliver some AGLS training). The benefits of additional resourcing for OLSC should be Commonwealth-wide – they would include better linkages across the Commonwealth and access to a much wider range of critical information for government lawyers, which should in turn reduce duplication.

In terms of critical capability, OLSC will need additional capability in service delivery, legal practice management, communication, training and procurement and will continue to require a core of officers with strong legal and litigation skills and experience. There are opportunities to meet some of these needs through seconding officers from other practices. The Review considers OLSC would be strengthened by having, at a minimum, one secondee from AGS and one from an in-house legal area at all times. Not only would this assist OLSC in ensuring its approach is well adapted to the needs of government lawyers, it would also assist in building understanding within other practices of OLSC’s role and contribute to greater consistency across the Commonwealth.

Implementation of the Review’s recommendations also requires an investment in IT infrastructure developed and managed by OLSC for the benefit of all entities. The IT infrastructure requirements include a targeted legal advice database (as discussed in Chapter 2), training and professional development system, a data collection portal and a communications hub for the AGLS.

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Figure 6 – OLSC priorities

Collaboration and service

delivery

Support significant legal issues

process

Support the AGLS

Share critical information

Administer the Directions

Administer the charter for

General Counsel

Assist to administer

legal services panel

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Recommendations4. ROLE OF THE OFFICE OF LEGAL SERVICES COORDINATION (OLSC)a) That the role of OLSC be focused on the following priorities:




b) In the context of OLSC’s priorities, its key functions should be:

supporting the Australian Government Legal Service (Recommendation 1) supporting the significant legal issues process coordinating and disseminating critical information (Recommendations 5 and 10) together with the Department of Finance, managing the legal services panel

(Recommendation 10) supporting the AGD Secretary in administration of the charter for General Counsel

(Recommendation 2), and administering the Legal Services Directions with comprehensive guidance material and a risk

management based approach to compliance.

c) To support the objectives at paragraph a), the Legal Services Directions should be reviewed and simplified. Amendments should include but are not limited to the following:

reconsideration of the current distinctions based on the PGPA Act so that the Directions apply generally to CCEs

increasing the value threshold for when external advice is required on monetary claims expanding the range of powers that can be exercised by OLSC, and other amendments to implement recommendations of the Review, including in relation to sharing

knowledge (Recommendation 5), tied work (Recommendation 6) and procurement (Recommendation 10).

d) To ensure OLSC has the skills and engagement necessary to deliver on these priorities, a dedicated secondment program of officers from in-house legal areas and AGS to OLSC should be implemented to improve knowledge and skills in OLSC and across the Commonwealth.

e) That OLSC receive the resources required to deliver the above priorities and functions.

5. SHARING KNOWLEDGEa) That AGD, through OLSC, should establish a central database of legal advice about issues of broader

relevance to Commonwealth entities. The database would include advice from AGS, other external providers and in-house lawyers. Features of the database would include:

incremental establishment, with priorities to be identified in consultation with General Counsel

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administering entities (ie those having carriage of the substantive legal issue) would have an opportunity to check advice being uploaded and could request removal of out-of-date or incorrect advice

primarily relying on capturing existing advice, but where a critical gap is identified, the administering entity would be asked to commission advice, and

to protect the integrity of the database:

access would only be available to government lawyers with a need to know as identified by their entity or General Counsel, and

all government lawyers with access would be required to undertake training and sign a terms of use agreement, including an obligation of confidentiality and acknowledgement that material should not be relied upon without consideration of accuracy, currency or applicability to the specific circumstances.

b) Following implementation of a central database of legal advice, that AGD should establish a database or website for the sharing of templates, guidance material and other documents that do not attract legal professional privilege. This would involve:

incremental establishment, based initially on existing material on priority topics a platform for entities to share their own documents or templates, and where applicable, templates or policy documents developed through AGLS networks.

6. TIED WORKThat tied work remains a critical mechanism for ensuring a consistent and coherent legal position in Commonwealth legal work. The following improvements to the scope and mechanisms for delivering tied work should be implemented:

Expand categories of tied work to include significant or precedential issues arising from:

Freedom of Information Act 1982 Public Governance, Performance and Accountability Act 2013 Public Service Act 1999 Public Interest Disclosure Act 2013 Privacy Act 1988 Machinery of Government changes, and public interest immunities.

Where a tied issue arises in a legal matter but is not the central issue in the matter, the assumption should be that the instructing entity or entities should have an option that non-tied aspects of the work be performed by the existing provider. This would be supported by a standard protocol prepared by OLSC for managing these matters.

Where multiple tied providers exist, arrangements should be clarified to provide a simpler path for clients and ensure consistency of advice.

AGD’s Office of International Law would cease charging for tied international legal services (other than for international litigation, where the entity with responsibility for the subject matter would cover the cost.)

In the event of any disagreement on whether a matter is tied, OLSC is the decision maker.

Chapter 4 – In-house legal areasThere has been an appreciable growth in the size and functions of in-house legal areas since the Logan Review in 1997 (see Chapter 1). The resources and capability within in-house legal areas has developed over time in response to the demands and the operating environment of their individual entities. As a result there is diversity in the structure, functions and arrangements of in-house legal areas across the Commonwealth. Given the decentralised nature of legal services, each entity has taken its own approach to in-house legal arrangements.

The Review has found the approaches to in-house legal arrangements vary considerably across the Commonwealth. It is also apparent that without a framework that enables information sharing, individual entities may be ‘reinventing the wheel’ and missing opportunities to learn from the experiences of other entities to adopt better and different practices. The Review’s recommendation for the establishment of the AGLS can make important in-roads on information sharing and stronger collaboration, but this measure on its own is not enough. The Review considers that supporting in-house legal areas to take a more cohesive and strategic approach to in-house legal arrangements and practices has the potential to bring returns on efficiency and consistency to both individual entities and to the Commonwealth.

The value that an in-house legal area can represent to its individual entity is best demonstrated with a legal services strategy that addresses whether the in-house legal area has:

a clear role and purpose within the entity the ability to influence decision-making within the entity, and supporting architecture that enables it to operate effectively and efficiently.

Given the diverse nature of in-house legal services a ‘one size fits all’ approach to in-house arrangements is neither realistic nor constructive. However, while the Review is not advocating a single homogenous approach to delivering in-house legal services, it is not clear that the degree of diversity and specialised approaches are entirely necessary or efficient. There is scope for entities to work together to maximise good practices for the benefit of the entity and the Commonwealth more broadly.

Opportunities for greater synergies and shared services between in-house legal areas are also explored in this Chapter.

Snapshot of in-house legal servicesThe Review has identified a wide variety of arrangements for in-house legal areas in Commonwealth entities. Figure 7 below sets out some of the findings of the data collection survey in relation to in-house arrangements and Appendix 2 contains additional data tables. The Review also considered in-house legal arrangements outside of government, including the findings of the 2015 Benchmarking and Leading Practices Report (the Benchmarking Report) co-published by the Australian Corporate Lawyers Association and the Corporate Lawyers Association of New Zealand.102 The diversity of in-house legal arrangements within the Commonwealth is also reflected in the private sector.

102 Australian Corporate Lawyers Association and Corporate Lawyers Association of New Zealand, Benchmarks and Leading Practices Report 2015.The Benchmarking Report provides an overview of the current trends and performance of in-house legal areas from a broad range of government and private sector entities that operate within Australia and New Zealand. In this way, the Benchmarking Report provides a useful yardstick to consider the findings of the data collection survey of the Review.

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Two key metrics considered by the Review were the size of in-house legal areas and the workforce profile of the lawyers within those areas.

The total full time equivalent number of employees in in-house legal areas was 2107. The data collection survey showed that just over half (52%) of in-house legal areas in Commonwealth entities that responded to the data collection survey with in-house legal areas had 10 or fewer full-time equivalent employees.103 The Benchmarking Report found that government in-house legal areas tend to be larger on average than those in the private sector, which likely reflects the regulatory, administrative and decision-making functions that public sector bodies often have.

The total number of lawyers in respondent entities was 1775. The data collection survey shows that the majority of in-house lawyers are employed in the APS at the Executive Level (EL1 and EL2), which reflects the professional and specialised nature of the roles.

103 In this context, ‘total’ refers to the inclusion of legal support staff who are not lawyers.

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Defining the role of in-house legal areas Diversity of functions in in-house legal areasThe functions of in-house legal areas can extend beyond the scope of ‘Commonwealth legal services’ as categorised by the Review. For example, in some entities, the in-house legal area also performs functions associated with governance and risk management on behalf of the entity.

The diversity of the responsibilities of Commonwealth entities is also reflected by the varied functions of government lawyers. For example, the core business of in-house legal areas in regulatory entities can be to investigate whether Commonwealth laws have been complied with and, in the event of non-compliance, potentially take administrative or legal action. These functions are generally different from that of legal services in Commonwealth entities that predominately perform policy or service delivery functions.

Figure 8 below provides examples of the diversity of legal roles performed by in-house lawyers in the Commonwealth.

Benefits of a well-defined in-house legal areaA common theme throughout the Review was a high and continuing demand for in-house legal services from business line areas. Noting the diversity of legal and non-legal functions performed within in-house

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legal areas, a basis on which to prioritise work is critical if in-house legal areas are to fulfil the strategic potential of the trusted adviser function for their entity. This is relevant to both managing work day-to-day and investing in key skills and knowledge. In an environment of high demand, in-house legal area’s that are primarily reactive are likely to have their resources stretched. Their ability to effectively meet critical needs and assist their entity to manage the most serious legal risks may be affected.

Many in-house legal areas are involved in their entity’s strategic business planning activities. These provide an opportunity to ensure that the work undertaken in the in-house legal area supports the priority objectives of the entity and the core expertise required to deliver them has been identified. Any in-house specialisation should be strategically aligned with an entity’s priorities and in-house lawyers should have a clear appreciation for how their work relates not only to the entity’s objectives, but also supports the management of whole-of-government issues.

The Review agrees with the Blunn and Krieger Review recommendation that there is value in an in-house legal area adopting and promulgating a well-defined and clearly articulated statement of its role and purpose.104 The Review acknowledges that a number of in-house legal areas have such statements in place.

A coherent role or mission statement provides unanimity of purpose and defines the services that in-house legal areas are there to provide, and flowing from that, an understanding of what is best done by others.105 Such a statement facilitates day-to-day operating decisions and enables in-house legal areas to focus on core business priorities; work that is outside of the remit of the in-house legal area is identified and can either be managed by the appropriate business line or outsourced to an external legal services provider.

The Review examined the extent to which entities have policies that provide guidance on when and why external legal services should be sought, as well as how.106 Just over half of the entities who responded to the survey indicated that they had written internal policies, guidance material or procedures to assist in deciding whether to seek legal services externally.

Internal guidelines include a system whereby all work that is proposed to be outsourced must be assessed by the in-house team. This requirement is directed at ensuring an agency-wide perspective is applied and that work is not commissioned inappropriately, for example if another business area has previously obtained advice on the same issue.

The decision to engage external legal services is generally made at a relatively senior level: 80.3% of survey respondents with an in-house legal area reported authorising an EL2 or SESB1 to make the decision to engage external legal services providers.107 Almost half (46.6%) of the survey respondents with an in-house legal area indicated that the decision to engage external legal service providers was a joint decision made between in-house legal and the relevant business line area.

104 Blunn and Krieger, above n 26, 45.105 Ibid.106 The importance of such guidance is also identified in the ANAO Audit Report No.52 2004-05 Legal Services Arrangements in the Australian Public Service. The ANAO considered that “All agencies should provide specific policy guidance about how legal services should be accessed or purchased” and that “Policies should be included in or linked to other relevant purchasing policies, and regularly updated.” See Australian National Audit Office, above n 27, 68. 107 This data reflects the primary decision to seek services externally, not the subsequent procurement related decisions and approvals. Entities without an in-house legal area told the Review that the decision to engage external legal service providers was made by a senior officer in a business line area.

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Clear parameters about what work is to be done in-house and what is to be outsourced encourages a strategic consideration of risk. Generally, the factors taken into consideration by stakeholders when deciding whether or not to engage an external legal service provider are: 108

the degree to which the work fits within the role and expertise of the in-house area the complexity and significance of the work to the entity and to the Commonwealth, and cost and/or relative efficiency, including whether the in-house area has the capacity to do the

work.

A combination of these factors will give an indication of the overall level of risk attached to a particular piece of work. The higher the level of risk the more valuable it may be for the entity and the Commonwealth to obtain an external perspective. For lower risk matters, the relative cost and the impact of the work on core business are often the primary drivers of a decision about whether or not to outsource.

Having made the decision to outsource, the value that an entity expects to gain from the arrangement may be affected by the manner in which the matter is handled. The Review heard from external providers that some in-house legal areas essentially duplicate the external work by the amount of time and effort they allocate to briefing a provider and scrutinising the deliverables. For example, external legal services providers reported that clients will place limitations on the resources that an external provider might allocate to a matter to constrain costs, but bring an excessive number of in-house lawyers and officers to meetings with external providers. The Review has found that if the commissioning of the services is managed comprehensively and competently, it is less likely that the in-house legal area will need to apply many of its own substantial internal resources in order to get a satisfactory service or deliverable. Informed purchaser skills are discussed in further detail in Chapter 6.

Articulating clear service parameters and having guidance in place to decide when to source work externally can achieve more efficient and effective delivery of legal services. These measures can also help in-house legal areas that struggle to manage the demands placed upon them by their entities and the tendency to take on work that is not legal in nature or beyond their resources or capacity. Reinforcing the notion that government lawyers have certain professional obligations with respect to independence is also a positive consequence of establishing role clarity and service parameters.

A clear statement of purpose can also be a useful tool in influencing perceptions across the entity, helping to build and identify the relationships between in-house lawyers and business line areas.

Influence of in-house legal areas The importance of influence A prevailing view in submissions to the Review was that, to be highly effective, an in-house legal area must be well-respected by senior management, have close working relationships with business line areas and be able to influence decision-making when appropriate. It flows then that the value that an in-house legal area represents to an entity is contingent on how effectively it can influence processes and outcomes.

There is no single governance model for integrating an in-house legal area into the operations of a Commonwealth entity. However what should be common are structures and practices that enable in-house legal areas to have an appropriate degree of influence both with the senior management and across the entity. That is, Commonwealth entities should ensure that in-house legal areas:

108 Certain types of legal work do not warrant a consideration of who is best placed to perform the services because the Legal Services Directions 2005 (Cth) place restrictions on tied work and certain litigation work.

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are closely integrated with the strategic decision-making of the organisation (influencing up), and support the effective management of legal risk in business line areas (influencing across).

Influencing up The most significant advantages of in-house legal areas include having a trusted advisor that understands the entity’s business.

With a seat at the table, the legal function is positioned within the organisation to more easily and effectively influence organisation behaviour…A seat at the table can be formal as part of the executive team, or informal based on relationships and knowledge. Whether official or by design, strong relationships with those at the executive level are critical.109

In this regard, the Review has looked at examples from the private sector, where the visibility and influence of General Counsel through the senior management is prominent. In particular, a number of General Counsel from the private sector who spoke to the Review emphasised their relationships with their executive, including their CEO and where relevant, their CFO and Board.

The Blunn and Krieger Review concluded that in-house lawyers should be closely integrated into the strategic decision-making of the entity to ensure that they are aligned with the entity’s priorities.110 Similarly, entities agreed that the link between in-house legal areas and an entity’s senior management is critical to ensure that legal risk is being managed at a strategic level and that risks are identified and managed early. Some entities suggested that the most senior lawyer should have a ‘dotted line’ to the entity head and should form part of the ‘management fabric’.

Strong connections between senior leaders within in-house practices to senior management and client areas are a critical feature of being able to effectively influence critical decision making.

Results from the data collection survey indicate that overall, General Counsel have taken steps to ensure they are closely integrated with senior management. In the majority of Commonwealth entities, the most senior lawyer reports directly to (and has regular contact with) either the head or deputy head of the entity. Additionally, in the majority of entities, the most senior lawyer is also a member of the executive board and/or participates in a number of senior committees that influence decision-making within the entity. Other mechanisms that establish a link between in-house legal areas and senior management include routine engagement with senior leaders of business line areas and regular reporting to the executive officers on legal issues and risks.

For some stakeholders giving the in-house legal area visibility and a ‘seat at the table’ raised concerns around the need to maintain independence.

To maintain [legal professional privilege] it is important that in-house legal practices are able to disconnect from the [entity’s] decision making process itself but be available to advise as necessary at arms-length.

This risk can be managed by having structures and processes in place that reinforce the importance of professional independence. These measures should not stymie relationships, but rather promote relationships of trust based on a clear understanding of the role of the in-house lawyer.

109 Australian Corporate Lawyers Association and Corporate Lawyers Association of New Zealand, above n102, 5.110 Blunn and Krieger, above n 26, 48.

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Influencing across In-house legal areas should also be able to influence the management of legal risk in business line areas across the entity. Measures that make in-house legal areas visible and accessible to business lines, and thereby encourage partnerships, are critical to a successful approach. Encouraging business line areas to engage early with the in-house legal area is highly effective in influencing critical decision-making and forms part of a mature risk mitigation strategy.

As identified in Chapter 1, it has been suggested that one of the contributing factors to the growth of in-house legal areas has been the increased risk aversion of Commonwealth entities. This had led to a tendency for business line areas to seek ‘legal signoff’ for a range of activities that may not strictly need legal input or that have already been identified as routine or low risk. Examples provided to the Review included standard venue hire agreements, simple grant agreements and the exercise of relatively straightforward decision-making powers.

This may reflect an approach to risk management that disempowers officers from making decisions, generating risk shifting behaviour and over-legalisation of routine activities or decisions. Issues with line areas not taking ownership of risk was identified by the Shergold Report as a key barrier to achieving more positive risk cultures:

In organisations that have achieved positive risk cultures, individuals are expected to identify and respond to risks in their own sphere of influence, rather than assuming that responsibility sits with senior managers or risk committees. They know who to approach in their agency if they need help, they receive support to identify and treat risk as early as possible, and they know that when they identify problems their concerns will be appropriately addressed by management. Knowledge of risk needs is widely shared.111

In-house legal areas can play a valuable role in promoting a positive risk culture. A sound approach to legal service delivery should reinforce the responsibility of business line areas to understand the legislation they administer, assume responsibility for risk and identify when in-house legal services are genuinely required.

As part of the management of legal risk, the Review notes that it is common in some entities for a lawyer to be embedded into a business line area. For example, at the ACCC, lawyers would generally work as part of a broader investigative or enforcement team to provide on-the-ground independent legal advice, while still remaining part of and reporting within a separate Legal Group.

The above approach is distinct from arrangements where legal professionals have been directly recruited into a business line area without oversight by the in-house legal area. The Review considers that these kinds of arrangements raise several risks. At best, the in-house legal area could overlook opportunities to utilise this resource but at worst, legal professionals would be operating outside of the controls that most in-house legal areas have in place to regulate the conduct of their in-house lawyers, including accountability to the Directions. Therefore, in circumstances where lawyers are ‘out-posted’ to a business line area, there must be sufficient governance and communication structures to protect the independence and quality of the in-house legal area and to ensure these lawyers remain connected to the centre.

Architecture – why systems and processes matter The architecture supporting an in-house legal area directly impacts on the area’s effectiveness and efficiency in undertaking its role and functions. The Review considers architecture to encompass systems, processes and policies in support of the legal function.

111 Shergold, above n 16, 40.

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The Review has identified the following architecture as key to supporting an effective in-house practice:

information and case management solutions access to legal reference material mechanisms to maintain independence and legal professional privilege of legal advice quality assurance processes measurements for value and performance, and a strategic approach to developing legal capability.

Each of these examples of supporting architecture is explored in more detail below, with a discussion of indicators of good practice. Generally, the Review considers that entities and General Counsel should ensure that in-house legal areas have the identified architecture in place. How they are implemented will depend on the role and nature of the in-house practice – arrangements should be tailored to the entity’s needs but should also be informed by the experience and expertise of other entities. There would be opportunities through the proposed AGLS to explore elements of effective legal practice management, including the supporting architecture identified by this Review, to identify and perpetuate good practice.

Information and case management solutions The business of legal work is changing in the context of increasingly capable and rapidly evolving IT solutions. Stakeholders almost universally agreed that in-house legal areas benefit substantially from effective case management, knowledge management and practice management IT solutions. These solutions may contribute to improving efficiency and managing legal risk through reducing duplication, managing workflows, retaining corporate knowledge and simplifying repetitive tasks.

However, only 65.8% of in-house legal areas who participated in the data collection survey indicated they use IT solutions to manage casework and store legal advices, precedents and templates. Larger entities were more likely to purchase or develop tailored databases and case management systems. In contrast, smaller entities rely on general record management systems that are not designed specifically for legal practice work to perform the same functions.

In total, entities identified 35 different products in the data collection survey which are currently used to manage information in in-house legal areas. Selecting and purchasing an IT solution can be an expensive and long-term investment. Between them, entities in the Commonwealth have significant knowledge and experience in selecting and implementing information and case management solutions. The Review identified strong interest among entities for more knowledge about what systems others were using, how they were being implemented and their efficacy. However, in practice, entities were usually operating alone – there is a missed opportunity for entities to learn from and build on each other’s experience. There may also be opportunities to maximise purchasing power if entities with similar needs approach the market together.

There are opportunities for entities to better meet their information and case management needs through a more coordinated mechanism to circulate guidance material and collaborate on legal practice management issues. This is discussed in Chapter 2 in relation to the establishment of the AGLS and Chapter 3 in relation to information sharing.

Access to legal reference material Access to legal reference material such as law library databases was singled out by a broad range of entities as key supporting architecture that was not originally identified by the Review in Issues Paper Two.112 The Review agrees with this assessment.

112 Attorney-General’s Department, above n 39, 20-21.

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In the past, external legal service providers had acted as ‘keepers of legal knowledge’ maintaining law libraries much larger than in-house legal areas could afford113. The advent of large online legal databases has significantly opened up access to legal reference material for in-house legal areas. However, the Review notes that the cost of legal reference material, whether physical or electronic, remains a significant barrier, particularly for smaller in-house legal areas. Some smaller entities suggested there may be benefit in centralising the purchasing of library resources, or entities partnering together to obtain access to legal reference material at a lower cost. For example:

Access to library resources and online databases is essential for government lawyers to have the information they need to fulfil their role. [AGD] could play an important leadership role in assisting agencies to acquire the necessary legal resources. This could be done through bulk purchasing of software packages, maintaining a library of up to date textbooks that Commonwealth lawyers can access, or entering into an arrangement with libraries to access suitable resources.

The Review considers this is something that could be explored through the AGLS model. For example, the library resources of AGD represent a considerable volume of legal knowledge and expertise unlikely to be capable of being replicated elsewhere in the Commonwealth. Another option worth considering is entities within the same portfolio or with shared subject matter interests sharing resources or purchasing resources together.

Supporting independence and maintaining legal professional privilege In-house legal areas should have structures and systems in place to support the professional independence of in-house lawyers, including the maintenance of legal professional privilege where appropriate.

One of the key value propositions of in-house legal areas is the understanding of an entity’s business. However, this may raise issues about the degree of independence maintained by in-house lawyers. One stakeholder suggested:

Public and community confidence in government decision-making and legal action is supported by a clear perception that the government is receiving frank advice from professionals who are directly accountable to the courts and the profession; it is correspondingly undermined by any perception that the government seeks and obtains the legal advice that it ‘wants to hear’ and structures its legal service arrangements and decisions accordingly.

There are a number of factors that may impact on independence. These include the involvement of in-house lawyers in day-to-day policy and operational work of the entity, the lack of clarity as to the role an in-house lawyer is filling in a particular circumstance and not clearly identifying who the client is.

These concerns can be reduced through:

a well-defined role for the in-house legal area and responsibilities of in-house lawyers having a clear understanding of when legally qualified staff are providing legal advice, and when

they are not,114 and

113 Schwarcz S L, To Make or to Buy: In-house Lawyering and Value Creation (2006) <http://scholarship.law.duke.edu/cgi/viewcontent.cgi?article=2298&context=faculty_scholarship>, 14-15.114 For example, entities mentioned having a clearly distinguishable form of words for circumstances where legal advice is being provided which is different from that used where a lawyer may be involved in agency governance or policy functions distinct from the legal function.

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a governance structure that ensures functional separation and freedom from non-legal direction.115

Whether advice provided by in-house legal areas of Commonwealth entities attracts legal professional privilege is complex, and involves questions of fact. For communications from a government lawyer to attract legal professional privilege, the lawyer must, amongst other things, be able to act with independence.116

Independence is crucial, as an important feature of in-house lawyers is that at some point the chain of authority will result in a person who is not a lawyer holding authority, directly or indirectly, over the in-house lawyer. The relevant question for consideration is whether the advice given is, in truth, independent.117

Practising certificates

The purpose of the practising certificate regimes is to regulate the suitability of legal practitioners. However, five of the eight State and Territory jurisdictions currently exempt government lawyers from the requirement to hold a practising certificate in certain circumstances.118 Practising certificates may assist to establish that a lawyer has the requisite degree of independence for their communications to attract privilege. However, holding a practising certificate is not a precondition for legal professional privilege to apply to work done by an in-house lawyer and nor does it alone indicate independence.

The requirement by entities that government lawyers in their in-house legal areas hold a practising certificate appears to have become common. In the data collection survey:

54.8% of respondent entities with in-house legal areas require all legal staff to hold practising certificates. The most common reasons given were to maintain legal professional privilege, to maintain credibility in their entity, because of local legal profession requirements, the maintenance of core legal skills, and to distinguish between practising lawyers and other staff with legal qualifications.

26.0% of respondent entities with in-house legal areas require some legal staff to hold practising certificates. The more senior lawyers were generally required to hold a practising certificates as were those whose role required them to appear in a court or tribunal.

19.2% of respondent entities did not require any staff to hold practising certificates. These entities predominantly had small in-house legal areas, most with fewer than three full-time equivalent staff.

The Review considers that, due to the diversity in the roles of government lawyers, a common position on practising certificates is not practical or necessary. However, a clear policy on whether an entity requires practising certificates, and in what circumstances, will assist entities to support the professional independence of in-house lawyers and maintain legal professional privilege.

The role of practicing certificates in relation to training, professionalisation and collegiality with the broader legal profession are discussed in Chapter 5.

115 Australian Government Solicitor, Factsheet 31: Legal Professional Privilege in an In-house Environment (June 2013) <http://www.ags.gov.au/publications/fact-sheets/Fact_sheet_No_31.pdf>.116 Ibid.117 Aquila Coal Pty Ltd v Bowen Central Coal Pty Ltd [2013] QSC 82, 8. 118 The five jurisdictions are Queensland, Tasmania, Western Australia, New South Wales and Victoria. Legal Profession Act 2006 (ACT) s 16(4)(c); Legal Profession Act 2004 (NT) s 18(1); Legal Practitioners Act 1981 (SA) s 21(1); Legal Profession Act 2007 (QLD) s 23(1); Legal Profession Act 2007 (TAS) s 13(2)(a)-(c); Legal Profession Act 2008 (WA) s 12(3)(f); Legal Profession Uniform Law Application Act 2014 (NSW) s 45(1)(a); Legal Profession Uniform Law 2014 (NSW) s 56; Legal Profession Uniform Law 2014 (VIC) s 169.

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http://www.ags.gov.au/publications/fact-sheets/Fact_sheet_No_31.pdf

Quality assurance mechanisms Effective quality assurance mechanisms ensure in-house legal areas maintain a high standard of work, manage legal risks effectively and invest in the development of junior lawyers. The Review found that the majority of in-house legal areas have written procedures in place with respect to quality assurance.

The role of quality assurance such as second counselling is more nuanced and should reflect the needs of the entity with regard to the APS levels of employees, types of work and experience of the lawyers within in-house practices.

In the data collection survey, 69.9% of respondents with an in-house legal area had written policies on quality assurance. Smaller in-house legal areas were less likely to have written policies and procedures in place. However, within very small teams, there were still examples of good practice which included consideration of when to use external legal service providers or lawyers in other entities for second counselling purposes. External second counselling was also used by some other entities for higher risk matters, or where in-house legal capability on an issue was being developed.

Amongst larger teams there was broad agreement on the value of second counselling:

We consider it important to clearly outline the approach taken to the supervision of junior lawyers as part of the provision of appropriate quality assurance mechanism…all legal advice is required to be settled by a senior legal adviser (EL1) or above.

A quality assurance mechanism is a key architectural component of an effective in-house legal area and should be adopted by all in-house legal areas. The most appropriate quality assurance mechanism will depend on the significance and level of risk involved with the particular work and role and structure of the in-house legal area.

Measuring value and performanceMeasuring value and performance can assist in-house legal areas to tailor their role to the entity’s needs, maintain and improve performance and efficiency, inform resourcing decisions and make well-informed decisions about whether work should be performed internally or externally.

The majority of stakeholders were supportive of measuring value and performance and of using both quantitative and qualitative measures.

Qualitative and quantitative information demonstrate the value of in-house legal practices as ‘experience goods’ … we can better assess value for money by better developed structured benchmarks.

The most popular quantitative measures were cost and volume of work. The most popular qualitative measures were client feedback, litigation or transaction outcome analysis and timeliness. In addition, a number of entities expressed support for more objective measures such as benchmarking against other entities or advised that they have undertaken or are considering undertaking an external and independent audit of their in-house legal area’s performance and capability.

A smaller group of stakeholders challenged the benefits of measuring the value or performance of in-house legal areas. For example, they suggested that in-house legal areas should not be measured any differently from other in-house corporate service providers,119 that the exercise may be too complex to

119 The Review notes that many in-house corporate service providers such as human resources and IT now regularly measure and benchmark cost and performance.

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yield useful results or that it should be up to the executive and business line areas to determine the value of in-house legal areas.

The Review considers there is a need to differentiate between measuring performance of strategic in-house services (characterised by a trusted adviser relationship and early involvement in key initiatives and decisions), as against those services where a decision is being made primarily on the basis of efficiency and whether to do work in-house or externally. To the extent that the latter situation applies, a comprehensive understanding of the costs of doing the work in-house is essential to making sound decisions.

Throughout the Review, entities indicated that their in-house legal areas were substantially cheaper than external services, with figures ranging from one-fifth to two-thirds of the cost of external services. This is broadly consistent with a general view that, all things being equal, in-house legal work is likely to be cheaper. However, the Review is also aware of circumstances where entities have found that external providers are able to provide some work substantially cheaper than the cost of doing the work in-house. As such, it is important not to rely on a general presumption but to have a strong sense of comparable cost for work.

The Review considered detailed material about measuring cost provided by a small number of entities, with a view to potentially identifying areas of commonality or good practice. However, the Review found large divergence in the method and level of detail, and was not able to draw any specific conclusions. The process revealed that this is one area that would benefit from greater sharing of experience and good practice.

The Review also sought stakeholder views on timekeeping and billing as means of measuring value and performance. Most stakeholders agreed that both could be useful to measure performance, assist with resource management and increase transparency, but had some reservations.

The Review generally agrees with stakeholders who suggested that strict timekeeping could result in a shift of focus from quality to quantity of work. Similarly, a strong case was made that billing could unnecessarily deter line areas from seeking legal advice and thus undermine core value propositions of in-house legal areas such as accessibility and early engagement with business line area projects. Some indicated that a ‘lighter touch’ approach to timekeeping can assist with managing resourcing and individual performance management without introducing negative competitive behaviours. For example, one entity has adopted:

…a time management system for the purpose of identifying the proportion of staff time, across the organisation…This enables lawyers and their managers to track the use of lawyers’ time and make a judgment about what areas are resulting in greater workflows and require more resources.

The Review considers that measuring value and performance is important to effective in-house legal practice. There are a wide range of options available and entities should look to find the right measures based on the role and nature of their in-house legal area. Greater consistency or shared approaches between entities would allow for more effective benchmarking of value and performance. The Review cautions that billing business line areas may undermine the strategic benefit of the in-house legal area and, while timekeeping may have some benefits, it should not be the primary method for measuring and managing value or performance of in-house legal areas.

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Strategic approach to developing legal capability In-house lawyers should receive appropriate and relevant training that addresses skills and knowledge necessary or desirable for government lawyers. On the whole, entities agreed that training and professional development is essential supporting architecture for an in-house legal area – many saw it as the most important element. Options for a more strategic approach to developing core and generic skills and knowledge for government lawyers, through the proposed AGLS, are discussed in Chapter 5. However, for entities with niche and specialist skill requirements, a strategic approach to building and maintaining that capability is also critical, and may incorporate structured learning and development programmes and targeted recruitment of lawyers with specialist skills.

Shared services The Review considers that in the interests of maximising the effectiveness of in-house legal areas, there may be opportunities to explore greater synergies between entities through shared services arrangements.

The Australian Government is currently looking at driving efficiencies through consolidating the provision of transactional and other common corporate activities under the whole-of-government Shared and Common Services Programme. This Programme is not currently focused on strategic services, which include legal services. Given the diversity of entities’ legal needs, the Review does not consider that the shared services model being used for transactional services could be applied to legal services. However, the Review considers that there may be benefit, in some circumstances, in entities exploring shared services arrangements for legal services on a case by case basis. The Review has not directly assessed whether any given entity is in a position to offer or use shared services, but considers that there is scope to explore the initiative.

There is already some evidence of successful shared legal services arrangements. The data collection survey indicated that a small number of entities have a partial shared services model. One department reported providing legal services to one of its portfolio entities under a Memorandum of Understanding. Several other departments reported providing ad hoc legal services to entities in their portfolios where the entities had a shared interest in the outcome of a matter.

Opportunities for exploring greater synergies There are a number of ways in which shared legal services could be delivered, depending on the particular circumstances. It could be through an in-house legal area in one entity providing particular legal services to a range of other entities – for example where the entity has relevant expertise or can achieve economies of scale. There may be scope for entities with larger in-house legal areas to provide services to entities within their portfolio or entities grouped together by common issues.

There may be some benefits in a shared services model, particularly where the participating agencies have common interests or deal with similar legal issues.

Cultural institutions are an example of where shared services arrangements may be worth considering. Most cultural institutions have a small in-house legal area and the issues handled by one entity are not dissimilar to those of others. A shared approach may provide opportunities to build an in-house legal area with greater specialisation, and provide better coverage and continuity when a staff member is absent or leaves.

More generally, a shared services model may also be a way of ensuring that the legal needs of entities with small in-house legal areas are met efficiently and sustainably. Resourcing can impact on how some small in-house legal areas operate and forgoing key supporting architecture may create risks.

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Opportunities for shared services may overcome some of these resourcing challenges. For example, a small in-house legal area without access to an extensive law library or effective quality assurance policies could at times benefit from sharing access to legal reference material or second counselling arrangements with other entities.

A shared services model may also benefit entities without an in-house legal area by providing an additional avenue to access legal services. The data collection survey showed that the legal needs of respondent entities without in-house legal areas were primarily around similar ‘corporate’ legal services (such as general employment law or contract issues) which they procured from external legal providers.120 A shared services model may create opportunities to access commonly used legal services more effectively and efficiently, either by the services being provided by another entity, or through assistance with procurement of legal advice from a more informed purchaser.

The consideration of shared services arrangements are not limited to smaller in-house legal areas or entities. The Review is aware that some of the larger in-house legal areas may include a single lawyer working on corporate legal services that are unrelated to the core business of the legal area. In this context, an entity without a critical mass of expertise in a particular area of law could benefit from another entity’s expertise.

[The entity] is interested in exploring how a shared services model would work in legal areas that are not central to its core regulatory responsibilities; for example, in areas such as property, information technology and employment. [The entity] does not see a shared services model as being useful in the legal areas that are central to its core regulatory responsibilities.

The Review considers that there is merit in considering shared services arrangements in the types of circumstances outlined above, but shared legal services would be unlikely to provide benefits in many other circumstances and could be impractical or administratively cumbersome. Opportunities for shared services would need to be considered carefully on a case by case basis.

120 23 out of 96 respondent entities advised they did not have an in-house legal area.

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Recommendations7. IN-HOUSE LEGAL AREASThe structure and role of each in-house legal area should primarily remain the responsibility of the accountable authority of each entity, but should be undertaken with reference to the indicators of good practice set out in this Review. In particular, the General Counsel (or equivalent) should ensure all in-house areas have:

a clear statement of their role and responsibilities, objectives and expertise a governance arrangement that facilitates a direct link between in-house legal and executive

decision-making within the entity a focus on supporting business line areas in their statutory obligations and responsibilities in

managing legal risk information and case management solutions access to legal reference material a tailored approach to measuring value and performance structures that support the giving of independent advice and maintenance of legal professional

privilege where appropriate quality assurance processes, and a strategic approach to developing legal capability.

Accountable authorities should seek opportunities to achieve economies of scale and better support smaller entities’ legal needs, including through shared services arrangements for areas of overlapping expertise or more routine corporate legal issues.

Chapter 5 – Government Legal Careers The success and effectiveness of any legal practice, whether in government or the private sector, hinges on its ability to recruit, develop and retain quality legal professionals. The Review has examined what measures are in place across the Commonwealth to ensure that its government lawyers have the knowledge and skills required to effectively manage the Commonwealth’s legal risk. By examining the current recruitment, professional development and mobility arrangements, the Review has considered whether the Commonwealth is making the most of lawyers as a resource.

This Chapter examines firstly, the professional identity of government lawyers, secondly, the current professional development arrangements for government lawyers and thirdly, whether there is a need to improve recruitment and mobility practices for government lawyers.

Background In their professional capacity government lawyers share many characteristics and obligations with their private and corporate sector equivalents; they interpret the law, advise on the law and sometimes take actions relating to legal matters. However, there are aspects of the role that are unique to government lawyers:

as public servants they are guardians of the rule of law as it applies within government they have an important relationship to their Minister in a system of responsible government, and they have an obligation to protect the reputation of the Commonwealth, its legal interests and

the public interest.

The legal profession and the provision of legal services generally are regulated through State and Territories Legal Profession Acts and Regulations.121 Commonwealth government lawyers also have particular obligations under the Judiciary Act and the Directions and may also have obligations that are specific to their entity’s legislation. This combined framework of general legal profession regulation together with specific obligations of government lawyers fulfils an important regulatory function, but also contributes to the development of a professional identity and a related ethos.

The Blunn and Krieger Review found that government lawyers in some entities lacked a clear role and purpose which has hampered the development of a professional ethos. By ‘professional ethos’, Blunn and Krieger meant “recognition that aside from owing loyalty to their particular agency, they have obligations to be objective and independent, and to recognise obligations to uphold the rule of law and the interests of the Commonwealth as a whole”.122 Given that a unique set of obligations are placed upon government lawyers, there is a question over whether the current arrangements are sufficient when it comes to their professional and ethical obligations.

The skills, knowledge and expertise demanded of government lawyers are complex and broad. The need for government lawyers to acquire the knowledge and develop the skills particular to working within government, and to an appropriate standard, was identified in the Blunn and Krieger Review.123 Currently, each Commonwealth entity is responsible for identifying and fulfilling their lawyers’ training and professional development needs. The Review is examining whether the current training and professional

121 Most jurisdictions have exceptions in place that relieve government lawyers from practising certificate requirements. See above n 118.122 Blunn and Krieger, above n 26, 44. 123 Ibid 46.

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development arrangements are meeting the needs of government lawyers and are being delivered efficiently.

Within the decentralised Commonwealth legal services model, each entity is responsible for recruitment of lawyers into their in-house legal areas. Given the range of functions performed by in-house legal areas and the need to understand entity-specific legislation, entities will want to ensure that they are able to attract the right candidate with the requisite experience and skills for the position. Alongside entity-specific requirements, the Commonwealth also has an interest to ensure that recruitment arrangements and mobility opportunities support the Commonwealth’s legal needs as a whole.

The Review has examined whether the current recruitment and mobility arrangements enable the Commonwealth to attract and retain high quality lawyers and are flexible enough to ensure the Commonwealth has government lawyers where they are most needed.

Professional Identity In focus groups and submissions stakeholders referred to the challenges associated with being both a lawyer and a public servant, of having to juggle the demands of multiple clients (business lines areas, entity head, Minister, the Attorney-General, the Commonwealth) and maintain a whole-of-government focus. The interests of the Commonwealth as a whole and the interests of their particular entity often intersect and in some cases may clash.

Understanding the perspectives of stakeholders and maintaining objectivity about the role of the Commonwealth should be as much a part of the development of government lawyers as understanding the technicalities of how the Constitution should be interpreted…

In a constantly changing and complex environment, government lawyers should be supported to navigate competing stakeholder interests with an awareness of their whole-of-government role and obligations. The Review has found that the mechanisms to support lawyers in this regard require strengthening.

Building a professional identityIn Review focus groups with Commonwealth in-house lawyers, a majority identified most strongly as legal professionals but also identified as public servants. Participants were asked whether they identified their client as the relevant business area of their entity, their entity head, their Minister and/or the Commonwealth. Approximately 40% of the participants chose all of the available options. Selections made by the other participants, from most to least common, were the relevant business area, their entity head, the Commonwealth and, finally, their Minister. Some stakeholders also struggled to articulate the relationship between the role of a government lawyer and the role of the Attorney-General as the First Law Officer .

The above feedback tells the Review that government lawyers do not necessarily have a clear sense of how their specific role within their entity relates to the broader Commonwealth’s interest, or how their obligations as a public servant interact with their professional obligations as a lawyer. The scope and range of work that government lawyers perform presents a challenge to building a sense of professional identity despite that some positive steps have been taken.

Existing professional networks

As discussed in Chapters 2 and 3, an outcome of the Blunn and Krieger Review was the establishment of two networks to strengthen the ‘professional ethos’ of government lawyers:

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the GCWG, which brings key General Counsel together to consider strategic issues facing the Commonwealth legal services market, and

the AGLN, the opt-in network for government lawyers and its Legal Practice Managers' Forum which focusses on practice management.

The prevailing view among stakeholders was that the AGLN and GCWG help forge a professional identity. A common observation was that the potential of the AGLN would be better realised if it had sustainable funding, a stronger sense of direction and dedicated permanent resources.

Existing Commonwealth wide networks for government lawyers are useful in improving the professional ethos and sense of belonging of government layers, but their potential is limited by a lack of resources.

The GCWG was perceived by a number of agencies as having limited value and its small membership is seen as a barrier to adequately representing the breadth of legal interests across the Commonwealth. Similarly, entities expressed a view that the reach of the AGLN was limited – they noted its voluntary nature and that it is largely based in Canberra.124

The Corporate Commonwealth Legal Entity Network (CCLEN), hosted by AGS, was also identified as a useful forum for the identification and discussion of legal questions more relevant to CCEs and to build networks with colleagues from similar practices.

Stakeholders generally acknowledged the value of cross-agency networks as a mechanism to support government lawyers. A majority of entities reported their in-house lawyers participated in both formal and informal cross-agency networks and liaison meetings. Networks, whether formal or informal, that promote professional connections between government lawyers from across a range of Commonwealth entities were generally considered necessary to cultivate a whole-of-government perspective.

These forums have also confirmed to us that when we are thinking about our work, we are not missing whole of Commonwealth issues, or issues of relevance to other agencies.

Experienced General Counsel also told the Review that they have valuable personal networks that they call upon for advice and information sharing. These informal networks are more common among government lawyers at the General Counsel level who may be more established in their role. Newer General Counsel can find it difficult to ‘break in’ and join these connections. The Review observed that lawyers at the Executive Level are less likely to have personal networks to call upon outside their entity and as a result may feel less connected than the General Counsel cohort.

Despite the recommendations of the Blunn and Krieger Review, little progress has been made to develop a single unifying professional ethos and this has undermined the efforts that in-house legal areas have taken to support their lawyers. Government lawyers told the Review that upon entering the APS as a government lawyer, or moving to a government lawyer role within the APS, there had been little in the way of induction or guidance about the expectations of the role. Government lawyers have mostly been left to glean this understanding from a patchwork of sources including colleagues and networks, on-the-job learning and entity-specific material, where it exists.

124 The Review recognises the efforts on the part of several non-Canberra based lawyers to establish an AGLN presence and organise events in other locations.

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Practising Certificates: strengthening professional ethos

A subset of stakeholders also identified practising certificates as a critical component of government lawyers’ professionalism and accountability. The relevant benefits of a practising certificate were articulated as:

it assists to distinguish between those legally qualified employees who provide legal services and those who do not

it may assist to establish a requisite degree of independence it enhances a sense of collegiality with the broader legal profession, and through CPD requirements, it maintains standards to the degree necessary to establish credibility

with internal and external clients.

The relevance of the practising certificate regime for government lawyers is more fully explored below in the discussion of professional development and training, and in Chapter 4 in connection with establishing independence.

A more coordinated approach to developing professional identityOpportunities through the AGLS

Government lawyers assemble notions of their professional identity from informal networks (including those established through participation in the AGLN), opportunities to work and liaise with government lawyers in other entities, the Directions and attending professional development events. Stakeholder submissions on these mechanisms supported an overarching solution that is robust, visible and has the dedicated resources to bring these elements together:

Government legal practice would be strengthened if government lawyers were encouraged to consider their place within a broader network of government lawyers and share skills and information with colleagues in other agencies...the [central coordinating body] would play a central role in supporting this.

As previously discussed in Chapter 2, the AGLS framework would support government lawyers in a more cohesive and consistent manner. If membership of and participation in the AGLS is an expectation of all government lawyers it will have the coverage and authority necessary to drive the development of a clear professional identity for government lawyers working in in-house legal areas.

A statement of roles and responsibilities of government lawyers

Another suggestion from stakeholders was the development of a charter or code that clearly articulates the obligations and responsibilities of government lawyers.

A charter or code - may be an opportunity to acknowledge the unique demands placed on government lawyers and reinforce the importance of complementing technical legal competence with a broad understanding of the context in which they have to operate.

Stakeholders who supported this idea told the Review that the purpose of such a statement would be to:

raise awareness of and seek an individual commitment on core expectations of government lawyers

provide guidance on how government lawyers should approach their duties (with objectivity, independence and consideration for the public interest), and

reinforce a whole-of-government focus.

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Such a statement could be incorporated into the Directions and form part of the governing documentation of the AGLS, giving government lawyers a single point of reference and a shared understanding of their role.125

Professional development and training Approaches to training and professional developmentThe terms ‘skills’, ‘knowledge’ and ‘competencies’ are often used quite loosely and interchangeably. For the purposes of this Chapter, the Review has taken the approach that a competency is a combination of skill and knowledge applied together to meet the demands of a particular context.

The skills government lawyers need

In Issues Paper Two, the Review invited submissions on what core skills and knowledge government lawyers need. Stakeholders primarily concentrated on areas or topics of law. A few entities provided views on the types of generalist or practical skills they consider government lawyers need. These included:

written and verbal communication skills – with an emphasis on the skills needed to convey legal advice in plain English to a variety of audiences and crafting advices that offer pragmatic solutions with the right balance of content and brevity

interpersonal skills – the ‘soft’ skillset needed to work effectively with team members and stakeholders

negotiation and advocacy skills – analysing problems, understanding interests, developing solutions, use of language and the skills of persuasion and influence

research and analysis – scoping of legal problems and analysis of research needs developing and working with legislation work management – prioritising work, assessing and reviewing workload and records

management, and talent development and leadership training at the Executive Level.

What knowledge government lawyers need to have

In 2015 the AGLN considered options for shared legal training for government lawyers. It circulated a survey to the heads of approximately 40 Commonwealth in-house legal areas. The AGLN’s survey results supported a conclusion that the areas in which government lawyers need to be competent are generally consistent across agencies, with some additional areas of specialisation. Knowledge identified by the AGLN as potential ‘core competencies’ for government lawyers included:

the professional duties of government lawyers, with reference to the relevant legislation covering the legal profession

the framework for government legal work with reference to the role of the Attorney-General as First Law Officer and obligations under the Directions

Constitutional law the Commonwealth financial framework, grants, procurements and Commonwealth contracts administrative law and good decision-making information and disclosure law the Australian Public Service, and governance and risk management in the Commonwealth public sector.

A majority of entities, from a good cross-section both in terms of the size of their entity and the size of the in-house legal area, agreed with the above list. Additional suggestions to the above list included:

125 Any statement should complement and not duplicate their general responsibilities as APS officers, where relevant.

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informed purchaser skills assessment and management of legal risk litigation project management matter management, and commercial law.

Core knowledge and skills identified by AGS as part of its training programme for its junior lawyers include many of the above as well as alternative dispute resolution essentials and federal jurisdiction.

The Review considers that work should be undertaken to develop a comprehensive set of competencies for government lawyers based on the skills and knowledge identified by the AGLN and AGS.

How training and professional development is delivered to government lawyers

In submissions to the Review and in focus groups, stakeholders told the Review that training and professional development is sourced from a combination of:

in-house training provided by in-house staff in-house training provided by external providers, and approved attendance at external seminars and forums that qualify for CPD points.

Of the entities with in-house legal areas who participated in the data collection survey, 95.9% indicated that they had provided government lawyers with training and professional development via one or more of the above sources in the last 12 months. Attendance at an external seminar that qualifies for CPD points is the most common form of professional development offered to government lawyers.

A factor that government stakeholders can consider when looking to purchase external services is whether an external legal services provider offers free training on a ‘value-add’ basis. However, while a few entities take advantage of this type of arrangement, the Review understands that this is not common. Some external providers also indicated that the uptake of value-add services that had been negotiated was mixed.

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Case study: A competency-based approach for government lawyers

The Departments of Education and Training, Employment and Industry, Innovation and Science have taken a competency-based approach to developing specific work level standards for government lawyers. These standards set out the deliverables and behaviours expected of government lawyers at each level. The standards reflect duties unique to in-house legal settings. These include actions and behaviours that:

promote good in-house legal practice management establish and maintain productive client/stakeholder relationships demonstrate a requisite level of technical legal expertise and compliance with legal regulatory

frameworks (for example the Directions), and identification of whole-of-Department and whole-of-government issues.

This approach builds upon the Australian Public Service Work Level Standards which are general in nature and require entities to interpret them according to the context of the position, duties, level of expertise and behaviours required to perform the role competently. These entities advised that a bespoke set of competency based standards for government lawyers assists with role clarity and career progression, and is an effective platform for performance management.

Reasons for training and professional development services being purchased from external providers include limitations on internal resources, capability and expertise. Depending on the nature of the training product, the number of attendees and the outlay of time to develop and deliver the content, it may be more cost effective to outsource these services. Purchased training services can range from individual and group attendance at seminars, courses or conferences, to more tailored services that are developed and delivered in partnership with one or more entities.

A number of entities have invested in the development and delivery of specific training programmes, tailored to meet the particular requirements of their government lawyers and their entity’s needs. Some entities have set up committees within their in-house legal areas to identify skills and knowledge gaps, decide on content and whether the training should be delivered in-house or by external providers. Some of those programmes appear to be quite sophisticated.

For more niche requirements or to keep up-to-date with current relevant developments in the law, stakeholders gave examples of more informal and simple options. These included topical presentations at regular staff meetings delivered either by in-house staff or guest speakers and presentations given at inter-agency liaison meetings.

Continuing Professional Development arrangements

Stakeholders overwhelmingly identify the continuing professional development (CPD) requirements of each jurisdiction as one of the main drivers behind their requirement for practising certificates. One of the objectives of CPD requirements is to ensure that practitioners maintain and develop their professional skills, competence and ethical standards for the benefit of their clients and the community.126

Attendance at an external seminar that qualifies for CPD points is the most common form of professional development offered to government lawyers. However, during consultation, stakeholders noted that the professional development activities lawyers are required to undertake to maintain practising certificates

126 Campbell B and Lynch J, Regulation of Government Lawyers – Report to the Attorney-General (2009).

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Case study: A structured training program developed in partnership with the tertiary sector

The Defence Legal Division provides legal advice and other support services to the Australian Defence Force (ADF), the Department of Defence and portfolio Ministers. As at June 2016, the Division is staffed by 128 Permanent ADF legal officers, 39 APS legal officers and 77 APS paralegals and other support staff. Approximately 100 of these personnel are located outside Defence’s Canberra headquarters, most particularly at major commands and bases throughout Australia. A further 23 ADF legal officers work for statutorily independent or as statutorily recognised office holders within the military justice system, for example, in the offices of the Inspector General ADF and the Director of Military Prosecutions.

The Legal Division has developed and implemented a professional training programme that seeks to achieve a balance between career progression requirements, the needs of legal officers and operational requirements.

Defence works in partnership with the Australian National University and Adelaide University to run Graduate Diplomas and Masters of Laws degrees. All ADF legal officers are required to complete tertiary level modules on core areas specific to Defence’s work, such as Military Discipline Law and Military Administrative Law, Operations Law and Military Legal Practice. Work is currently being undertaken to expand the program to include APS legal officers. In addition, a Certificate IV program is available for Paralegal staff. Obtaining this qualification is one of the requirements for progression through the Defence APS Paralegal Broadband.

are not generally geared towards government lawyers and they have concerns about the quality, consistency and relevance of the content of these seminars and courses.

In 2009, the Law Society of NSW recognised that although it had a well-developed CPD programme, it was limited in meeting the particular needs of government lawyers. It subsequently recommended specialist courses for government lawyers.127 Since this time, the market has responded to demand for courses aimed at government lawyers. The majority of law societies offer one day CPD programmes or conferences for government lawyers in addition to short seminars and forums covering areas of law relevant to government. Some law firms have also developed training packages aimed at meeting government lawyer’s CPD requirements.

While generally worthwhile, the Review considers that CPD seminars and courses provided by Law Societies and the private sector have not been sufficient to meet the particular professional development needs of government lawyers.

A more strategic approach to training and professional developmentAlthough most stakeholders agree that there is a core set of skills and knowledge that government lawyers should have, there is little evidence to indicate that in-house legal areas have taken a strategic or consistent approach to training and development. An entity-focused approach to training and professional development has prevailed and ad hoc arrangements have worked against efficiency and consistency. This observation is supported by the AGLN’s shared legal training survey, which identified duplication of effort, inconsistent outcomes in how topics are addressed and an agency-specific focus.128

This Review has examined the proposition that a strategic Commonwealth-wide approach to the development and delivery of core training and professional development to its government lawyers will result in greater efficiencies, less duplication of effort and a cohort of lawyers better equipped to recognise whole-of-government priorities. The Review has concluded there are opportunities for a Commonwealth-wide approach both in identifying common standards and in delivery of training and development.

Determining and maintaining common standards

There is scope to leverage the fact that a majority of Commonwealth entities broadly agree on a set of core skills and knowledge that government lawyers must have. Packaging skills and knowledge requirements into a competency based framework presents an opportunity to reinforce Commonwealth priorities in the work of government lawyers and achieve greater consistency in Commonwealth legal practise.

The development of competency frameworks for government lawyers has gathered favour in a number of jurisdictions. The frameworks have been used both as a tool for recruitment and professional development. In the UK, the Government Legal Service Qualified Lawyer Competency Framework comprises of generic skills such as ‘effective decision-making’, ‘delivering at a pace’ and ‘collaborating and partnering’.129 In New Zealand, the Government Legal Network provides centralised training including an ‘Introduction to being a Government Lawyer’ course for all lawyers new to government and practice groups within the network provide seminars on specific topics.127 Law Society of NSW, An Exploratory Study of the Continuing Legal Education Needs of Government Solicitors in New South Wales (2009) <https://www.lawsociety.com.au/cs/groups/public/documents/internetcontent/063626.pdf>.128 Australian Government Legal Network – Professional Development Committee, Options Paper: Shared Legal Training for Government Lawyers (27 August 2015), 2.129 Government Legal Service (UK), Working for GLS <https://www.gov.uk/government/organisations/civil-service-government-legal-service/about/recruitment>.

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The Review considers that the AGLS should build on the work undertaken by the AGLN Board and the competencies identified by AGS to develop and deliver a continuing legal education programme that is organised around a competency framework for government lawyers. A framework that also included a clear articulation of the Commonwealth’s expectations of government lawyers, as discussed above, would complement the professional development programme to ensure government lawyers have both the professional ethos and competencies to meet the Commonwealth’s needs.

A more efficient and strategic delivery mechanism

Support for a more centrally coordinated approach to training and professional development was a common theme during consultations. One stakeholder said that “…training and professional development should be provided from the centre, where there is also an ability to ‘turn on the switch of coordination’”. Stakeholders that supported this approach identified the following advantages:

maintenance of consistent standards in terms of core skills and knowledge across the cohort reducing duplication involved in creating and delivering training and development programmes opportunities to shift from an entity-specific focus to a whole-of-government focus ensuring government lawyers take a consistent approach to common issues, and potentially facilitating greater mobility of government lawyers between entities.

The efficiencies to be gained from coordinated training and development were recently acknowledged in the McPhee Report. The Report identified the general trend across the APS to duplicate spending on similar learning and development products, resulting in inconsistent products of varying quality for common topics.130 The Report calls for a rethink of options that should aim to reduce duplication, achieve better value taking advantage of collective purchasing power and improving the consistency and quality of learning and development products.131 The Review considers these conclusions are accurate for training and development of government lawyers.

Reservations from stakeholders about a coordinated approach were primarily about the ability of a ‘one size fits all’ approach to accommodate the differences between in-house legal areas and the need for a degree of specialisation. The Review agrees there will always be a need for niche or expert training organised by entities in addition to government lawyer core competencies training, although there are opportunities for entities with similar niche needs to develop and deliver training together. The Review also agrees with stakeholders who emphasised the importance of on-the-job training and practical experience as complementing more coordinated training approaches.

A function of the AGLS would be to ensure that the development and delivery of training to government lawyers was efficient and effective; a 'build once, use many times' model would improve the quality of the delivery and reduce duplication of effort.132 The AGLS should partner with centres of expertise and private sector providers to:

design and deliver training and professional development products that are tailored to core competencies for government lawyers, and

maximise the accessibility of training and professional development products by ensuring they are innovative and flexible, and delivered on multiple platforms (not limited to face-to-face delivery in capital cities).

130 McPhee, above n 17, 76.131 Ibid 77.132 McPhee, above n 17, 76.

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To strengthen the AGLS training function, there should be an expectation that government lawyers would commit to developing and maintaining core competencies. For individual lawyers, this expectation should be reflected in the statement of roles and responsibilities of government lawyers discussed earlier in this Chapter. In terms of the broader practice, it should also be reflected in the charter for General Counsel as recommended in Chapter 2.

Mobility and recruitment A Commonwealth legal career offers the opportunity to work across very broad subject matters and roles, and across a wide variety of entities. The McPhee Report, found that the current recruitment practices within the APS were doing it a disservice by not communicating the potential for challenging and exciting careers.133 Together with the earlier observations about the lack of a clear and coherent professional identity for government lawyers, opportunities may be missed to attract and retain the best and most talented legal professionals into Commonwealth legal careers.

Consistent with the Government’s Smaller Government agenda, a shift to more responsive and flexible recruitment and mobility solutions in a resource constrained APS environment is required. A workforce of government lawyers that could be nimbly deployed between entities would improve the capacity to offer a diverse legal career and bolster the Commonwealth’s capacity to provide strategic and high quality legal services:

resources could be moved quickly to work on the most challenging and high risk matters and projects

government lawyers at all levels would be exposed to a range of approaches to Commonwealth legal work, and

the Commonwealth’s capacity to identify and manage whole-of-government legal issues would be improved by forging closer partnerships between government lawyers across entities.

Recruitment of government lawyersCurrent approaches to recruitment

Current approaches to recruitment vary greatly across the Commonwealth. This is to be expected, given the diversity in size, function, resources and location of entities. However, the result is a less clear path into and through a government legal career.

Recruitment approaches for in-house legal areas currently include:

generalist graduate programmes, where officers with legal qualifications may be placed in a legal area

entry-level legal graduate programmes (only a small number of entities have such an arrangement)

internal recruitment of officers with legal qualifications from business line areas open recruitment processes, where candidates may come from within the entity, from other

entities and from the private sector targeted recruitment of specialist lawyers with several years post-admission experience, primarily

from the private sector, and transfer of staff at level from another entity, for example under s 26 of the Public Service Act.

The current entity-based approaches lack cohesion and do not contribute to developing the Commonwealth government lawyer cohort more generally.

133 Ibid 39.

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Feedback on recruitment issues

The potential for a more cohesive and strategic approach to recruitment was recognised by many entities. Stakeholders noted that recruitment arrangements need to take into account the distinction between generalist and specialised legal work, but the majority of stakeholders saw the value of presenting an approach that recognised this diversity but was more cohesive and unified.

[F]or lawyers who want to build and focus on a government law career, there could be better mechanisms in place to assist them in identifying career options and making decisions.

Other stakeholder views included:

small in-house legal areas commented on the difficulty of recruiting lawyers, and particularly backfilling positions where a temporary vacancy occurs

suggestion of a more centralised approach that enables positions to be filled (on short or long-term basis) across a number of entities managed by a centre of excellence or coordinating entity, and

support for greater consistency in position titles, remuneration and APS levels of legal positions in entities, noting that the current inconsistency can lead to confusion and works against attracting legal professionals into the APS.

Mobility of government lawyersMobility has been identified by the McPhee Report as a key factor to building a workforce with the right balance of breadth of experience spanning different entities and sectors, and deep subject matter expertise.134 A measure of the Commonwealth’s commitment and ability to respond to its legal needs and develop its workforce is how well it promotes and facilitates the mobility of government lawyers.

The Review does not have any direct measures of mobility of Commonwealth lawyers, although mobility in the APS is generally considered limited.135 More than half of entities reported a retention rate of 91-100% for ongoing employees providing in-house legal services between 1 July 2014 to 30 June 2015. In the absence of comprehensive mobility statistics, the appetite among stakeholders for greater mobility across entities tends to indicate that the APS trends are also relevant to legal services. For example, one entity told the Review:

While agencies can and do facilitate secondments to a degree, they are limited to a small number of departments that generally sit within their portfolios and therefore a more centralised system in which this could operate may be a preferable approach.

Examples of current mobility arrangements

In the data collection survey, 17.8% of respondent entities with in-house practices had seconded lawyers out of their in-house legal areas to another entity’s in-house legal area in the 12 months prior to the survey. By comparison, 45.7% of respondent entities with in-house practices had engaged a lawyer from an external legal services provider on an outposting or secondment basis in the 12 months period. The Review did not collect data about secondment of government lawyers to external providers, but anecdotally the practice is rare.

134 McPhee, above n 17, 53.135 Ibid 56. Movements that involve a temporary secondment arrangement are not recorded in the APS Employment Database. Over the past 15 years mobility rates in the APS have fluctuated between 1.1% and 3.1% of the APS workforce - Australian Public Service Commission, Australian Public Service Statistical Bulletin, State of the Service Series 2014-15, <http://www.apsc.gov.au/about-the-apsc/parliamentary/aps-statistical-bulletin/statistics-2015>, 69.

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This is consistent with APS-wide tendencies that preference a reliance on drawing from an entity’s own workforce through personal networks and expressions of interest processes.136 The Review has found that, where secondments and exchanges of government lawyers do feature, they tend to be from larger entities to other entities within the same portfolio:

…an annual transfer process for lawyers within the [in-house legal area] and short-term placements in portfolio agencies to assist when their staff take long-term leave…facilitating secondments to significant agency review and reform projects and to other agencies in appropriate cases, to assist staff in building specific professional, management and contextual skill sets

One-way secondments from a larger entity are the most common arrangement. As a consequence, opportunities for lawyers in smaller in-house legal areas to be seconded out are more limited:

As a small agency, [the entity] does not pretend to its staff that it can provide a full career path to its staff – it is practically impossible to provide a meaningful career path. For this to be possible for [entity] staff, this would need to be tackled at least at Portfolio level…collaboration and coordination across the APS would need to be significantly enhanced for this idea to be viable.

Smaller entities expressed strong support for a better level of coordination to enable them to either draw from a pool of lawyers from their portfolio department or exchange lawyers. An exchange of lawyers was seen as a particularly beneficial as it builds two-way learnings and encourages stronger collaboration between the exchanging entities.

Opportunities to improve recruitment and mobilityThere is support among stakeholders for a shift towards better coordinated opportunities that would strengthen the career paths for government lawyers and support the Commonwealth in attracting, developing and retaining government lawyers. The Review considers such initiatives should not be implemented in a manner that prevents individual entities from undertaking recruitment activities to meet their particular needs.

Mobility

Arrangements that encourage in-house legal areas to utilise government lawyers as a whole-of-government resource have the potential to reduce duplication of effort and reinforce the notion that government lawyers belong to a well-defined broader professional cohort.

The Review proposes that the AGLS would work with entities to facilitate access to secondment and exchange programmes. The AGLS would undertake this function mindful of the Commonwealth’s need for a balance between lawyers that have valuable generalist skills, who are nimble and able to be deployed to work in diverse settings, to lawyers who have equally critical expertise and specialisation.

Given the broad range of needs across the Commonwealth, the Review considers that a model that takes an incremental approach is best suited to the current environment. In undertaking this work, the AGLS would bolster the Commonwealth’s capacity to provide strategic and high quality legal services by:

identifying areas of expertise across the Commonwealth that are well-suited for mobility opportunities, to meet development needs of government lawyers and their in-house legal areas, and respond to broader Commonwealth legal priorities, and

136 McPhee, above n 17, 27.

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create and facilitate secondment opportunities with practical on-the-job experience to complement more structured training programmes.

An incremental approach could involve the AGLS partnering with General Counsel from a selection of in-house legal areas to trial a secondment and exchange programme for government lawyers, including in in-house practices, AGS and other tied providers and OLSC.137 Road testing or piloting a secondment and exchange programme would still deliver some of the benefits of a more comprehensive model – these would include a focus on the AGLS brand and the breadth of opportunities for government lawyers across the Commonwealth to attract quality officers. Important to the success of the programme would be the leadership of General Counsel, including promoting the benefits of a diverse government legal career, and managing workload pressures to allow capacity for high-performing staff to access development opportunities in other entities.

Once a Commonwealth-wide secondment and exchange programme is developed and implemented, and subject to interest from the private sector, consideration could be given to exchange programmes between entities and law firms aimed at building legal professional skills of government lawyers and better public sector knowledge in external providers.

Recruitment

Once established, there are opportunities for the AGLS to work with entities to trial joint recruitment arrangements. Experience of the mobility arrangements discussed above would provide a basis for designing joint recruitment efforts. Once key initiatives around standards, professional identity, training and development have been delivered, the AGLS would be well placed to explore options for a more joined-up recruitment approach.

That being said, there is nothing to stop a group of entities trialling a joint recruitment exercise in advance of any more centrally coordinated arrangements. A Commonwealth-wide view on core competencies and roles and responsibilities for government lawyers, as discussed above, would assist entities to develop shared selection criteria for a joint recruitment process. Given the particular recruitment challenges faced by smaller entities, the Review suggests portfolios should consider opportunities for smaller entities to piggyback on any recruitment activities undertaken by larger entities.

137 See The future role of OLSC section in Chapter 3 for further discussion of secondment arrangements for OLSC.

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Recommendations8. GOVERNMENT LEGAL CAREERSThat, as part of the Australian Government Legal Service (Recommendation 1 and 4), lawyers in Commonwealth entities would:

have a statement of roles and responsibilities which include clear obligations to identify whole-of-government issues and support the First Law Officer

be required to have ongoing training in identified core skills for which training would be delivered on a joined-up basis facilitated by the AGLS, and

have access to mobility opportunities, such as secondment or exchange programs across Commonwealth entities, including with OLSC and AGS (see also Recommendation 4).

Entities with an identified need for niche or specialised training would share knowledge, training and development opportunities with similar entities in the AGLS.

Chapter 6 – External legal servicesThis Chapter examines the role of external legal services in the Commonwealth legal market, including:

the procurement of external legal services (other than counsel) the role of counsel in Commonwealth legal services, including procurement of counsel, and how the role of the informed purchaser contributes to effective engagement with external legal

services.

This Chapter is particularly focused on the private sector. However, observations about the external legal market and role of external providers are often also relevant to AGS.

The role of external legal services in the Commonwealth legal marketThe Review considers that external providers remain a critical component of the Commonwealth legal services market.138

In 2014-15, external legal services made up 29% of total legal services expenditure (excluding AGS and disbursements) compared to about 20% in 1995-96.139 By value, expenditure on external legal services (excluding AGS) has more than tripled in inflation-adjusted terms over that period.140 This reflects both the substantial expansion of Commonwealth legal service costs as a whole, and the greater role of external providers within the market. When AGS is included, external legal services made up 43% of the total Commonwealth legal market in 2014-15.141

The Review sought feedback on the types of circumstances where entities seek assistance from external providers. The responses included:142

matters with high reputational risk high level strategic advice on issues that would benefit from an external perspective matters which require a specialist skill or expertise not available in-house litigation and related dispute resolution matters (noting the Directions restrict in-house lawyers

from undertaking this work) where in-house resources are insufficient to meet demand where it is cheaper – for example simpler matters where external providers have the benefit of

economies of scale to deliver outcomes at a very good price, and to take advantage of innovation in the private sector.

Commonwealth entities do not have a uniform approach to determining whether services should be performed internally or by an external provider. This is explored in more detail in Chapter 4 above.

138 This remains consistent with the findings of the Logan Review (at 9.12) that “the overwhelming response of departments and agencies…was that they required access to both public lawyers and private lawyers to meet their needs”.139 Within these totals, expenditure on external firms is up from 10% to 22%, while expenditure on counsel is down from 10% to 7%. In Issues Paper One, the Review noted that the market for external legal services appeared to have declined since 2008-09. However, the increase in external expenditure in the 2014-15 legal services expenditure report (which was released after Issues Paper One) suggests the trend is not as clear as had been thought.140 Calculation excluded disbursements and inflation-adjusted figures were calculated using the Reserve Bank of Australia’s inflation calculator at <http://www.rba.gov.au/calculator/annualDecimal.html>.141 See comparisons in Chapter 1 of this Report. In 2014-15, AGS had about 14% of the total market, and tied work generally constitutes around 10-15% of AGS’ work in any given year.142 Another common response was for tied work. Ties work is not dealt with here as it is limited to government providers and is dealt with separately in Chapter 3.

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The Review further observes that continuing engagement with the private sector is critical to the Commonwealth accessing the full breadth of innovation in the legal sector. Professor Richard Susskind OBE, IT Adviser to the Lord Chief Justice of the UK, has noted “The legal market is in an unprecedented state of flux. Over the next two decades, the way in which lawyers work will change radically .”143 Innovations in document analysis and automation of transactional tasks are already available, and artificial intelligence tools for analysing documents and providing advice are being developed. Firms are also experimenting with innovative service delivery and billing mechanisms to increase efficiency and responsiveness. Continuing engagement with external legal services providers, together with an orientation towards innovation within government, will position the Commonwealth to best take advantage of innovation wherever it may occur.

Factors impacting the role of external providers in the current marketIn the context of the contestability programme, the Review has considered whether there are any factors that reduce the ability of external providers to compete in the Commonwealth legal services market, and how the sustainability of external legal services should factor into the management of Commonwealth legal risk.

If external providers are not able to sustain a practice in particular areas of law required by the Commonwealth, this may impair the Commonwealth’s ability to manage legal risk. The key issue identified by firms was the availability of a sufficient volume of work to justifying investing in a practice. Most stakeholders agreed that sustainability is primarily an issue in areas of law that are particular to the Commonwealth and therefore the range of potential clients is limited.

From the perspective of the private sector, factors impacting on the ability of external legal service providers to compete included:

administrative burdens including high costs of tendering, inefficiencies arising out of decentralised procurement and duplicative and expensive performance monitoring

reliance on existing relationships makes it difficult for new providers to break into the market a perception that in-house areas treated AGS as the default external provider144

AGS market share affects ability of other providers to build and sustain a Commonwealth practice smaller firms and non-national firms are discriminated against based on size or location, and tied work creates a barrier to fair competition.145

From the perspective of Commonwealth entities, factors impacting on the ability of external providers to compete included:

conflicts of interest in key areas of law cost, including both that external services are generally more expensive and that external costs

are more difficult to control, and external providers lacking skills that are critical to Commonwealth entities, including knowledge

of the Directions, detailed knowledge of entities’ operating environments and an appreciation of government processes and political sensitivities.

The discussion in this Chapter on procurement and informed purchaser issues seeks to respond to a number of the issues raised by stakeholders on the sustainability of practices and ability of the private sector to compete.

143 Susskind R, Tomorrow’s Lawyers: An Introduction to your Future, Oxford University Press, 2013, 3.144 Although evidence from entities generally indicated this perception was not borne out in practice.145 As discussed in Chapter 3, the Review does not consider that a restriction to tied work is warranted.

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External Legal Services – procurement A key issue for the Review is how best to leverage the Commonwealth’s purchasing power to optimise value. Optimising value means that the Commonwealth should, as far as practicable, purchase legal services in a way that is efficient, sustainable and proportionate to the scale, scope and risk of the procurement.

Current arrangements for Commonwealth legal services procurementThe Directions require all Commonwealth entities to source their external domestic legal services from the LSMUL, except in the case of tied work or where exemptions have been granted. The Commonwealth’s current legal services procurement model is a product of a series of reviews from 2009 to 2011 that examined the purchasing framework:

The Blunn and Krieger Review found there was a strong case for greater coordination of the provision of legal services across the Commonwealth.146 It recommended that the system of entities individually tendering for legal services be reviewed and put forward three options: a single Commonwealth panel, a multi-use list, and a hybrid model.147

The Lateral Economics Report further explored the relative merits of the models for coordinated procurement. It recommended a slightly different hybrid model to the one proposed by Blunn and Krieger, consisting of whole-of-government subject area panels as the primary source of procurement, supported by a multi-use list for purchases off-panel.148

The LSMUL, established in 2012 in response to these reviews, is a list of external legal services providers who have been pre-qualified by applying for, and satisfying, the conditions for participation. Conditions for participation include:

demonstrating capacity to provide quality legal services, identify and manage conflicts of interest, and an understanding and capacity to meet the requirements of the Directions

public liability, professional indemnity and workers’ compensation insurance requirements, and providing list rates and information about fee arrangements.149

External legal service providers are appointed to the LSMUL by OLSC. As at 1 July 2016, 135 providers had been appointed to the LSMUL.

The LSMUL also allows entities to ‘parcel’ certain aspects of their external legal services needs to particular providers. Parcels may range from a specific task or matter, to broader categories of work required over a period of time. Once a parcel is established, it is not necessary to seek quotes for individual purchases from a provider in the parcelling arrangement. Of the 96 entities who responded to the data collection survey, 18 have parcelling arrangements in place and most of those are among the higher spending entities.

Within the LSMUL framework, piggybacking practices are not widespread and most entities purchase independently of each other. Piggybacking occurs where an entity accesses another entity’s established parcel contract.150 In the data collection survey, only six out of the 96 respondents indicated that they

146 Blunn and Krieger, above n 26, 9. 147 Ibid 51. 148 Lateral Economics, above n 40.149 Important Information and Guidance for Applicants <https://www.ag.gov.au/LegalSystem/LegalServicesCoordination/Documents/OLSC-LSMUL-AFI-ImportantInformationandGuidanceforApplicants.pdf>, clause 7.150 The Review uses the term ‘piggybacking’ broadly, also including multi-agency access arrangements.

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https://www.ag.gov.au/LegalSystem/LegalServicesCoordination/Documents/OLSC-LSMUL-AFI-ImportantInformationandGuidanceforApplicants.pdf

https://www.ag.gov.au/LegalSystem/LegalServicesCoordination/Documents/OLSC-LSMUL-AFI-ImportantInformationandGuidanceforApplicants.pdf

piggybacked on parcels arranged by other entities. There are no known instances of clustering, whereby multiple entities collaborate to approach the market together, or other joint approaches to market.151

Upcoming reform to the Commonwealth Procurement Rules

During the course of the Review, the Department of Finance advised of anticipated changes to the Commonwealth Procurement Rules, pending agreement by the Minister for Finance, expected to commence on 1 July 2017. Of most relevance to the Review, these changes include transitioning to two procurement methods (open tender and limited tender), removing pre-qualified tenders (the method used when procuring from a multi-use list).

As a result, it is not open to the Review to recommend continuing the current (or an amended) LSMUL beyond the expiry of the current arrangement on 30 June 2018. The Review has therefore focused on building on the lessons learned through the LSMUL process to ensure an effective legal services procurement arrangement for the future.

Critical issues in legal services procurementBased on previous reviews, stakeholder views and research, the Review has concluded that effective legal services procurement in the Commonwealth requires the following features:

Access to the right services:

Optimising value for legal services means that entities should be able to access the right provider to perform the services required. For some legal services there may be a large number of suitable providers, while for a more niche or highly complex issue, the number of suitable providers may be very limited. Value for money decisions are not just about minimising cost, but also risk management and access to quality advice that achieves positive outcomes.

Achieving the best price for those services:

The model for legal services procurement should facilitate the Commonwealth obtaining the best possible price for the service it needs. This requires a shared knowledge of price points for legal services. The right provider may not necessarily be the cheapest option, but the Commonwealth should seek to get the best price from that provider.

A procurement model that is efficient, proportionate and avoids unnecessary regulation (red tape):

Any model for procurement should be efficient and proportionate to the benefit being achieved. It should avoid unnecessary regulation, both of Commonwealth entities and external service providers. In this context, the Review is informed by the principles of internal regulation identified in the Belcher Review (briefly discussed in Chapter 1).

Fairness and transparency for potential service providers:

For the Commonwealth to be an attractive client who can negotiate competitive prices, access to the Commonwealth legal market needs to be fair and transparent for potential providers. This includes that the process for seeking Commonwealth work is clear and

151 However the Departments of Employment and Education created a parcel prior to the 2013 Machinery of Government change when they were the single Department of Education, Employment and Workplace Relations. As a result, they currently share 3 parcels.

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well-communicated, and the process for entities deciding which provider to use is sufficiently transparent to give providers confidence that they will be judged fairly.

Facilitating access to key information for purchasers and providers:

A central element of making best use of the Commonwealth’s purchasing power and the capacity for entities to act as informed purchasers is the availability of information about the skills, price and performance of legal service providers.

Lessons from the LSMULOver the course of the Review, most stakeholders’ feedback on procurement was focused around experiences with the LSMUL. Despite the broader Commonwealth procurement changes which are expected to remove the LSMUL option in future, the feedback remains useful in informing the design of a new approach to procurement. This section summarises the Review’s findings about the LSMUL in the context of the critical issues set out above.

Access to the right services

Overall, the LSMUL provides access to a wide range of expert providers with a high degree of flexibility. Some entities think the list is too long and cumbersome to be useful, while other entities prefer the flexibility offered by a large list of providers.

Consultation by the Review highlighted the importance of entities being able to access individual expert lawyers or teams as opposed to just a particular firm, and a number of larger entities observed that the LSMUL has made it easier to continue working with a particular lawyer when they move to a different firm.

Some smaller entities expressed concern that firms with expertise in their boutique legal needs are not on the LSMUL. These providers are often small practices and either do not meet the requirements for being added to the LSMUL or do not perform enough Commonwealth work to justify the effort. The LSMUL’s exemption system is designed to accommodate these circumstances. It is unclear why entities raising concerns about availability of niche experts on the LSMUL were not seeking exemptions in those cases. In practice, very few exemptions are sought and almost all exemption requests are granted.152

Entities with parcelling arrangements said they provided advantages in ensuring access to the right service. For example, entities could tailor parcelling to specialised fields of law and ensure that the providers they approach have the necessary expertise and experience to meet those specific legal needs. Some entities and providers noted that developing long-term relationships with providers and giving them greater certainty through parcelling arrangements encourages providers to invest in core capabilities tailored for the entities as clients, which in turn leads to better and more responsive legal advice.

Achieving the best price for those services

Anecdotally, the Review has heard from both entities and providers that Commonwealth entities often achieve very competitive rates but information is not available to verify this objectively. The only rate information generally available is the LSMUL rates, which are universally acknowledged as not reflecting competitive pricing. Offering a good price is not a precondition to inclusion on the LSMUL. LSMUL rates are ceiling rates that do not generally represent good value – entities still have to negotiate separately to

152 In 2014-15, OLSC granted all 11 exemption applications received to allow entities to engage providers not on the LSMUL. As at 10 May 2016, OLSC had received 12 applications for 2015-16. Only two of these had been declined or not processed for reasons unrelated to merit (i.e. not enough information provided).

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access competitive rates. In fact, throughout consultations, only one entity identified an instance where they paid the LSMUL rate.

Price is affected by volume and certainty. The LSMUL has such a large volume of providers that, of itself, it can create no certainty of work for providers. Indeed, in 2014-15 approximately 35% of LSMUL providers did not receive any Commonwealth work and a further 20% received work of less than $50,000 in total value.

Commonwealth entities with large volumes of legal work can leverage their individual purchasing power to negotiate lower commercial rates, secure low fees for regular routine work and obtain value-add services. In particular, entities that parcel their legal work create a critical mass of work for providers to bid on, creating incentives for competitive rates.

This individualised negotiation does not leverage for the broader Commonwealth the competitive rates that larger entities are able to secure. Essentially, the benefits of any discounts achieved are not applicable to others because there is no formal price discovery mechanism in the Commonwealth legal services market. Entities do not know what other entities are paying and, often, they are asked by providers not to reveal this information. Structurally, the Commonwealth is not in a position to obtain the full benefits of its purchasing power. As the Lateral Economics Report previously identified:

[S]ince many agencies purchase legal services independently of each other, they compete with each other and in so doing undermine any monopoly power that the Commonwealth might have in the market.153

Many entities saw benefit in more candidly sharing information about value and prices.

A procurement model that is efficient, proportionate and avoids unnecessary regulation

Over the course of consultation, a majority of stakeholders indicated that the LSMUL imposes excessive red tape. Several entities suggested the interaction between the LSMUL and the broader Commonwealth procurement policies creates a complicated regulatory framework and that guidance on the interaction would be useful. However, it appears these issues may arise, at least in part, from entity-specific practices including Accountable Authority Instructions.

The LSMUL has not removed the need to negotiate arrangements with providers before selecting and engaging a provider. Each entity is still required to undertake the appropriate procurement process and negotiate arrangements with providers before selecting and engaging a provider, retaining a level of administrative burden for those who do not have parcels.

A smaller group of entities thought the LSMUL was a net positive, citing the streamlined set of engagement terms that are common to all external providers as an advantage that makes the instructing process quick and efficient.

Inconsistent and fragmented purchasing practices were identified as a source of increased costs to the Commonwealth as a whole:

Several top tier firms observed that some entities have overly prescriptive requirements on how external providers are to deliver legal services, depriving the service provider of the ability to innovate and, at times, compromising the desired outcome or adding to the cost.

The LSMUL’s Request for Quote and Order templates were generally considered useful when used, but many entities did not use them. Several providers noted that entities sometimes asked

153Lateral Economics, above n 40, 27.

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for information that is available in existing LSMUL documentation or sought to apply terms that duplicate or overlap with the LSMUL Deed.

Providers observed that entities’ tendering processes are inconsistent, complex and disproportionate to the work. Some indicated this inconsistency is administratively burdensome:

Administration is disproportionate to the value and complexity of the legal work. The more detailed tendering typically results in a more costly and time consuming process both for external legal services providers and for government in procuring those services, potentially undermining obtaining value for money and the provision of legal services at relatively short notice.

Several providers have indicated that excessive reporting requirements, particularly under parcel arrangements, have increased inefficiencies and cost.

Providers reported some entities have sought competitive quotes for matters of a very low value (ie as low as $1 500). Quotes can vary from a simple two-line email request to a lengthy document with evaluation criteria. Many providers also suggested that some entities struggle to appropriately identify the scope, volume and nature of the legal work required.

Compared to the general LSMUL, entities who have parcels considered the procurement process simpler. Many entities have established parcels primarily to streamline the subsequent value for money assessment exercise.

This raises questions about why piggybacking is so limited, given it would appear to be a simple way to access more streamlined purchasing.154 For example, several entities have established parcels for similar or identical subject matters, each requiring their own administrative cost to establish and maintain and each requiring effort from service providers to bid for the work. One stakeholder believed the fault lay with the LSMUL itself: “the LSMUL arguably works against a coordinated response to an issue, by encouraging agencies to approach matters in an individualistic manner and requiring agencies to consider their requirements in isolation”.

Fairness and transparency for potential legal service providers

The LSMUL allows for relatively straightforward access to the market for new and smaller providers, compared with tendering for work on individual entity panels. In theory, this enables more legal service providers to compete for legal work. Several entities provided examples of where the LSMUL has enabled testing of a larger number of firms in a competitive environment, compared with individual panel arrangements. Entities also gave examples of more innovative proposals from service providers disrupting the complacency of previous arrangements and leading to better priced and more client focused services.

On the other hand, the fact that 87% of professional fees were earned by the top 10 providers in 2014-15 suggests that the LSMUL has not substantially opened up the market.155 In 2014-15, 96% of work was undertaken by the top 20 external providers, while the figure in 2013-14 was 97%.156

Some newer providers report that it is difficult to compete without Commonwealth legal experience but they cannot demonstrate experience without getting work. Many entities still rely on pre-existing relationships with known legal service providers rather than exploring the full range of providers. Some have approached parcelling in a way that undermines the LSMUL model, by replicating previous panel

154 This is partially explained by the lack of knowledge of parcels, and the extent to which they are tailored very specifically to the establishing entity’s work.155 Attorney-General’s Department, above n 22, p 12.156 Based on source data for the 2013-14 and 2014-15 Legal Services Expenditure Reports.

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arrangements without providing opportunities for many new providers to bid. This lack of transparency and relatively opaque market makes the ‘reduced barriers to entry’ somewhat of a fiction.

Unlike in an open tender, LSMUL service providers are not necessarily provided with an opportunity to bid for every parcel. Providers do not know which entities have established parcels unless they have been invited to tender. Several providers also observed that some parcelling practices are not consistent with the spirit of the LSMUL in that entities “aggregate disparate groups of work into a single parcel, precluding external legal service providers from tendering for the parcel unless they can undertake to provide the full range of services”.

The Review has heard that the requirement to maintain at least $10 million worth of professional indemnity insurance to qualify for the LSMUL is a barrier to inclusion for some small firms and sole practitioners. One stakeholder argued that the exclusion of proportionate liability in the LSMUL Deed places external legal services providers at a competitive disadvantage compared to AGS.157

Service providers also expressed concern about the lack of visibility of LSMUL evaluations about their performance. Providers sought an opportunity to comment on the feedback and to improve performance based on that feedback.158

Facilitating access to key information for purchasers and providers

Under the LSMUL arrangements, access to information that would assist purchasing decisions remains a concern for entities. The issue of price transparency discussed above is an example of critical information that is not currently available.

A simple IT system was designed to support the LSMUL when it was introduced but it was always expected that it would evolve over time. While the LSMUL IT system contains basic information about service providers, it is otherwise limited in its functionality. If an entity knows the particular provider they wish to use, that provider’s experience, current rates and contact details can easily be accessed on the system. However, the system does not allow for comprehensive searches by service or location, or presentation of search results in a format that facilitates easy comparison between providers.

Entities reported an appetite for more and better performance information. Under the Directions, entities were previously required to regularly evaluate work by an external legal services provider (every 6 months and/or on completion of a matter). The Belcher Review found this was onerous and that, in its current form, the evaluation provided little value to entities.159 Consistent with the Belcher Review findings, this Review’s analysis also found that the rating system did not assist entities to make a decision about which firm to use. For example, the ten firms with the most evaluations had a spread of average scores from 2.95 to 3.15 out of 4, which is not a significant enough difference to inform purchasing decisions.160 The evaluation requirement was subsequently removed.161 However, entities have indicated they would benefit from access to more meaningful performance information, such as whether the provider kept to the budget and feedback on specific personnel, rather than the firm. Other jurisdictions within Australia have had some success with more targeted and periodic performance surveys and some entities indicated support for such an approach.

157 As commercial insurers will not provide cover in respect of the liability assumed when contracting out of proportionate liability, a portion of the potential liability of an external legal services provider is uninsured.158 As explored below, the LSMUL evaluation feedback was not useful in practice and that process is no longer mandatory. However, the point remains that providers are keen to have access to any feedback collected.159Belcher, above n 14, vol 2 135. 160 As at 31 May 2015.161 Legal Services Amendment (Removal of External Legal Service Provider Reporting Requirements) Direction 2016 (Cth).

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The new AusTender Dynamic Sourcing functionality may assist with facilitating access to information as it will provide increased visibility of panel suppliers and their capabilities as well as streamlining access to panel documentation.

Options for future legal services procurement arrangementsThe Review has considered possible procurement models that maximise value and coordination for the Commonwealth including:

Option 1 - a whole-of-government panel Option 2 - cooperative procurement: tendering in compulsory clusters (by portfolio or common

issue), and Option 3 - individual panels with multi-agency access: each entity tenders for legal services as

they see fit.

The Review has considered how effective each option would be in responding to the critical issues in legal services procurement above, and in light of the LSMUL experience.

Option 1: whole-of-government panel

How it would work

There are a number of existing jurisdictions using a panel approach for legal services procurement. The Review team met with officers from the Queensland and Victorian public sector who have responsibility for establishing and administering their legal services panels. The Review also considered information about legal services panels in New Zealand and the UK. At the Commonwealth level, whole-of-government procurement arrangements are in place for a number of goods and services. Most, but not all, are implemented through a panel arrangement.162

There are a wide range of models that could broadly be described as a whole-of-government panel. However, given the complex nature of the legal services and the diversity of entity legal needs, the Review has made some assumptions about the whole-of-government panel model for this option, including that it would:

be mandatory for NCCEs and opt-in for CCEs163

have capacity for an exemption for panel use in specified or exceptional circumstances include the ability for entities to negotiate further discounts, for example for substantial matters

or simple but high volume work, but entities would be required to share details of negotiations to maintain price transparency

involve a wide range of entities in the design of the arrangements and assessment of tenders, and

be funded through a small levy on suppliers, or entities.

Experience in other jurisdictions suggests that the division of work into sub-panels on defined topics would be a critical feature. Sub-panels should be sufficiently defined to enable tailoring of service providers’ bids to achieve efficiencies, while also ensuring sub-panels are no more specific than necessary to ensure a volume of work worth bidding for. For example, it might be sufficient to have a panel on administrative law rather than immigration or social security law.164 The number of providers on each 162 The LSMUL and Communications Multi-Use List are the only whole-of-government arrangements that are not panels.163 The Review does not consider that a voluntary panel for legal services has the potential to respond to the issues identified about use of purchasing power and price transparency and does not consider this option further.164 Issues Paper One responses indicated that entities saw value in having a whole-of-government panel for work that is commonly delivered and where duplication currently exists, including commercial leasing, standard procurement

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sub-panel would be decided by reference to the value offered and the volume of work available for that topic. As part of the whole-of-government panel design process, a full audit of the nature and volume of legal work across entities would be required.

Tenders would be assessed by a group of informed purchasers from entities who are most experienced in the use of those services. For example, assessment of a sub-panel for commercial law should involve the Department of Finance and the Department of Defence, while assessment of a sub-panel for administrative law should involve the Department of Human Services and the Department of Immigration and Border Protection.165

The Review has also canvassed additional design options for a whole-of-government panel to maintain a degree of flexibility within a mandatory arrangement:

The ability for the panel to be refreshed on an annual basis, subject to an assessment of need, to take account of substantial developments in the legal services market or critical capability gaps on existing panels. Refreshing a panel may result in new providers being added.

A mechanism to grant exemptions from use of the panel where work is highly technical, where a conflict of interest arises or expertise is only available from a non-panel provider.

The ability for entities to continue to procure a proportion (for example, 10%) of their legal work off-panel.166 This would allow entities to maintain knowledge of the broader legal services market and maintain interest in Commonwealth work from non-panel providers. It would also allow entities to engage smaller firms that represent good value but are unable to meet panel requirements for ad hoc work without undermining the spirit of the panel. However, it would create some administrative complexity. This option is referred to as the ‘10% rule’ below.

A whole-of-government panel would be administered centrally. With responsibility for the PGPA Act and the Commonwealth Procurement Rules, as well as other whole-of-government panels, the Review considers that the Department of Finance would be best placed to administer a whole-of-government panel. This would be in partnership with AGD which, through OLSC, would have responsibility for compliance with the Directions, gathering of performance and expenditure information and consideration of exemptions.

Evaluation against the key issues identified by the Review

One of the key benefits of a whole-of-government panel is the efficiency of the subsequent purchasing process, which delivers administrative savings for both entities and providers. Where a provider has qualified for a sub-panel, they have been through an evaluation process to assess value for money and their relevant expertise. Being on a panel is in itself a ‘purchasing event’ under the Commonwealth Procurement Rules. A streamlined process enables fast and cheap engagement and reduces duplication of effort.

A whole-of-government panel delivers a clear basis for legal service providers to offer competitive prices. Selection as a panel provider creates a degree of assurance of the volume and predictability of work available, although it would still not be a guarantee to work. Greater certainty enables providers to invest in the necessary assets and resources to deliver quality services. Other benefits delivered by a whole-of-government panel include much greater transparency of process for external legal services

contracts, human resources, or IT procurement law. 165 This listing of expert agencies for a sub-panel topic is not intended to be exhaustive.166 The Review is aware of an arrangement where an entity includes in its approach to parcelling a policy of conducting about 10% of its work ‘off-parcel’.

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providers compared to current parcelling arrangements, as well as comprehensive price disclosure across the Commonwealth.

With careful implementation based on an informed assessment of the Commonwealth’s legal needs, this model provides an opportunity to better harness Commonwealth purchasing power for the benefit of all entities, creating savings for many entities from better price outcomes.

Panel processes are generally acknowledged as transparent for potential external providers. In other jurisdictions, panel arrangements have also assisted in facilitating access to key information for purchasers, including skills, price and performance, and leveraging the most informed purchasers for the benefit of the jurisdiction as a whole.

The Review sought feedback from stakeholders on the possibility of a whole-of-government panel through Issues Paper One and a number of consultation events. The response from entities indicated diverse views. For example:

…the adoption of whole-of-government panels would be effective in providing a competitive set of rates for standard types of Commonwealth legal services (in the same way that occurs for Counsel fees) and streamlining the procurement process. This would provide a greater capacity for the Commonwealth to use its scale to drive more competitive pricing.

A whole-of-government panel could be effective, so long as it would have a wide range of firms available under the panel. Alternatively, if particular expertise was required off-panel, there should be a simple mechanism for engaging a non-panel provider.

…a whole-of-government panel would not provide an effective or practical means to ensure access to high quality legal services of the specialist nature required by [the entity]…in the absence of a number of suitable firms being appointed, it is likely that the AGS would become the default option… it would be impractical to rely solely on [AGS’] services due to capacity issues and lack of competitive tension.

A handful of entities, particularly those that currently parcel, did not support a whole-of-government panel. However, many entities, diverse both in size and location, saw value in the model. Regardless of their overall conclusions, many entities expressed the same key concerns and conditions, namely that a whole-of-government panel would require flexibility to account for the diverse nature of Commonwealth legal work, including the need for entities with niche legal requirements or a need for specialist services to access the right service. Some external legal services providers also raised this concern. The Review considers that these concerns can be managed through an effective exemption system paired with a continued degree of flexibility.

Consultations also identified a concern that a whole-of-government panel would not provide the large purchasers the same deals as they currently receive. Some entities go to great efforts to negotiate low rates and value-add services – some of the larger purchasers are concerned that the Commonwealth as a whole would be unlikely to get the same value for money. The Review proposes that entities would still be free to negotiate for lower prices with panel providers. The difference between a panel arrangement and the LSMUL in this regard is:

that panels are expected to deliver a competitive price upfront, unlike the LSMUL, and price transparency would mean that outcomes of negotiations were known to other

Commonwealth entities.

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Some stakeholders raised concerns that a whole-of-government panel would result in unsuccessful tenderers choosing not to invest in the Commonwealth as a client. The Review considers that the combination of the 10% rule and an ability to periodically refresh the panel mitigate this risk sufficiently. The Review notes that other Australian jurisdictions with a legal services panel have not had difficulty accessing suitable providers.

Some concern was also raised that a whole-of-government panel imposes a barrier to entry for smaller firms in the Commonwealth legal services market. The Review accepts that panel arrangements are often difficult for smaller providers to engage with. Sub-panels may assist, as they allow smaller providers to tailor their bids to areas of specific expertise within a transparent process. The 10% rule and exemptions for specialist legal expertise not otherwise available would also aid access. As the 100 LSMUL-appointed firms outside the top 20 currently only get 4% of total external expenditure, it is not clear that adopting a whole-of-government panel would have a negative impact on smaller firms compared to current arrangements.

Option 2: cooperative procurement

How it would work

An alternative to the whole-of-government panel would be to implement a cooperative procurement option through purchasing clusters. Under this option, entities wishing to establish panels would do so together with similar or related entities. Cooperative procurement involves multiple entities collaborating prior to approaching the market. Depending on how the purchasing clusters are formed, the model could have smaller entities leveraging the purchasing power of larger entities or allow a group of smaller entities to work together to leverage their combined purchasing power.

A cooperative approach to the market could be structured so that each entity would participate in an overall value for money assessment and be listed on a schedule of the lead entity’s contract.167 Clusters could be either pre-determined (ie grouped together by portfolio or function) or ad hoc (ie grouped together by common issues). An entity wishing to establish a panel would notify all entities in the cluster of their proposal, including the subject matter and the parameters of the panel. Other entities would then be able to express an interest in participating in the panel and would provide relevant information to the lead entity. In consultation with other interested entities, the lead entity would develop a proposal for the establishment and structure of the panel. Any proposal would include identifying how the other entities would participate in the panel.

Whether or not a given panel is mandatory for participating entities to use would depend on the conditions of participation for the particular panel, which would be agreed by the clustering entities as part of the panel design process.

Once other participating entities were identified, the lead entity would approach OLSC to commence a tender process for the panel with the identified cluster. OLSC would assist entities to confirm that opportunities to cluster had been fully considered and the size and scope of the cluster was appropriate to the tender proposal. The lead entity, with assistance from other participating entities, would then undertake the tender process. The outcomes, including prices achieved, would be reported, shared and used as part of guidance for future tender processes. In circumstances where no potential cluster partners are identified, OLSC could approve an entity to proceed to tender on an individual basis.

167 Department of Finance, Cooperative Procurement: Buying for the Australian Government <http://www.finance.gov.au/procurement/procurement - policy - and - guidance/buying/policy - framework/cooperative - agency/practice.html>.

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http://www.finance.gov.au/procurement/procurement-policy-and-guidance/buying/policy-framework/cooperative-agency/practice.html

http://www.finance.gov.au/procurement/procurement-policy-and-guidance/buying/policy-framework/cooperative-agency/practice.html

In circumstances where no panel was in place, entities would need to approach the market on an individual basis for each procurement.

Evaluation against key issues identified by the Review

The cooperative procurement model responds to the primary objection to a whole-of-government panel model – the perceived inflexibility – by giving entities more capacity to tailor arrangements to their needs. Similar to the whole-of-government panel, the model makes it difficult for small firms to compete in terms of the scope of services offered, although the more limited the scope of a particular panel, the more likely that a smaller provider could make a well-tailored bid based on their particular expertise.

The cooperative procurement model also supports the overarching Review principles of increased coherence and consistency by encouraging entities to work together and find synergies. It allows entities without well-developed informed purchaser skills to have the benefit of the skills of the more informed entities. This could result in savings for entities from better price outcomes. One private sector stakeholder noted:

…there are varying levels of sophistication across Commonwealth entities in the procurement and assessment of legal services…To address this, an entity which has a proven track record of being an informed purchaser of legal services could be designated the lead agency to co-ordinate the procurement of legal services from external legal services providers.

This view was also echoed from some entities:

…piggybacking arrangements could be developed into formal ‘cluster tendering’ arrangements that would make use of informed purchaser skills in Commonwealth agencies. For example, agencies without well-developed informed purchaser skills could approach agencies that had been assessed by AGD as having informed purchaser skills, to be included in the contractual arrangements for the informed purchaser agency’s legal services panel.

This option identifies opportunities to consolidate and leverage purchasing power, although not to the same extent as a whole-of-government panel. Cooperative procurement also offers the potential to group volumes of work larger than what would be required for a single entity, therefore increasing the potential for volume discounts. However, the LSMUL model also specifically envisaged that parcels would apply to more than one entity through a clustering arrangement.168 Despite provision being made for a joint approach, the Review is not aware of any instances of clustering or other approaches to market by multiple entities under the LSMUL arrangement. Therefore, it is important not to overstate the likelihood of entities embracing a cooperative procurement approach in future.

To support increased access to information, OLSC could also conduct periodic legal service provider performance surveys to provide information in support of informed purchasing decisions by entities regardless of whether they are using a panel. Through reporting panel outcomes and prices to OLSC, OLSC would have an opportunity to provide more detailed information to other entities to inform their purchasing. However, the complex range of arrangements that would be in place through multiple clusters

168 Paragraph 13 of the LSMUL guidance material refers to ‘clustering’, where multiple entities might ‘cluster’ together to cooperatively approach the market and establish a cross-entity parcel from which all could purchase. Such an approach was expected to allow smaller entities to access volume discounts that may otherwise be unavailable to them due to the relatively small size of their legal service needs or expenditure (Attorney-General’s Department, Legal Services Multi-Use List Guidance Material (1 March 2016)<https://www.ag.gov.au/LegalSystem/LegalServicesCoordination/Documents/Legal-services-multi-use-list-guidance-material.pdf>).

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may make comparability more difficult, and may require substantial resources to analyse and circulate information that would be of assistance to purchasers. The clustering model provides greater transparency and price disclosure than current parcelling arrangements, although not to the extent of a whole-of-government panel.

From an administrative perspective, this option has the potential to reduce the number of tenders conducted by the Commonwealth compared to entities acting separately. It would also streamline subsequent engagement arrangements once clustered panels are established, although there would likely be some administrative complexity in panel design and in lining up contractual commitments of clustering entities. There is potential for duplication of tendering processes under this model, imposing greater administrative costs on providers to bid for work and meet specific panel requirements. This may affect the cost outcomes through providers needing to account for greater administrative overheads.

The primary risk of this model is that it continues the inconsistent purchasing methodologies across the Commonwealth. Entities may also be reluctant to nominate themselves as the lead entity given the increased time and resource burden, and there is a risk of lead entities focussing on their own priorities at the expense of broader cluster needs. This might be overcome by enforcement of approach to market rules through OLSC in considering whether to approve a particular approach to market, but there would be substantial red tape consequences from a complex OLSC approval process for each proposed cooperative procurement process.

Option 3: individual panels with requirement for multi-agency access option

How it would work

The final option moves away from a central approach, with each entity free to create their own panels or undertake procurement action as needed. However, to respond to some of the issues noted above as well as key recommendations from the Blunn and Krieger Review and the Lateral Economics Report, entities would be required to:

include the ability for other entities to access panels (multi-agency access), unless there are exceptional circumstances why this is not appropriate, and

share details of all panels established to assist entities who may wish to access them – this would include price, scope and provider details that would be available to all other entities through OLSC.

As this model primarily relies on individual entity actions, it is relatively simple to describe.

Evaluation against key issues identified by the Review

An autonomous approach best accommodates entities’ desire for flexibility. The model leaves each entity to tender for legal services as they see fit. It gives entities greater freedom of choice when purchasing their legal services, providing confidence that they can secure the right people to perform the services and continue working with lawyers with whom they have existing relationships.

However, individual panel arrangements fail to respond to the majority of the key issues outlined earlier in the Chapter. In particular, they encourage individualised and disparate practices that are antithetical to the core recommendations of this Review, such as strengthening the Commonwealth’s ability to take a consistent and coherent legal position and obtaining the best value legal services. The model would result in each entity developing its own approaches, systems and methods, increasing red tape and administrative overheads for both entities and providers.

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An effective implementation of this option would rely on entities designing their individual arrangements in a way that would make them helpful to other entities. The lack of uptake of piggybacking on the LSMUL tends to indicate that arrangements developed with a focus on an individual entity are less well adapted to broader needs, although lack of information about current piggybacking options also plays a part and this option would overcome that issue.

As identified by Blunn and Krieger, individual open tendering for legal services would appear to be “an extravagant use of Commonwealth resources”.169 A largely autonomous approach duplicates tendering costs of individual contract management and diminishes competitive pressure in the market. Critically, if entities purchase legal services independently of each other they undermine any leverage that the Commonwealth’s collective buying power has in the market. While there are a small number of entities with a sufficient spend individually that their buying power may not be affected, this does not describe the majority of entities.

Conclusion

On balance, the Review considers that a whole-of-government panel is the most appropriate model for legal services procurement in the future. Successful implementation of a whole-of-government panel approach in several other jurisdictions also supports this conclusion. It is doubtful whether a clustering model could be implemented effectively without substantial regulation in a way that would hamper flexibility and create administrative overheads and unnecessary red tape. Moving to a model where entities purchase individually, with an additional requirement for piggybacking is likely to entrench inconsistency and increase procurement administration costs.

In recognition of the complex legal services needs of Commonwealth entities, successful implementation of a whole-of-government panel is highly dependent on a structure tailored to those legal needs. The model adopted would need to respond to the need for flexibility to meet individual entities’ legal needs, but the Review considers this can be accommodated sufficiently within a whole-of-government panel model, through a combination of flexibility and exemption options. Participation of informed purchaser entities across the Commonwealth in the design of the panel will be crucial to successful implementation.

Engagement of CounselThe role of counsel and current arrangementsCounsel play an important role in the legal profession as independent and specialist advocates and advisors. They are primarily engaged for their advocacy and dispute resolution skills which can be essential to effectively and efficiently resolving complex disputes. In addition, many counsel are specialist in particular areas of the law and can be briefed to provide advice similar to that sought from law firms.170

Ready access to high quality and appropriately experienced counsel is critical to managing the Commonwealth’s legal risk. In practice, the majority of counsel engaged by the Commonwealth operate independently in the private sector as sole practitioners.

As sole practitioners, counsel negotiate with Commonwealth entities on an individual basis. Counsel are usually engaged at key or sensitive points of a dispute resolution matter and timeframes are often short and inflexible. Counsel are generally engaged and briefed via a legal practitioner.171

169 Blunn and Krieger, above n 26, 28.170 Australian Bar Association, What is a barrister? <http://www.austbar.asn.au/the-profession/what-is-a-barrister>.171 This convention provides Commonwealth entities with in-house legal areas with a choice to either ‘directly’ brief counsel or ‘indirectly’ brief via an external legal services provider. The Commonwealth currently briefs around half of its annual number of briefs directly. The proportion of direct briefs to counsel by Commonwealth entities for advocacy and advice work was 58% in 2014-15, 62% in 2013-14, 49% in 2012-13, 56% in 2011-12 and 43% in 2010

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The current Commonwealth framework for engaging counsel is primarily focused on the management of counsel fees. Counsel fee arrangements are overseen by OLSC. The centralised nature of the arrangement was recognised by the Logan Review as essential to enabling the Commonwealth to effectively exploit its “significant purchasing power” to achieve savings.172

OLSC currently undertakes the management of counsel fees by:

approving initial ongoing rates for counsel seeking to be engaged by the Commonwealth173

approving one-off and updated ongoing rates that are higher than relevant base thresholds ($2 300 for Junior Counsel and $3 500 for Senior Counsel)174 but below the $5 000 per day threshold that requires personal approval by the Attorney-General175

facilitating the making of requests by entities to the Attorney-General for one-off or ongoing rates higher than $5 000 per day176

providing guidelines to entities on counsel fee negotiations, and maintaining an internal database of initial ongoing rates for counsel and any additionally

approved rates.

In practice, both entities and counsel usually start by engaging with OLSC to set or check for an initial ongoing rate. In setting this rate, OLSC will have primary regard to the counsel’s years of experience as a Junior or Senior, their experience both with Commonwealth work and otherwise, and their existing commercial rate and that of their cohort. The initial rate is intended to operate as a default ongoing rate. The Directions provide that:

initial ongoing rates “should not be regarded as the standard or starting point for fee negotiations”177

that deviation from the initial ongoing rates set by OLSC should be the exception and not the rule, and

that rates agreed must meet PGPA and CPR requirements and achieve ‘value for money’.

Recent changes to OLSC policy

Recent changes implemented by OLSC on 1 February 2015 were a feature of stakeholder feedback. Under the changes, entities no longer need to contact OLSC to seek approval for rates negotiated above the initial ongoing rate and under the relevant base thresholds. This change to internal OLSC policy was intended to provide greater flexibility and autonomy to entities in their negotiations with counsel. Approval is now only required for one-off or ongoing rates above the relevant base thresholds or when Junior Counsel take silk. As part of implementation, OLSC developed guidelines to assist entities in their negotiations which reiterated that initial rates should still be default rates.

-11. Attorney-General’s Department, above n 22.172 Logan, above n 18, 4.18173 Paragraph 4E of the Legal Services Directions 2005 (Cth) requires counsel to have an initial rate approved by OLSC, even where the rate being sought is below relevant thresholds. 174 Paragraph 5 of the Directions.175 Paragraph 9 of the Directions.176 Paragraphs 9 and 14 of the Directions. If an entity seeks to engage counsel at a daily rate higher than $5000, they will contact OLSC to facilitate the Attorney-General’s consideration of the request. In its guidance to entities, OLSC recommends that applications for approval should be accompanied by correspondence from the Chief Legal Officer (who should also be an SES officer). In certain circumstances, OLSC may also recommend applications be accompanied by a letter from the relevant portfolio Minister supporting the request. OLSC will then prepare a submission to the Attorney-General providing information on the request for his or her consideration and decision.177 Paragraph 12 of the Directions.

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Analysis of current arrangementsIn analysing the effectiveness of the current framework, the Review analysed whether existing arrangements ensure that:

counsel with the right expertise can be engaged the Commonwealth achieves value for money, and the method for engaging counsel is flexible and responsive.

The overwhelming majority of consulted stakeholders were supportive of the current arrangements. Both Commonwealth entities and external legal service providers noted that the framework was effective in generating downward pressure on counsel fees to achieve rates well below commercial rates and thus provide substantial savings to the Commonwealth. Generally, current arrangements do not hinder the ability of entities to identify and engage appropriate counsel.

The current arrangements have also demonstrably achieved ongoing savings for the Commonwealth. Discounts on commercial rates are substantial.178 With annual expenditure of $48.05 million on counsel in 2014-15, the total saving to the Commonwealth is similarly significant.

A subset of stakeholders identified ways in which the existing system could be improved, particularly with respect to ensuring that appropriate counsel could be engaged in an efficient way. These stakeholders were predominantly Commonwealth entities and external legal service providers who engage counsel on a more frequent basis compared to other stakeholders.

The main points of concern raised in consultations were:

the level of existing thresholds as prescribed in the Directions reduced oversight of rate increases under the change in OLSC policy from 1 February 2015, and information sharing in the context of developing and maintaining informed purchaser capability.

Views about these concerns were not consistent and reflected the wide range in purchasing skill and entity needs.

Existing thresholds

The existing thresholds, above which rates offered must be approved by OLSC or the Attorney-General, have not been increased since 2005.

Several stakeholders reported particular difficulty with engaging counsel for complex and high value commercial work within the current thresholds:

[C]urrent arrangements generally work well for public law matters. However, we have had difficulty obtaining suitable counsel in other types of matters…[C]urrent arrangements appear to have the effect of limiting Commonwealth access to counsel in areas where counsel’ primary clients are the commercial sector.

Some stakeholders also described the current mechanism to obtain approvals for rates above thresholds, particularly rates above $5 000 a day, as complex and inefficient. One stakeholder observed that “whilst approval from the Attorney-General can be sought, this is a significant administrative burden for an agency… [which includes] seeking internal approval to seek [Attorney-General] approval”.

178 This is based on information about commercial rates provided to OLSC when setting initial rates and when considering applications rates above the threshold.

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As a counterpoint, the Review notes that there are very few requests for Attorney-General approval of rates over the threshold179 and most are approved very quickly. Where the rates are within OLSC capability to approve, urgent matters can generally be considered within a few hours.

The importance of obtaining the services of the most qualified counsel were raised by a number of stakeholders, particularly where opposing parties were very well resourced and represented. One entity noted that:

[T]here are times when [the entity], in considering what is said about making value for money decisions beyond dollar value, requires the skills and experience of particularly senior counsel and to retain such counsel needs to pay them at a rate in excess of [existing thresholds].

A few stakeholders advised of situations where ad hoc arrangements were not possible and the Commonwealth has had to proceed without being able to engage counsel “of similar experience and seniority to the counsel engaged by the other party or parties to the dispute or litigation”.

The establishment of arrangements to ‘work around’ approval mechanisms suggests that the existing mechanisms are not sufficiently agile to respond to the short time frames that arise in dispute resolution.

The requirement to regularly engage counsel for high value commercial work was confined to a relatively small group of entities. These entities engaged counsel regularly and displayed strong informed purchaser skills. For these entities, existing mechanisms act to limit their ability to engage appropriate counsel in complex and high value commercial matters.

Impact of the change in OLSC policy which reduced central oversight of rates

Several stakeholders commented on the 1 February 2015 policy change for counsel rates.180 Most entities who regularly engage counsel for high value commercial work welcomed the increased flexibility and administrative simplicity of the new policy. One stakeholder advised that:

The current arrangement for setting counsel fees on balance [is] beneficial to ensuring we get value for money from counsel whilst ensuring some flexibility…The [updated policy]…helps set the expectations of counsel and the growth of their rate over time.

A law firm commented that the change has:

“provided greater flexibility for counsel and agencies and have enabled less micro-management/oversight by OLSC. [The policy change has] also assisted in making Commonwealth briefs a more attractive proposition for experienced counsel”.

However, for other stakeholders the change in policy has increased the time and resources required to negotiate rates with counsel and they found insufficient information available to assist with minimising rate variance. One observed “members of the bar quickly requesting increases to their rates” and that “senior staff have spent an increasing amount of time negotiating rates with counsel” following the change in policy. Another stakeholder observed that the requests for increases “can leave agencies in a difficult position to negotiate particularly if the brief has been ongoing for some time and counsel demand an increase or will return the brief”.

179 Fewer than 20 per annum.180 The effect of the change is that entities have flexibility to negotiate with counsel up to the $2 300 daily rate threshold for junior counsel and the $3 500 daily rate threshold for senior counsel.

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More than one stakeholder advised that they had encountered ‘gaming’ of the system by counsel where the “rates one client is willing to pay [are used] to induce other clients within the Commonwealth to increase their rates”. Entities advised that they were unable to verify the claims made by negotiating counsel about rates paid by other entities. The reduced transparency has made negotiations more difficult and is putting upward pressure on rates.

Responses to the 1 February 2015 policy change suggest that there may be value in a more tailored approach to maintain downward pressure on rates but provide flexibility for strong negotiators and informed purchasers.

Information sharing

Several entities sought greater transparency and easier access to rate information to assist them in the development and maintenance of informed purchaser capability. The Review observed a number of consequences of a lack of access to information.

Firstly, there is a wide variance in market knowledge as the majority of counsel are engaged by a relatively small number of entities. This has influenced the way in which entities engage counsel and maintain their informed purchaser capability. Entities whose functions require advocacy skills on a regular basis demonstrated greater confidence in engaging counsel. Entities who do not engage counsel on a regular basis are more likely to use other external legal service providers to negotiate advocacy services.

There is currently no general mechanism by which information about the qualifications and suitability of a particular counsel is collected and promulgated. Key market information appears to be siloed within the groups of more frequent users of counsel services. In this context, some stakeholders suggested “that OLSC [should] undertake a more active assessment of the relative skills and experience of counsel” and maintain a database of ratings and feedback on counsel by Commonwealth entities. However, this view was not widely held and most stakeholders opposed reporting-based solutions.

Secondly, under existing arrangements, most entities must contact OLSC to access information about counsel rates. Since the 1 February 2015 policy change, this information no longer includes updated rates that are above the initial ongoing rate but below prescribed Directions thresholds, although entities have been provided with a simple formula to increase rates per year of experience181 as a substitute for an up-to-date ongoing rate. There is also currently no mechanism to verify or record the increased rates that are negotiated between counsel and individual Commonwealth entities.

Finally, a number of frequent purchasers of counsel services supported increasing access to counsel rate information.

Stakeholders advised that increasing access to information would streamline negotiation processes and allow them to easily verify the value of negotiated rates or offers. One suggested that “greater transparency…[and] access to the central [counsel fee] database…could make the process of determining relevant counsel more efficient and allow agencies to better test the recommendations of firms.” Another noted that increased access would drive the development of better informed purchasing capabilities by facilitating informed decisions, without reliance on prior knowledge or on information being provided by OLSC.

It is clear that mechanisms to improve access to information and price transparency would assist to develop and maintain informed purchaser and negotiation capability of entities.

181 Rates cannot be increased above the thresholds without OLSC approval.

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Options for reformThere is overwhelming support for the current framework. In comparison to other elements of the legal services framework for the Commonwealth, counsel fee arrangements have received relatively little comment. Overall, the mechanism is effective in delivering significant savings to the Australian Government. Nevertheless, existing mechanisms could be refined to improve the Commonwealth’s access to expert counsel and ensure entities continue to achieve value for money.

Adjusting thresholds to account for inflation

The first option would be to update approval thresholds, which have not changed since 2005, and provide a mechanism for the thresholds to automatically adjust for inflation in the future. For example, if the $5 000 threshold had been adjusted for inflation since 2005, it would have been at $6 488 by 2015.182 This option would require simple amendments to the Directions. The Review considers this a sensible and straightforward reform that should be implemented as a matter of priority.

Reintroduce greater OLSC oversight of counsel fees

The increase of thresholds to take account of inflation would provide some additional flexibility to entities. However, the increase could also be viewed by counsel as an opportunity to renegotiate for significantly higher fees. This would place additional pressure on less informed purchasers to negotiate effectively and could create significant upwards pressure on counsel rates.

Noting this risk, and feedback from entities about the existing upward pressure due to the 1 February 2015 policy change, the Review considers OLSC’s role in setting counsel fees should be adjusted to assist entities to manage these risks. Options to achieve this include reintroducing OLSC’s role in considering increases to ongoing rates and all one-off rates negotiated by entities.

Reintroducing OLSC oversight of increases to ongoing rates would assist both counsel and entities by ensuring ongoing rates that are set reflect a consistent judgment of the experience and skill of the particular counsel and are consistent across the board. Returning this responsibility to OLSC would provide greater certainty to less informed purchasers and entities who do not engage counsel on a regular basis. More broadly, reintroducing oversight would increase transparency of key pricing information which would assist entities to both engage counsel and negotiate one-off rates in relevant circumstances more effectively. This option could be progressed as an amendment to OLSC policy.

In addition, the Review has considered reintroducing OLSC oversight of all one-off rates rather than only one-off rates above the threshold as is currently the case. This would realign the system to the pre 1 February 2015 policy. This would provide the support that less confident purchasers have sought but would reduce flexibility for experienced purchasers. The Review considers this reform would be worthwhile, but only if combined with the exemption option outlined below for experienced purchasers.

Exemptions for experienced purchasers

Should the option to provide greater OLSC oversight be adopted, flexibility for informed purchaser entities could be maintained through an exemption mechanism for these entities. Entities could apply for an exemption from seeking OLSC approval for one-off counsel rates up to a defined threshold. This would allow entities with an identified functional need and strong informed purchasing skills to have the simplest possible process. This would reduce the administrative burden on entities and OLSC by removing unnecessary oversight and targeting centralised approval of rates to circumstances where it benefits the entity.

182 Calculated using the Reserve Bank of Australia’s inflation calculator at <http://www.rba.gov.au/calculator/annualDecimal.html>.

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http://www.rba.gov.au/calculator/annualDecimal.html

A further option would be to extend the range of exemptions to allow for exemptions from Attorney-General approval requirements in limited circumstances. On balance, the Review considers this unnecessary as the number of requests to the Attorney-General for daily rates over $5 000 is relatively small and this can be expected to drop if the threshold is updated.

Establish database of approved ongoing rates for Commonwealth entities

Redeveloping the database of rates so that it can be accessed by all Commonwealth entities would respond to the identified information gap and reduce the need for entities to contact OLSC for basic information.

If coupled with the option to reintroduce OLSC oversight of updated ongoing rates, the database could be a useful way to quickly disseminate current rate information. The information captured by OLSC as part of setting ongoing rates (such as a CV, summary of experience, contact details and other relevant information) could also be made available to other entities through the database, making better use of that information than the current model. This information could be used by entities to identify appropriate counsel or assist with negotiations of one-off rates.

The main challenge of this option is the additional resourcing to establish and maintain the necessary IT infrastructure. However, the Review considers this would be a worthwhile investment in the context of the overall savings achieved by the Commonwealth for counsel fees.

Functionality of a database could also allow for recording of one-off rates agreed by OLSC or negotiated by entities or contact details for referees in Commonwealth entities. The Review considers such additional functionality should proceed on a voluntary basis, at least in the first instance. Stakeholders have generally not been supportive of additional reporting. It is not clear that a requirement to report all one-off negotiated rates would provide enough value compared to the effort required to monitor compliance with the reporting obligations. However, if this additional information is of use to entities, the incentive to record rates should be sufficient without a mandatory requirement.

Informed PurchaserThe nature and importance of informed purchasersImplementation of a whole-of-government legal services panel will not deliver efficiency or value in the absence of effective purchasing in each participating entity. The role of the informed purchaser has consistently been identified as a key factor in the effective and efficient procurement of legal services and the management of service providers and costs.183

At a minimum, purchasers of legal services should be able to define the needs of the entity, scope the services to be purchased and have a well-informed view of what those services are worth to competently identify and protect the entity’s interests, as well as those of the Commonwealth.

The concept of informed purchasing applies both to individuals within an entity who have skills and experience in purchasing legal services and to the collective knowledge, skills and systems within that entity. As the Lateral Economics Report identified:

…the relevant knowledge comes not just from preparation and search and not just from experience. And it may not reside in one person. (One might even go so far as to say that it should not reside in one person.) Rather the professional informed purchaser should be understood to exist within a management system which is

183 Blunn and Krieger, above n 26, 8.

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both knowledgeable at the outset but which also – crucially – continually captures relevant information, processes it in useful ways and learns from experience.184

Current state of informed purchasing in Commonwealth entities Examples provided by stakeholders of how entities develop and maintain informed purchaser capability include:

relying on past experience of service providers participation in government networks, including ALGN, CCELN and Legal Practice Manager’s

Forum face-to-face meetings with service providers word of mouth and consultation with other entities internal systems and procedures, including matter management systems, guidelines for

outsourcing legal work, and internal performance evaluations making informed purchaser capabilities part of staff performance agreements, and employing senior staff who have experience working for external legal services providers.

Skills and systems

As identified by previous reviews, informed purchaser skills should not necessarily reside in one person or a group of individuals.185 Practices, procedures and knowledge management should be embedded within teams and the broader organisation.

The Review found that, with the exception of a few best practice entities, the informed purchaser capability of an entity remains too often dependant on the skill and experience of certain individuals in the in-house legal area rather than on a broader system that supports informed purchasers. For example, many entities suggested that their experienced lawyers perform the informed purchaser role due to their knowledge of the market and their understanding of the entity’s legal needs and strategic business operations.

None of the structured professional development programmes described in the data collection survey specifically identified informed purchaser training as a component.

A number of larger entities told the Review that the main way they develop and maintain informed purchaser capability is by taking a centralised approach to the management and purchasing of external legal services. Typically this means all procurement is to go through a single person or team, separate to or within the in-house legal area. Entities using this model reported that it assists to ensure continuity of knowledge, matters and personnel.

Access to information

The problems arising from the lack of price transparency in the Commonwealth are discussed above. These issues have a substantial impact on Commonwealth entities’ ability to act as informed purchasers. Existing external networks for sharing information include the GCWG and Legal Practice Managers’ Forum, but these are limited in their reach. Within GCWG, information sharing about legal services providers has not been a substantive feature. A number of large Commonwealth departments valued the utility of the Legal Practice Manager’s Forum, which focuses on sharing ideas on legal practice management.

Most entities, both large and small, expressed ongoing support for more formal opportunities to talk with other entities with similar work. Some entities provided examples of networks that already exist. For

184 Lateral Economics, above n 40, 12.185 Blunn and Krieger, above n 26, 43-44.

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example, the Fair Work Ombudsman and Fair Work Building and Construction regularly discuss the performance of external legal service providers within related practice areas.

Disparate purchasing practices

As discussed under procurement arrangements above, disparate purchasing practices are a feature of the current Commonwealth approach. The wide variety of practices tends to suggest that entities are not learning from or building on the experience of others.

Impact of the LSMUL

Consultation over the course of the Review suggested that the LSMUL has not made a significant difference to Commonwealth entities’ capacity to act as informed purchasers of legal services.

In particular, most entities agreed that whilst a wider range of suitably pre-qualified providers and limited information has been of some assistance, the LSMUL has not succeeded in providing enough information about the merits of those providers to assist entities in choosing a legal service provider. As one entity observed:

…when the agency seeks to engage an external legal service provider…considerable weight is given to past experience with an external legal service provider that is known to be on the LSMUL, rather than accessing the online platform and reading the more in-depth information provided by the external legal service provider.

As noted above, the evaluation arrangements under the LSMUL did not assist entities to make a decision about which firm to use, and the rates published on the LSMUL IT portal do not assist entities to identify value.

Options to improve informed purchasingThe Review has not made a separate recommendation on informed purchaser capability, but notes that options to better support the informed purchaser role are incorporated in several other recommendations.

Training through AGLS

The Review considers that greater consistency in informed purchaser practices across the Commonwealth could be achieved through dedicated professional development that is focused on purchasing skills and delivered through the AGLS. This could include training on how to scope a matter, formulate a request for quote, select a provider, manage outsourced work, assess performance and value for money, as well as disseminating any lessons learned.

A formal approach to training and education around informed purchaser principles is consistent with recommendations of recent reviews into legal services purchasing. Many stakeholders over the course of the Review, including large and small entities and external legal service providers also welcomed informed purchaser training.

Information sharing

Improved information sharing could be achieved through:

the AGLS and within portfolios, establishing communities of practice and/or forums to discuss purchasing arrangements and experience

as discussed above, sharing details of arrangements negotiated with external legal services providers

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the partnering of entities with high informed purchaser capabilities with those who have less experience to access expertise and build better purchasing practices

periodic performance surveys about external providers, with results aggregated by OLSC, and sharing of best practice material such as procurement templates and approaches to complex

matter management.

It should also be made clear, through the proposed charter for General Counsel (see Recommendation 2), that the role of General Counsel includes sharing information to support informed purchasing.

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Recommendations9. ROLE OF EXTERNAL LEGAL SERVICES PROVIDERSThat external legal services providers remain a critical component of the Commonwealth’s overall legal services delivery. Entities should have policies in place indicating the circumstances in which external legal services should be used, with reference to the statement of role and responsibilities, objectives and expertise of the in-house legal area.

10. PROCUREMENT OF EXTERNAL LEGAL SERVICESa) That the Commonwealth establish of a whole-of-government panel for procurement of external legal services. The panel would have the following features:

compulsory for NCCEs and opt-in for CCEs divided into a number of sub-panels on key topics informed by an assessment of the volume of

work available across the Commonwealth a framework that enables procurement off-panel in defined circumstances, recognising niche or

specialist needs, the value proposition of small providers who may not be suitable as panel providers and the importance of the Commonwealth maintaining knowledge about the broader legal services market

OLSC could grant exemptions from use of the panel in exceptional circumstances capable of being reopened to new providers in the event of an identified need for additional

providers, and entities could negotiate further discounts for large or volume work, but would be required to

report outcomes of negotiations to the panel managers for transparency.

The panel would be administered by Finance or AGD with an expectation that all major legal purchasers would participate in its establishment and management. OLSC would also conduct periodic performance surveys to support entity purchasing decisions and panel management.

b) That the arrangements for engaging counsel be reformed to:

re-establish a process for updating approved counsel rates every two years, on request, taking account of information submitted by the applying counsel and views from entities and AGS

update thresholds to take account of inflation, and allow entities with strong informed purchaser knowledge to negotiate one-off rates up to a

threshold through an exemption model.

Appendix 1 - Review MethodologyIntroduction On 27 October 2014 the Australian Government asked the Secretary of the Commonwealth Attorney-General’s Department (AGD) to undertake a review of Commonwealth legal services (the Review). The Review commenced on 1 July 2015. The Review was established to examine how legal services can be delivered most effectively and efficiently to the Commonwealth, focussing on ensuring high-quality and coordinated advice is provided to Government in the future.

Terms of Reference outlining the objectives and scope of the Review were approved by the Attorney-General and the Minister for Finance.

Mr David Borthwick AO PSM, was engaged to provide the Secretary with independent advice on the Review. The Secretary was also supported by a project team from within AGD.

Stakeholder Engagement StrategyDuring the planning phase of the Review, an analysis was undertaken to identify stakeholder groups with a variety of experience both as users and providers of Commonwealth legal services. A broad spectrum of entities across the Commonwealth, state and international jurisdictions, external legal services providers and industry were consulted (see Appendix 3). Stakeholders were kept informed of the progress of the Review and upcoming consultations via an email distribution list.

A range of consultation mechanisms were employed over the course of the Review. These included interviews with stakeholders, targeted forums and workshops, two issues papers, and a data collection survey.

InterviewsThe Review undertook 109 interviews with a wide range of stakeholders, including General Counsel from several Commonwealth entities, a selection of heads of Commonwealth entities, representatives bodies, experts in other jurisdictions and General Counsel from industry.

As Commonwealth entities perform a diverse range of functions and their requirements for legal services vary significantly, interviews were key to obtaining qualitative information and anecdotal evidence to inform the work of the Review and to understand specific agency needs and approaches. The perspective of heads of Commonwealth entities was sought to reflect on the role of legal services within a broader organisational and Commonwealth landscape.

Forums and Information SessionsThe Review held a series of 19 forums and information sessions to discuss the approach to the Review, distil complex issues and generate ideas that would help guide the direction of the Review. Forums were held with General Counsel, AGLN members and representatives of LSMUL firms. Forums and workshops were held in Canberra, Sydney and Melbourne to maximise stakeholder participation.

Focus groupsSix focus groups were conducted to bring together the expertise and experiences of specific stakeholders and stakeholder groups. These explored issues such as the experience of being a government lawyer, legal services issues specific to small to medium sized entities, issues specific to entities with regulatory functions and legal services procurement.

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High Level Working GroupThe High Level Working Group (HLWG) was established to act as an advisory committee for the Review. The HLWG did not have decision-making powers but served as a source of advice and guidance to the Review. The HLWG was chaired by the Secretary of AGD and its membership comprised experts from across all stakeholder groups, including General Counsel from departments and a regulatory entity, senior executives from within AGD and Finance, the Australian Government Solicitor, and private sector experts. The HLWG met four times over the course of the Review.

In addition to the above, the Review also engaged with professional groups, including the GCWG, the AGLN and the CCELN.

Research and Data CollectionPrevious ReportsThe Review has drawn from and built upon previous examinations of Commonwealth legal services arrangements. The two most significant previous reviews of Commonwealth legal services were the 1997 Report on the Review of the Attorney-General’s Legal Practice undertaken by Basil Logan, David Wicks QC and Stephen Skehill (the Logan Review)186 and the 2009, Report of the Review of Commonwealth Legal Services Procurement by Anthony S Blunn AO and Sibylle Krieger (the Blunn and Krieger Review).187

The Logan Review considered the needs of the Commonwealth for legal services, including the role of the former Attorney-General’s Legal Practice. The Blunn and Krieger Review examined practices for the procurement of legal services by the Commonwealth and how the Commonwealth could make best use of its in-house legal services.

Other reviews that have been undertaken relating to the provision of legal services to and by the Commonwealth include the:

2003 Review by Sue Tongue into the impact of the Judiciary Amendment Act 1999188 2005 Australian National Audit Office (ANAO) Review into legal services arrangements in the

Australian Public Service189 2009 Allen Consulting Group organisational audit of the Attorney-General’s Department190

2011 Lateral Economics Report into coordination of arrangements for the purchasing of legal services by Commonwealth agencies,191 and

2014 ANAO Review into the establishment and use of multi-use lists across agencies.192

Data Collection Survey The Review undertook a comprehensive data collection exercise to help build a more complete profile of lawyers employed by Commonwealth entities as well as a better understanding of how legal services are managed and structured. The data collection survey was designed to elicit both quantitative and qualitative responses. All 181 Commonwealth entities were approached and the Review received 96 responses (53.0%). The data collection survey collected valuable information about:

186 Logan, above n 18.187 Blunn and Krieger, above n 28.188 Tongue S, Report of a review of the impact of the Judiciary Amendment Act 1999 on the capacity of Government departments and agencies to obtain legal services and on the Office of Legal Services Coordination (June 2003). 189 Australian National Audit Office, above n 27. 190 Beale R, Organisational Audit of the Attorney-General’s Department: Final Report (2009).191 Lateral Economics, above n 40.192 Australian National Audit Office, Establishment and Use of Multi-Use Lists Across Agencies (26 June 2014) <https://www.anao.gov.au/sites/g/files/net616/f/AuditReport_2013-2014_54.pdf>.

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the legal services arrangements within Commonwealth entities including the size and structure of in-house legal areas

how and why external legal services are procured the training and professional development needs of government lawyers and whether services or resources are shared between Commonwealth in-house legal areas.

More detail on the data collection survey, as well as a summary of results, is in Appendix 2.

Issues PapersA major component of the Review’s public consultation strategy was the release of two Issues Papers which invited submissions from Commonwealth entities, private sector legal services providers and interested organisations and individuals. The Issues Papers were published on the AGD website and disseminated directly to stakeholders via an email distribution list.

Issues Paper One was released on 10 November 2015. This Issues Paper focused on overarching issues of relevance to the Review, the role of external legal services providers in the Commonwealth Legal Services market, and options for improving procurement of external legal services. The Review received 60 responses to Issues Paper One.

Issues Paper Two was released on 5 February 2016. This Issues Paper sought submissions on models for the provision of Commonwealth legal services, the role and structure of in-house legal areas, and coordination and collaboration across the Commonwealth. The Review received 65 responses to Issues Paper Two.

Commonwealth Legal Services Expenditure ReportThe Commonwealth Legal Services Expenditure Report (the Legal Services Expenditure Report) provides an overview of legal services expenditure across the Commonwealth. It has been published annually since 2009-10. The Review was informed by data reported in the Commonwealth Legal Services Expenditure Report. The data was used as a tool for understanding how entities direct legal services resources, and for identifying trends and patterns, and changes in entity expenditure across financial years. The Legal Services Expenditure Report is compiled by the Attorney-General’s Department based on information reported by Commonwealth entities as required by subparagraph 11.1(da) of the Directions.

Comparative analysis of legal services in international and Australian jurisdictionsWork was undertaken within AGD to complete a comparative analysis of models for the delivery of government legal services in both Australian state and territory jurisdictions and international jurisdictions. The Department of Foreign Affairs and Trade assisted by facilitating the collection of information from international counterparts.193 The Review was informed by this analysis.

The research covered how governments source legal services and the role of central providers, in-house legal areas and external legal services providers in the delivery of those services. The comparative analysis provided valuable information about the models for the delivery of legal services across jurisdictions.

193 Information about current arrangements was sought from all Australian jurisdictions and information was received from 20 foreign jurisdictions.

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Appendix 2 - Data Collection SurveyMethodologyOn 27 October 2015 a data collection survey, using the SurveyMonkey platform, was sent to 181 Commonwealth entities. A total of 96 responses were received, making a response rate of 53.0%.194 To elicit both quantitative and qualitative responses, the survey comprised of 33 questions using a mix of free text, multiple choice and yes/no formats. Where appropriate, questions were supported with definitions of key terms to help guide the respondent and ensure the consistency of the survey responses.

The survey was designed to gather data about Commonwealth legal services arrangements at a particular point in time as well as recent trends with respect to certain practices. For this reason some of the questions requested data ‘as at 30 June 2015’ or ‘over the last 12 months’.

The Review team was mindful of the diverse nature of the entities responding to the survey and sought to accommodate instances where a question might not be applicable to certain respondent entities due to their size and/or function. For example, although a total of 96 responses were received, only 73 of the respondent entities advised that they provided ‘in-house legal services’ and were therefore able to respond to survey questions about their in-house legal arrangements and practices. The term ‘in-house legal services’ was defined as the legal work undertaken by in-house lawyers either in a dedicated legal unit or by individual lawyers working within business lines, administrative support staff, paralegals, and General Counsel.195

Those entities that did not have an in-house legal area were unable to answer a number of questions relating to in-house legal arrangements. These respondents were guided by the Review team as to which questions they should attempt to answer to capture their experiences as purchasers of legal services and the management of legal risk.

In some cases where a question required the respondent to choose one or more responses and a respondent entity did not choose a response but provided information in a free text form, the Review team contacted the entity to either seek clarification of their responses or judgement was applied, based on the text answer, to select an appropriate response for that entity. For example, if the respondent entity indicated that its employees were not APS employees and the question asked the respondent to elect an APS level, the APS level that accorded the closest to the commensurate salary or level of responsibilities was selected.

Some questions provided the respondent with multiple choices to select from an ’other’ category with free text space to provide explanatory comment. In circumstances where the free text explanation provided by the respondent corresponded closely with one of the multiple choice categories, the Review team amended the response accordingly.

Based on Australian Public Service Employment Database (APSED) and Commonwealth Legal Services Expenditure Report material, the Review Team was able to identify that most of the non-responding entities were small to medium in size and did not have substantial legal service expenditures.

194 Only one survey per entity was submitted.195 This definition is consistent with the approach that entities are asked to take in relation to reporting legal services expenditure to OLSC. See Attorney-General’s Department, Guidance Note 8: Reporting of Legal Services Expenditure (2015) < https://www.ag.gov.au/LegalSystem/LegalServicesCoordination/Documents/Reporting-of-Legal-Services-Expenditure.pdf>.

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Snapshot of Survey ResultsKey observations about Commonwealth entities with in-house legal practices As at 30 June 2015, the respondent entities identified 2,107 FTE working in in-house legal areas. Of these, 1,775 FTE are lawyers and 86.5% of lawyers are employed at the APS5 to EL2 levels, with the remainder employed at either below the APS5 level or at the SES level.

Of the 73 respondent entities that reported having an in-house legal area:

The largest clusters of lawyers working in in-house legal areas are located in the ACT (50.8%), NSW (20.2%) and Victoria (16.0%).

8.2% of respondents have lawyers providing in-house legal services located in regional or remote locations.

As at 30 June 2015, 37 entities (50.7%) employed non-ongoing FTE in their in-house legal areas. 74.0% employ legal support staff196 and these staff are predominantly at the APS3-4 level. 54.8% had a retention rate of 91-100% in relation to ongoing employees providing in-house legal

services between 1 July 2014 to 30 June 2015. 93.2% report significant issues to the entity’s executive. 65.8% use IT solutions to assist in managing casework, legal advices and precedents/templates. 75.3% have written internal policies, guidance materials or procedures in relation to the role and

obligations of a lawyer in their entity. 80.8% require practicing certificates for some or all staff. 26.0% provide a structured professional development programme, tailored for its legally qualified

employees.197

Key observations about how Commonwealth entities use legal services A total of 96 entities responded to the survey and of these:

57.3% have written internal policies, guidance materials or procedures in relation to deciding whether to seek legal services externally.

80.3% authorise an EL2 or SESB1 to make the decision to engage external legal services providers. 18.8% have parcelling arrangements for legal services. Those entities with large external legal

spend were more likely to have parcelling arrangements. 6.3% piggyback on parcels arranged by other entities.

196 By ’legal support staff’ the Review means any employees who are undertaking administrative or clerical tasks to support the legal work undertaken by lawyers in the in-house legal services area.197 By ’structured’ the Review means a defined programme tailored for legally qualified employees that identifies and provides critical training for legal professionals.

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Survey Data TablesSurvey respondents with in-house legal servicesThe following tables relate only to Commonwealth entities with in-house legal services. 198

Table 1 - Which of these statements best represents the organisational structure of your in-house legal unit?

Response Number of respondents Percentage

A legal branch within a division with non-legal functions 16 21.9%

A legal division or group with multiple branches that perform

different but exclusively legal functions 19 26.0%

A small legal unit (1-3 people) within a non-legal branch 21 28.8%

Legal team/s within a branch with non-legal functions 16 21.9%

Other 1 1.4%

Total 73 100%

Table 2 - Total FTE count at 30 June 2015 by size of in-house legal area and size of agency

Total FTE in in-house area (lawyers and non-lawyers)

Number of respondents by size of agency199

Extra Small Small Medium Large

Extra Large

APSED data not available Grand Total

0.1-2 3 7 3 1 142.1-5 1 3 5 3 125.1-10 1 5 4 1 1 1210.1-20 1 5 3 920.1-50 1 6 8 1550.1-100 5 1 1 7100.1-200 1 2 3200 + 1 1Grand Total 5 17 23 22 3 3 73

Table 3 - Breakdown of FTE by APS level of the lawyers providing in-house legal services as at 30 June 2015

APS Level Number of lawyers Percentage

SESB2 20.0 1.1%

SESB1 90.8 5.1%

EL2 497.6 28.0%

EL1 629.6 35.5%

APS5–6 407.7 23.0%

APS3–4 96.3 5.4%

APS1–2 3.0 0.2%

Sum of Non-APS 30.2 1.7%

Total 1,775.0 100%

198 The data in these tables was filtered by respondent entities who indicated that they had in-house legal services.199 The Review synthesized a definition of entity sizes based on publications by the Australian Public Service Commission which included State of the Service Reports. The Review defined entity sizes as: Extra small: 1-100 employees; Small: 101-250 employees; Medium: 251-1000 employees; Large: 1001-10,000 employees; and Extra large: 10,001 or more employees. In this instance, partial FTE have been rounded to the nearest whole figure.

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Table 4 - Location of the lawyers providing in-house legal services as at 30 June 2015

Location Number of lawyers PercentageACT 901.8 50.8%NSW 358.0 20.2%VIC 283.3 16.0%QLD 129.7 7.3%WA 37.7 2.1%SA 24.4 1.4%TAS 8.7 0.5%NT 0.00 0.0%Location not disclosed 31.5 1.8%Total 1775.0 100%

Table 5 - Were any of the lawyers providing in-house legal services located in regional or remote locations as at 30 June 2015?


Yes 6 8.2%

No 67 91.8%

Total 73 100%

Table 6 - The number of employees providing in-house legal services who were non-ongoing employees as at 30 June 2015

Dataset A – count of non-ongoing FTE by respondent entity

Number of non-ongoing FTE Number of respondents0.1-1 181.1-2 112.1-5 65.1-20 320 + 2Total 40

Dataset B – total number of non-ongoing FTE

There were 203.0 non-ongoing FTE employees providing in-house legal services across 40 respondent entities at 30 June 2015.

Table 7 - Retention rate of ongoing employees providing in-house legal services from 1 July 2014 to 30 June 2015


0-10% 3 4.1%

31%-50% 4 5.5%

51%-70% 2 2.7%

71%-80% 5 6.8%

81%-90% 7 9.6%

91%-100% 40 54.8%

Agency does not collect this data 12 16.4%

Total 73 100%

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Table 8 - Entities with legal support staff


Yes 54 74.0%

No 19 26.0%

Total 73 100%

Table 9 - Breakdown of FTE by APS level of legal support staff

APS level - support staff FTE support staff Percentage

SESB2 0 0.0%

SESB1 0 0.0%

EL2 15.6 4.0%

EL1 43.4 11.3%

APS5-6 128.6 33.3%

APS3-4 178.3 46.2%

APS1-2 20.1 5.2%

Total 385.9 100%

Table 10 - Funding arrangements for in-house legal services


An allocation from the departmental budget60 82.2%

Departmental budget supplemented by another business line

budget eg. funding for additional staff to meet discrete program

work. 15 20.5%

Internal cost recovery (billing arrangements) 4 5.5%

Other 6 8.2%

*Note: total is greater than 73 as respondents were able to select multiple answers. Percentages have been calculated based on the total of 73 respondents.

Table 11 - Does your in-house legal unit have written internal policies, guidance materials or procedures in relation to:

a) the role and obligations of a lawyer in your agency?


Yes 55 75.3%

No 18 24.7%

Total 73 100%

b) the process for assuring the quality of legal work (eg. second counsel)?


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Yes 51 69.9%

No 22 30.1%

Total 73 100%

c) the identification, reporting or management of significant issues (as defined in paragraph 3 of the Legal Services Directions 2005)?


Yes 44 60.3%

No 29 39.7%

Total 73 100%

Table 12 - Does the in-house legal unit report matters that are, or are potentially, significant issues (as defined in paragraph 3 of the Legal Services Directions 2005) to the agency Executive?


Yes 68 93.2%

No 5 6.8%

Total 73 100%

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Table 13 – in the last 12 months has your agency’s in house legal unit:

a) seconded out/arranged temporary transfers of staff to other in-house legal units?


Yes 13 17.8%

No 60 82.2%

Total 73 100%

b) engaged a secondee/arranged a temporary transfer from another agency’s in-house legal unit?


Yes 17 23.3%

No 56 76.7%

Total 73 100%

c) engaged any outposted or seconded lawyers from an external provider (including AGS) into your in-house legal unit?


Yes 33 45.7%

No 40 54.8%

Total 73 100%

Table 14 - Use of any IT solutions (software and applications) to manage casework, legal advices or precedents/templates


Yes 48 65.8%

No 25 34.2%

Total 73 100%

Table 15 - Requirement to hold practising certificates?


Yes, all legal staff are required to hold practicing certificates 40 54.8%

Yes, some legal staff are required to hold practicing certificates 19 26.0%

No, staff are not required to hold practicing certificates 14 19.2%

Total Respondents 73 100%

Table 16 - Respondents with a structured professional development programme for in-house lawyers


Yes 19 26.0%

No 54 74.0%

Grand Total 73 100%

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Table 17 - Professional development provided for in house lawyers in the last 12 months

Total responses for each option* Number of agencies Percentage

a. in-house training provided by in-house staff 48 65.8%

b. in-house training provided by external providers 48 65.8%

c. approved attendance at external seminars that qualify for CPD

points (include free and paid seminars) 70 95.9%

d. agency has not provided professional development in the last

12 months. 3 4.1%

*Note: total number of responses is greater than 73 as respondents were able to select multiple answers. Percentages have been calculated based on the total of 73 respondents.

All survey respondentsThe following tables relate to all Commonwealth entities and their use of legal services.200

Table 18 - Respondents with written internal policies, guidance materials or procedures in relation to deciding whether to seek legal services externally

Response Number of Respondents Percentage

Yes 55 57.3%

No 41 42.7%

Total 96 100%

Table 19 - Decision-maker in relation to engaging an external legal services provider


Senior officer in a business line 25 26.0%

Senior officer in the in-house legal unit 35 36.5%

Both of the above - usually a joint decision between in-house legal unit and business line 34 35.4%

Did not respond to the question 2 2.1%

Total 96 100%

Table 20 - Minimum APS level of an officer empowered to make the decision that an external legal services provider should be used

APS level Number of respondents Percentage

SESB2 5 5.2%

SESB1 30 31.3%

EL2 47 49.0%

EL1 11 11.5%

APS 6 or below 0 0%

200 The data in the following tables contains the responses of the total 96 respondent entities which include entities that do not have in-house legal areas.

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Staff are not APS employees 3 3.1%

Total 96 100%

Table 21 - How are external legal services usually funded in your agency?

Response Number of respondents PercentageIn-house legal unit budget 34 35.4%

Relevant business line area budget 33 34.4%

Other 29 30.2%

Total 96 100%

Table 22 - Respondents with parcelling arrangements for external legal services


Yes 18 18.8%

No 78 81.3%

Total 96 100%

Table 23 - Respondents who piggyback on parcels arranged by other agencies


Yes 6 6.3%

No 90 93.8%

Total 96 100%

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Text of data collection survey and covering noteThe following is a copy of the data collection survey provided to 181 entities for the purposes of the data collection survey for the Review.

Thank you for taking the time to complete this survey. Please note that only one survey per agency should be submitted. This survey should be cleared, at a minimum, by the General Counsel or the most senior legal officer in your department/agency.

Data collection and the canvassing of stakeholder’s views more generally about how legal services are managed and structured across the Commonwealth is not limited to this survey. Several Issues Papers will be released and the Secretary's Review team will continue to undertake more targeted consultations on a range of issues throughout the Review process.

This survey will enable the Secretary's Review of Commonwealth Legal Service to collect data about:

the legal services arrangements in your department/agency how and why external legal services are procured the professional development of government lawyers and how your agency might share services or resources with other agencies.

Many of the questions in this survey will refer to "in-house legal services". By this term we mean the legal work undertaken by in-house lawyers either in a dedicated legal unit or by individual lawyers working within business lines, administrative support staff, paralegals, and General Counsel. This definition is consistent with the approach that agencies are asked to take in relation to reporting legal services expenditure to the Office of Legal Services Coordination (Guidance Note 8: Office of Legal Services Coordination).

The final question in this survey is an opportunity to provide more context and clarification about your responses where you consider this is important.

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General information about the entity 1. Enter agency name

Part A: In-house legal services arrangementsThe questions below refer to "in-house legal services". By this term we mean the legal work undertaken by in-house lawyers either in a dedicated legal unit or by individual lawyers working within business lines, administrative support staff, paralegals, and General Counsel. This definition is consistent with the approach that agencies are asked to take in relation to reporting legal services expenditure to the Office of Legal Services Coordination (Guidance Note 8: Office of Legal Services Coordination).

Organisational Structureheaded by a Senior Executive Service Band 1 and a team or section would be headed by an Executive Level 2.

2. Which of these statements best represents the organisational structure of your in-house legal unit?

Multiple choice: <select only one option>

a. a legal division or group with multiple branches that perform different but exclusively legal functions

b. legal branch within a division with non-legal functionsc. legal team/s within a branch with non-legal functionsd. a small legal unit (1-3 people) within a non-legal branche. Other (please describe)

[FREE TEXT RESPONSE]

3. With regard to the provision of in-house legal services in your agency, what was the total FTE count at 30 June 2015?


By “lawyer” we mean a legally qualified employee (ongoing or non-ongoing) undertaking legal work either as an in-house lawyer in a dedicated legal unit, or a lawyer undertaking legal work in a business line. Please do not include staff seconded from AGS or private firms.

4. Provide a breakdown of FTE by APS level of the lawyers providing in-house legal services as at 30 June 2015.

SESB2 - <Insert digits>SESB1 - <Insert digits>EL2 - <Insert digits>EL1 - <Insert digits>APS5-6- <Insert digits>APS3-4 - <Insert digits>APS1-2 - <Insert digits>

5. What was the location of the lawyers providing in-house legal services as at 30 June 2015? (enter FTE against relevant location/s)

ACT - <Insert digits>NSW - <Insert digits>QLD - <Insert digits>VIC - <Insert digits>NT - <Insert digits>SA - <Insert digits>WA - <Insert digits>TAS - <Insert digits>

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6. As at 30 June 2015, were any of the lawyers providing in-house legal services located in regional or remote locations?

Y/N

By “non-ongoing employee” we mean an APS employee engaged for either a specified term or for the duration of a specified task or for duties that are irregular or intermittent as mentioned in ss. 22(2)(b) and (c) of the Public Service Act 1999.

7. Of the total FTE, how many employees providing in-house legal services were non-ongoing employees at 30 June 2015?

[FREE TEXT RESPONSE] <Insert digits>

Retention rate is the percentage of people who were on staff in the in-house legal services unit and remained there from the start to the end of a time period. Please include people who have substantive positions in the in-house legal unit but are seconded to or on temporary assignment in a business line area to perform legal work.If, during this time period, the in-house legal services unit was affected by a restructure or a Machinery of Government change that would impact on the retention rate, then please tell us about this in the free text space.

8. What was the retention rate of ongoing employees providing in-house legal services from 1 July 2014 to 30 June 2015?


0-10%11%-30%31%-50%51%-70%71%-80%81%-90%91%-100%Agency does not collect this data


By "legal support" staff we mean any employees who are undertaking administrative or clerical tasks to support the legal work undertaken by lawyers in the in-house legal services unit.

9. Are there any legal support staff in your agency?

Y/N <if no, go to question 11>

10. If yes, please provide a breakdown of FTE by APS level of the legal support staff.

APS1-2 - <Insert digits>APS3-4 - <Insert digits>APS5-6 - <Insert digits>EL1 - <Insert digits>EL2 - <Insert digits>SESB1 - <Insert digits>SESB2 - <Insert digits>

GovernanceFor the question below, an internal cost recovery arrangement can include arrangements whereby:

a business line area makes a single prepayment to the in-house legal services area based on forecasted demand with top ups, or

the business line area pays per usage of the in-house services as they go.

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11. Which of these statements best describes the funding arrangements for in-house legal services in your department/agency?

Please select all that apply:

a. an allocation from the departmental budgetb. departmental budget supplemented by another business line budget eg. funding for additional

staff to meet discrete program work.c. internal cost recovery (billing arrangements)d. other, please describe


The relationships that General Counsel have with the Executive of their department/agency vary across the Commonwealth. The Review would like to understand the diversity of these arrangements and the extent to which the most senior legal officer/s might influence decision-making and the general strategic direction of the agency.

12. In terms of reporting lines, relationship with the Executive, and governance arrangements, how does your General Counsel/most senior legal officer contribute to your agency's direction and decision-making at the highest levels? (If the General Counsel is a member of the Senior Management Committee or Executive Committee/Board, please indicate this in your response)


Part B: Policies and proceduresThe review will examine the efficiency and effectiveness of in-house legal services. Gathering information about the approaches that in-house legal areas apply to ensure the quality and accuracy of legal work is an important component of this review. Data collection about this aspect of in-house legal services is not limited to this survey and will be the subject of more targeted agency and stakeholder consultations in the near future.

13. Does your in-house legal unit have written internal policies, guidance materials or procedures in relation to:

a. the role and obligations of a lawyer in your agency Y/N

b. the process for assuring the quality of legal work (eg. second counsel)?Y/N

c. the identification, reporting or management of significant issues (as defined in paragraph 3 of the Legal Services Directions 2005)Y/N

d. deciding whether to seek legal services externallyY/N

14. Does the in-house legal unit report matters that are, or are potentially, Significant Issues (as defined in paragraph 3 of the Legal Services Directions 2005) to the agency Executive?

Y/N

15. How is the final decision in relation to engaging an external legal services provider usually made in your agency?


a. Senior officer in the in-house legal unitb. Senior officer in a business linec. Both a and b - usually a joint decision between in-house legal unit and business line

The question below goes to the level of seniority of the officers involved in making the decision to use an external legal services provider prior to going through the formal procurement process.

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16. What is the minimum APS level of an officer (either in the in-house legal unit or the business line) empowered to make the decision that an engage external legal services provider should be used?


a. SESB2b. SESB1c. EL2d. EL1e. APS6 or below

Part C: External legal services17. How are external legal services usually funded in your agency?


a. In-house legal unit budgetb. Relevant business line area budgetc. Other arrangement (please describe)


In responding to the question below, please consider both the types of legal work eg. mediation, litigation or advice, and subject matter areas eg. administrative law, employment law or Intellectual Property law.

18. Describe the types of legal services that your agency generally sources externally, not including tied work, and why?


Part D: Legal services multiuse list and parcelling arrangementsUnder the Legal Services Multi Use List (LSMUL), agencies can ‘parcel’ certain aspects of their legal work by approaching external service providers to submit detailed quotes for parcels of legal services that, individually, may be valued at or above the relevant threshold amount. Parcels may range from a specific task or matter, to broader categories of work required over a period of time.

19. Does your agency currently have any parcelling arrangements for external legal services?


20. If yes, please provide the following information:

the scope, subject area, and type of work of the parcel/s their duration (in years) how many law firms are on each parcel


By “piggybacking” we mean an arrangement whereby an agency that has an established parcel has made the parcel or standing offer arrangement available to other agencies.

21. Do other agencies piggyback on your agency's parcelling arrangements? If so, please advise which agency/ies and the type of parcel.

[FREE TEXT]

22. Does your agency piggyback on parcels arranged by other agencies?


23. If yes, please advise which agency/ies and the scope, subject matter area, and type of work of the parcel.


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Part E: Coordination and collaboration24. In the last 12 months, has your agency's in-house legal unit:

a. seconded out/arranged temporary transfers of staff to other in-house legal units?Y/N

b. engaged a secondee/arranged a temporary transfer from another agency's in-house legal unit? Y/N

c. engaged any outposted or seconded lawyers from an external provider (including AGS) into your in-house legal unit?Y/N

25. Does your in-house legal unit use any IT solutions (software and applications) to manage its casework, legal advices or precedents/templates?


By “brand name”, we mean the name given to the IT solution by the company that developed the product, rather than the local name used by your agency/department to refer to it.

26. If yes, what is the brand name of the IT product(s) and briefly describe how it is used.


By “shared services” we mean one agency providing legal services to other agencies, and where funding and resourcing of legal services is shared or recovered from the agency receiving these services.

27. If your agency provides legal services to, or obtains legal services from, other agencies on a shared services basis, please:

name the agencies and briefly describe the scope of the arrangement

[FREE TEXT] <if no, go to question 28>

Part F: ProfessionalisationThe questions in this section are intended to identify agencies that may impose a requirement or condition on all or some of their legally qualified employees to hold current practising certificates. Requiring a person to have a practising certificate would be different to the agency generally being supportive of legally qualified staff having practicing certificates.

28. Does your in-house unit require any staff to hold practising certificates?


a. Yes, all legal staff are required to hold practicing certificatesb. Yes, some legal staff are required to hold practicing certificatesc. No, staff are not required to hold practicing certificates

29. If you have responded yes at a or b, please explain the reason for, and scope of the requirement.


By “structured” we mean a defined programme tailored for legally qualified employees that identifies and provides critical training for legal professionals.

30. Do you have a structured professional development programme for lawyers in your agency?


31. If yes, please describe:

what that professional development programme comprises of, and whether it seeks to cover all the legal professional development needs of your in-house lawyers


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32. If your agency has provided professional development for its in-house lawyers in the last 12 months, was this:

Select all that apply

a. in-house training provided by in-house staffb. in-house training provided by external providers or c. approved attendance at external seminars that qualify for CPD points (include free and paid

seminars)d. agency has not provided professional development in the last 12 months.

Part G: Additional information33. If you wish to provide information to clarify any of your responses in the survey, please provide below

and specify what question in the survey that clarification refers to.


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Appendix 3 - Entities consulted Commonwealth GovernmentThis list only includes entities consulted through a one-on-one interview. A number of additional entities were consulted through the forums, information sessions and focus groups (listed below), or provided submissions on the Issues Papers.

Administrative Appeals Tribunal (AAT) Airservices Australia Attorney-General's Department (AGD) Australian Broadcasting Corporation (ABC) Australian Competition and Consumer Commission (ACCC) Australian Federal Police (AFP) Australian Financial Security Authority (AFSA) Australian Government Legal Network – Board (AGLN) Australian Government Solicitor (AGS) Australian Human Rights Commission (AHRC) Australian Prudential Regulation Authority (APRA) Australian Public Service Commission (APSC) Australian Security Intelligence Organisation (ASIO) Australian Securities and Investments Commission (ASIC) Australian Taxation Office (ATO) Comcare Commonwealth Ombudsman Commonwealth Scientific and Industrial Research Organisation (CSIRO) Department of Agriculture and Water Resources Department of Communications and the Arts Department of Defence Department of Education and Training Department of Employment Department of Environment Department of Finance Department of Foreign Affairs and Trade (DFAT) Department of Health Department of Human Services (DHS) Department of Immigration and Border Protection (DIBP) Department of Industry, Innovation and Science Department of Infrastructure and Regional Development Department of the Prime Minister and Cabinet (PM&C) Department of Social Services (DSS) Department of Veteran's Affairs (DVA) Fair Work Ombudsman (FWO) Federal Court of Australia General Counsel Working Group (GCWG) Legal Practice Managers Forum National Offshore Petroleum Safety and Environmental Management Authority (NOPSEMA) Office of Parliamentary Counsel (OPC)

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Office of the Commonwealth Attorney-General Solicitor-General, Mr Justin Gleeson SC The Treasury

Private Legal SectorThis list only includes stakeholders consulted through a one-on-one interview. A number of other private legal sector providers were consulted through the focus groups (listed below), or provided submissions on the issues papers.

Law Council of Australia Law Firms Australia

Other Jurisdictions ACT Government (Justice and Community Safety Directorate) Department of Justice (New South Wales) Transport for NSW Department of Justice (Victoria) Queensland Crown Law and Legal Service Coordination Unit The Solicitor-General of Singapore and Attorney-General's Chambers of Singapore Victorian Government Solicitors Office Information was provided by the following international jurisdictions:

Belgium Canada European Union France Ireland Israel Italy Japan Malaysia Mexico New Zealand Norway Republic of Korea South Africa Spain Sweden Thailand The Netherlands United Kingdom United States of America

Industry and Other British Petroleum (BP) National Australia Bank (NAB) Woolworths Mr Dale Boucher – former head of Australian Government Solicitor

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Mr Laurie Glanfield – former Director-General of NSW Department of Attorney-General and Justice

Mr Tony Blunn AO – co-author of the Blunn and Krieger Review

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Forums, Information Sessions and Focus GroupsNo. Topic Date and Location Stakeholders attended

1 Information Session - AGS 10 August 2015, Sydney, NSW AGS officers

2 Information Session – Sydney entities

10 August 2015, Sydney, NSW AAT, Australia Council for the Arts Australian Crime Commission (ACC), Australian Communications and Media Authority (ACMA), AFP, Australian Film, Television and Radio School (AFTRS), AHRC, APRA, Asbestos Safety Eradication Agency, ATO, Department of Employment, Export Finance and Insurance Corporation, Fair Work Building and Construction (FWBC), FWO, Reserve Bank of Australia (RBA), Screen Australia.

3 Information Session - General Counsel

22 September 2015,Teleconference

ACMA, Australian Council for the Arts, AFTRS, AHRC, Australian Nuclear Science and Technology Organisation (ANSTO), APRA, Great Barrier Reef Marine Park Authority (GBRMPA), National Disability Insurance Agency (NDIA), IP Australia, Department of Communications, FWBC, Fair Work Commission, FWO, Independent Hospital Pricing Authority, National Broadband Network (NBN), Office of the Australian Information Commissioner (OAIC), Screen Australia, RBA, Tertiary Education Quality and Standards Agency (TEQSA).


24 September 2015, Canberra, ACT ACCC, AFP, AGS, Australian Pesticides and Veterinary Medicines Authority (APVMA), APSC, Australian Transaction Reports and Analysis Centre (AUSTRAC), Australian Sports Commission, Clean Energy Regulator, Comcare, CrimTrac, DFAT, Department of Infrastructure, Department of Parliamentary Services, Food Standards Australia, National Health and Medical Research Council, National Library of Australia, National Museum of Australia, Safe Work Australia and Workplace Gender Equality Agency.

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No. Topic Date and Location Stakeholders attended


25 September 2015, Canberra, ACT ACC, Australian Electoral Commission (AEC), Australian Fisheries Management Authority (AFMA), AGS, Australian Sports Anti-Doping Authority (ASADA), ASIO, Australian Transport Safety Bureau (ATSB), Civil Aviation Safety Authority, Commonwealth Director of Public Prosecution (CDPP), Commonwealth Ombudsman, Department of Environment, DHS, PM&C, Murray-Darling Basin Authority, National Archives of Australia (NAA), National Blood Authority, National Film and Sound Archive.

6 Focus Group - Being a Government Lawyer

2 November 2015, Canberra, ACT ACCC, APVMA, APSC, ATO, AGD – Office of International Law, AGD – Office of Corporate Counsel, Comcare, Department of Agriculture, Department of Communications, Department of Defence, Department of Education, Department of Employment, Department of Finance, DFAT, DHS, Murray-Darling Basin Authority, National Museum of Australia.

7 Focus Group - Being a Government Lawyer

6 November 2015, Canberra, ACT AFSA, ASIO, ATO, Commonwealth Ombudsman Department of Industry, DIBP, Department of Infrastructure, DSS, Department of Environment, Department of Health, PM&C, DVA, NAA, Australian Sports Commission, Screen Australia.

8 Forum - AGLN Members 10 November 2015, Canberra, ACT ACCC, AFP, CrimTrac, Department of Defence, Department of Employment, Department of Finance, DFAT, Department of Health, DHS, DIBP, Department of Industry, DSS, PM&C, The Treasury, Safe Work Australia.

9 Forum – Law Firms on the LSMUL 2 December 2015, Canberra, ACT Ashurst, AGS, Clayton Utz, DLA Piper, HWL Ebsworth Lawyers, Keypoint Law, King and Wood Mallesons, Maddocks, Minter Ellison, Sparke Helmore.

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10 Forum - Corporate Commonwealth Entitles Legal Network

3 December 2015, Melbourne, VIC ABC, Australian Hearing, Australian Institute of Marine Science (AIMS), ANU, ANSTO, Australian Rail Track Corporation, Comcare, CSIRO, EFIC, Future Fund, NDIA

11 Forum – Law Firms on the LSMUL 4 December 2015, Melbourne, VIC Aitken Partners, Ashurst, AGS, Corrs, DLA Piper, FOI Solutions, Gadens, Griffith Hack, HWL Ebsworth, Lander and Rogers, Maddocks, Piper Alderman, Sparke Helmore.

12 Forum - AGLN Members 4 December 2015, Melbourne, VIC Australian Charities and Not-for-profits Commission, ACCC, AIMS, ATO, Comcare, FWBC.

13 Focus Group – Whole-of-Government Panels

10 December 2015, Canberra, ACT ACCC, Airservices Australia, Department of Defence Department of Employment, Department of Finance, DHS, DIBP, DSS.

14 Forum – Law Firms on the LSMUL 18 December 2015, Sydney, NSW Allygroup, AGS, Baker and McKenzie, Colin Biggers and Paisley, Curwoods Lawyers, Dibbs Barker, Gilbert + Tobin, Herbert Smith Freehills, Hicksons, Holman Webb Lawyers, Jones Day, Lander and Rogers, Makinson d'Apice Lawyers, MatthewsFolbigg Lawyers, Molnan Webb, Piper Alerman, Sparkle Helmore Lawyers, TressCox Lawyers.

15 Forum - AGLN Members 18 December 2015, Sydney, NSW Austrade, AAT, ACC, AHRC, AGD, ASQA, ATO, Department of Environment, Department of Communications, DHS, Department of Infrastructure, FWBC, RBA.

16 Focus Group – Small and Medium Agencies

3 February 2016, Canberra, ACT Austrade, AFSA, AIMS, APSC, Australian Radiation Protection and Nuclear Safety Agency, ASADA, ATSB, Clean Energy Regulator, National Blood Authority, Screen Australia.

17 Focus Group - Agencies with regulatory functions

11 February 2016, Canberra, ACT ACCC, ACMA, Airservices Australia ASIC, ATO, CASA, FWO

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18 Information Session - Corporate Commonwealth Entitles Legal Network

17 March 2016, Sydney, NSW ABC, AFTRS, AGS, ASC P/L, Australia Council for the Arts, Australian Commission on Safety and Quality in Health Care, Australian Hearing, AHRC, Companies Auditors and Liquidators Disciplinary Board, CASA, CSIRO, Department of Finance, Future Fund, Independent Hospital Pricing Authority, Indigenous Business Australia, NDIA, NOPSEMA, Parks Australia, SBS, Wine Australia, Screen Australia

19 Information Session - Corporate Commonwealth Entitles Legal Network

21 July 2015, Canberra, ACT ABC, AFTRS, AGS, AIMS, ANU, APRA, ANSTO, ASC P/L, Australia Council, Australia Grape and Wine Authority, CASA, Comcare, CSIRO, Food Standards Australia New Zealand, Future Fund Management Agency, Grains Research and Development Corporation, Indigenous Business Australia, Murray-Darling Basin Authority, National Film and Sound Archive, National Library of Australia, National Museum of Australia, NDIA, NOPSEMA, Parks Australia, SBS, Screen Australia

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Appendix 4 - Review Recommendations1. ESTABLISHMENT OF THE AUSTRALIAN GOVERNMENT LEGAL SERVICE That an Australian Government Legal Service (AGLS) be established to support coherent and consistent legal services across the Commonwealth. All lawyers in Commonwealth entities, including AGS lawyers, would be members of the AGLS but also remain employees of their entity. The AGLS would:

have the primary purpose of supporting the delivery of high quality and joined-up legal services across the Commonwealth and its entities

facilitate information sharing, collaboration and networking across Commonwealth entities at all levels

develop and circulate information and guidance on legal and practice management issues, including engagement of external providers

develop and implement AGLS professional standards, and coordinate core training programs for AGLS staff.

The AGLS would be supported through a dedicated team in OLSC.

2. ROLE OF GENERAL COUNSELa) That the role of General Counsel should include:

responsibility for identifying and contributing to the coordinated management of whole-of-government issues

a leadership role on coordination of legal issues and services in the portfolio, and responsibility for sharing information across the Commonwealth, including on informed purchasing

and good in-house practice.

The expanded role would be supported through a charter for General Counsel to be sponsored by the Secretary of AGD.

b) That all General Counsel across the Commonwealth would have responsibility for leading their entity’s engagement in the AGLS, supporting their entity head to ensure their entity’s compliance with the Directions and managing any non-compliance.

3. ROLE OF AGSThat the role of AGS be redefined as a centre of excellence within the AGLS. Its defined priorities will be the delivery of high quality legal services in the areas of tied work, complex, systemic or precedential issues for the Commonwealth and Commonwealth-specific areas of law. The scope of these defined priorities will be set by the Secretary of AGD. As part of this:

AGS would operate on a cost-recovery basis only and would no longer seek to make a profit on non-tied work

the Secretary of AGD would review AGS’ cost structure every two years and any increase in costs would need to be approved by the Secretary with advice from an independent expert, and

AGS would invest in legal capability in areas directly connected to its defined priorities.

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4. ROLE OF THE OFFICE OF LEGAL SERVICES COORDINATION (OLSC)a) That the role of OLSC be focused on the following priorities:




b) In the context of OLSC’s priorities, its key functions should be:

supporting the Australian Government Legal Service (Recommendation 1) supporting the significant legal issues process coordinating and disseminating critical information (Recommendations 5 and 10) together with the Department of Finance, managing the legal services panel (Recommendation 10) supporting the AGD Secretary in administration of the charter for General Counsel

(Recommendation 2), and administering the Legal Services Directions with comprehensive guidance material and a risk

management based approach to compliance.

c) To support the objectives at paragraph a), the Legal Services Directions should be reviewed and simplified. Amendments should include but are not limited to the following:

reconsideration of the current distinctions based on the PGPA Act so that the Directions apply generally to CCEs

increasing the value threshold for when external advice is required on monetary claims expanding the range of powers that can be exercised by OLSC, and other amendments to implement recommendations of the Review, including in relation to sharing

knowledge (Recommendation 5), tied work (Recommendation 6) and procurement (Recommendation 10).

d) To ensure OLSC has the skills and engagement necessary to deliver on these priorities, a dedicated secondment program of officers from in-house legal areas and AGS to OLSC should be implemented to improve knowledge and skills in OLSC and across the Commonwealth.

e) That OLSC receive the resources required to deliver the above priorities and functions.

5. SHARING KNOWLEDGEa) That AGD, through OLSC, should establish a central database of legal advice about issues of broader

relevance to Commonwealth entities. The database would include advice from AGS, other external providers and in-house lawyers. Features of the database would include:

incremental establishment, with priorities to be identified in consultation with General Counsel administering entities (ie those having carriage of the substantive legal issue) would have an

opportunity to check advice being uploaded and could request removal of out-of-date or incorrect advice

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primarily rely on capturing existing advice, but where a critical gap is identified, the administering entity would be asked to commission advice, and

to protect the integrity of the database:

access would only be available to government lawyers with a need to know as identified by their entity or General Counsel, and

all government lawyers with access would be required to undertake training and sign a terms of use agreement, including an obligation of confidentiality and acknowledgement that material should not be relied upon without consideration of accuracy, currency or applicability to the specific circumstances.

b) Following implementation of a central database of legal advice, that AGD should establish a database or website for the sharing of templates, guidance material and other documents that do not attract legal professional privilege. This would involve:

incremental establishment, based initially on existing material on priority topics a platform for entities to share their own documents or templates, and where applicable, templates or policy documents developed through AGLS networks.

6. TIED WORKThat tied work remains a critical mechanism for ensuring a consistent and coherent legal position in Commonwealth legal work. The following improvements to the scope and mechanisms for delivering tied work should be implemented:

Expand categories of tied work to include significant or precedential issues arising from:

Freedom of Information Act 1982 Public Governance, Performance and Accountability Act 2013 Public Service Act 1999 Public Interest Disclosure Act 2013 Privacy Act 1988 Machinery of Government changes, and public interest immunities.

Where a tied issue arises in a legal matter but is not the central issue in the matter, the assumption should be that the instructing entity or entities should have an option that non-tied aspects of the work be performed by the existing provider. This would be supported by a standard protocol prepared by OLSC for managing these matters.

Where multiple tied providers exist, arrangements should be clarified to provide a simpler path for clients and ensure consistency of advice.

AGD’s Office of International Law would cease charging for tied international legal services (other than for international litigation, where the entity with responsibility for the subject matter would cover the cost.)

In the event of any disagreement on whether a matter is tied, OLSC is the decision maker.

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7. IN-HOUSE LEGAL AREASThe structure and role of each in-house legal area should primarily remain the responsibility of the accountable authority of each entity, but should be undertaken with reference to the indicators of good practice set out in this Review. In particular, the General Counsel (or equivalent) should ensure all in-house areas have:

a clear statement of their role and responsibilities, objectives and expertise a governance arrangement that facilitates a direct link between in-house legal and executive

decision-making within the entity a focus on supporting business line areas in their statutory obligations and responsibilities in

managing legal risk information and case management solutions access to legal reference material a tailored approach to measuring value and performance structures that support the giving of independent advice and maintenance of legal professional

privilege where appropriate quality assurance processes, and a strategic approach to developing legal capability.

Accountable authorities should seek opportunities to achieve economies of scale and better support smaller entities’ legal needs, including through shared services arrangements for areas of overlapping expertise or more routine corporate legal issues.

8. GOVERNMENT LEGAL CAREERSThat, as part of the Australian Government Legal Service (Recommendation 1 and 4), lawyers in Commonwealth entities would:

have a statement of roles and responsibilities which include clear obligations to identify whole-of-government issues and support the First Law Officer .

be required to have ongoing training in identified core skills for which training would be delivered on a joined-up basis facilitated by the AGLS.

have access to mobility opportunities, such as secondment or exchange programs across Commonwealth entities, including with OLSC and AGS (see also Recommendation 4).

Entities with an identified need for niche or specialised training would share knowledge, training and development opportunities with similar entities in the AGLS.

9. ROLE OF EXTERNAL LEGAL SERVICES PROVIDERSThat external legal services providers remain a critical component of the Commonwealth’s overall legal services delivery. Entities should have policies in place indicating the circumstances in which external legal services should be used, with reference to the statement of role and responsibilities, objectives and expertise of the in-house legal area.

10. PROCUREMENT OF EXTERNAL LEGAL SERVICESa) That the Commonwealth establish of a whole-of-government panel for procurement of external legal

services. The panel would have the following features:

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compulsory for NCCEs and opt-in for CCEs divided into a number of sub-panels on key topics informed by an assessment of the volume of work

available across the Commonwealth a framework that enables procurement off-panel in defined circumstances, recognising niche or

specialist needs, the value proposition of small providers who may not be suitable as panel providers and the importance of the Commonwealth maintaining knowledge about the broader legal services market

OLSC could grant exemptions from use of the panel in exceptional circumstances capable of being reopened to new providers in the event of an identified need for additional

providers, and entities could negotiate further discounts for large or volume work, but would be required to report

outcomes of negotiations to the panel managers for transparency.

The panel would be administered by Finance or AGD with an expectation that all major legal purchasers would participate in its establishment and management. OLSC would also conduct periodic performance surveys to support entity purchasing decisions and panel management.

b) That the arrangements for engaging counsel be reformed to:

re-establish a process for updating approved counsel rates every two years, on request, taking account of information submitted by the applying counsel and views from entities and AGS

update thresholds to take account of inflation, and allow entities with strong informed purchaser knowledge to negotiate one-off rates up to a threshold

through an exemption model.

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Appendix 5 - GlossaryAccountable Authority The person or group of persons responsible for a

Commonwealth entity’s operations as defined by s 12 of the Public Governance, Performance and Accountability Act 2013.

AGD Attorney-General’s Department

AGLN The Australian Government Legal Network

AGS Australian Government Solicitor – the organisational unit in AGD.

Australian Government Solicitor

The person appointed under s 55J of the Judiciary Act 1903 (Cth) to head the AGS.

CCE A corporate Commonwealth entity as defined by s 11(a) of the Public Governance, Performance and Accountability Act 2013.

Departments of State Agencies established in accordance with s 64 of the Australian Constitution, to advise, administer and oversee Australian Government policies.

External legal services Legal services provided by a non-government legal services provider.

First Law Officer The Attorney-General is the First Law Officer of the Commonwealth under s 63 of the Judiciary Act 1903.

GBE Government Business Enterprise as defined by s 8 of the Public Governance, Performance and Accountability Act 2013.

GCWG The General Counsel Working Group

General Counsel A senior legal services practice leader in an in-house practice. Includes heads of legal areas that do not use the title ‘General Counsel’. The elements of a General Counsel role may be split amongst multiple officers.

Government lawyer A legally qualified employee (ongoing or non-ongoing) performing legal services as an in-house lawyer to a Commonwealth entity.

In-house legal services The legal services undertaken by in-house lawyers (including General Counsel), administrative support staff and paralegals either in a dedicated legal area or by individual lawyers working within business line areas of an entity.

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In-house legal area A unit within an entity dedicated to the performance of legal services.

The Directions The Legal Services Directions 2005 (Cth)

Legal support staff Any employees who are undertake administrative or clerical tasks to support the legal services provided by lawyers in the in-house legal area.

LSMUL Legal Services Multi-Use List

NCCE A non-corporate Commonwealth entity as defined by s 11(b) of the Public Governance, Performance and Accountability Act 2013.

Non-ongoing employee An APS employee engaged for either a specified term or for the duration of a specified task or for duties that are irregular or intermittent as provided by ss 22(2)(b) and (c) of the Public Service Act 1999.

OLSC Office of Legal Services Coordination

Portfolio department A Department of State, which is appointed a portfolio together with other entities that have similar general objectives and outcomes.

Second Law Officer The Solicitor-General is appointed as the Second Law Officer of the Commonwealth under s 5 of the Law Officers Act 1964.

SLIC Significant Legal Issues Committee

The Belcher Review Independent Review of Whole-of-Government Internal Regulation - undertaken by Barbara Belcher released in August 2015.

The Blunn and Krieger Review Report of the Review of Commonwealth Legal Services Procurement - undertaken by Anthony S Blunn AO and Sibylle Kreiger released in November 2009.

The Lateral Economics Report Learning from experience: Purchasing legal services - undertaken by Lateral Economics commissioned by the Attorney-General’s Department released in February 2011.

The Logan Review Report on the Review of the Attorney-General’s Legal Practice - undertaken by Basil Logan, David Wicks QC, and Stephen Skehill released in March 2007.

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The McPhee Report Unlocking Potential: Australian Public Service workforce management contestability review – undertaken by Sandra McPhee AM released in December 2015.

The Shergold Report Learning from Failure: Why large government policy initiatives have gone so badly wrong in the past and how the chances of success in the future can be improved - undertaken by Professor Peter Shergold AC released in August 2015.

Tied Work The requirement to use specific government providers for legal services relating to constitutional, Cabinet, national security, public international law and most drafting work – see Appendix A to the Legal Services Directions 2005 (Cth).

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Bibliography LegislationFinancial Management and Accountability Act 1997 (Cth)

Judiciary Act 1903 (Cth)

Judiciary Amendment Act 2015 (Cth)

Law Officers Act 1964 (Cth)

Public Governance, Performance and Accountability Act 2013 (Cth)

Public Service Act 1999 (Cth)

Australian Public Service Commissioner’s Directions 2013 (Cth)

Directions for the Provision of Legal Services to Government Departments and Agencies 1994 (Cth)

Legal Services Directions 2005 (Cth)

Legal Services Amendment (Removal of External Legal Service Provider Reporting Requirements) Direction 2016 (Cth)

Legal Profession Uniform Law Application Act 2014 (NSW)

Legal Profession Uniform Law 2014 (NSW)

Legal Profession Uniform Law 2014 (VIC)

Legal Profession Act 2007 (QLD)

Legal Practitioners Act 1981 (SA)

Legal Profession Act 2008 (WA)

Legal Profession Act 2007 (TAS)

Legal Profession Act 2004 (NT)

Legal Profession Act 2006 (ACT)

Supplementary materialsMr Billson, Second Reading speech: Judiciary Amendment Bill 2015 (Cth), 28 May 2015, <http://parlinfo.aph.gov.au/parlInfo/genpdf/chamber/hansardr/832d97e7-5731-4e03-b7e4-02ee76be9d56/0040/hansard_frag.pdf;fileType=application%2Fpdf>

Explanatory Statement, Legal Services Directions 2005 <https://www.legislation.gov.au/Details/F2006L00320/Explanatory%20Statement/Text>

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Case lawAquila Coal Pty Ltd v Bowen Central Coal Pty Ltd [2013] QSC 82

Ex parte Browne (1913)13 SR (NSW) 593

R v Kidman (1925) 37 CLR 233

Williams v Commonwealth of Australia [2012] HCA 23

Williams v Commonwealth of Australia [2014] HCA 23 (Williams (No 2))

Issues and options papersAttorney General’s Department, AGD Secretary’s Review of Commonwealth Legal Services: Issues Paper One <https://www.ag.gov.au/LegalSystem/Secretarys-Review/Documents/Issues-Paper-One.pdf>

Attorney General’s Department, AGD Secretary’s Review of Commonwealth Legal Services: Issues Paper Two <https://www.ag.gov.au/LegalSystem/Secretarys-Review/Documents/Secretarys-Review-Issues-Paper-2.pdf>

Australian Government Legal Network – Professional Development Committee, Options Paper: Shared Legal Training for Government Lawyers (27 August 2015)

Office of Legal Services Coordination guidance materialAttorney-General’s Department, Compliance and reporting <https://www.ag.gov.au/LegalSystem/LegalServicesCoordination/Pages/Complianceandreporting.aspx>

Attorney-General’s Department, Guidance Note 2: Use of in-house lawyers for court litigation (2015) <https://www.ag.gov.au/LegalSystem/LegalServicesCoordination/Documents/Use-of-in-house-lawyers-for-court-litigation.pdf>

Attorney-General’s Department, Guidance Note 3: Compliance with the Legal Services Directions 2005 (2015) <https://www.ag.gov.au/LegalSystem/LegalServicesCoordination/Documents/Compliance-with-the-Legal-Services-Directions-2005.pdf>

Attorney-General’s Department, Guidance Note 7: Reporting and Settlement of Significant issues (2015) <https://www.ag.gov.au/LegalSystem/LegalServicesCoordination/Documents/Reporting-and-settlement-of-significant-issues.pdf>

Attorney-General’s Department, Guidance Note 8: Reporting of Legal Services Expenditure (2015) <https://www.ag.gov.au/LegalSystem/LegalServicesCoordination/Documents/Reporting-of-Legal-Services-Expenditure.pdf>

Attorney-General’s Department, Legal Services Multi-Use List Guidance Material (1 March 2016) <https://www.ag.gov.au/LegalSystem/LegalServicesCoordination/Documents/Legal-services-multi-use-list-guidance-material.pdf>

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Commonwealth Legal Services Expenditure Reports Attorney-General’s Department, Commonwealth Legal Services Expenditure 2008-2009, (2010)

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