Reforms to the Commonwealth Legal Services market
Major reforms to the provision of legal services to Commonwealth departments and agencies came into effect on 1 September 1999 when the Judiciary Amendment Act 1999 commenced.
As a result of the amendments made by the Judiciary Amendment Act the Judiciary Act 1903:
- establishes the Australian Government Solicitor (AGS) as a statutory authority, and
- enables the Attorney-General to issue Legal Services Directions governing the conduct of Commonwealth legal work.
Since the commencement of the Act, unless the matter involves tied work, agencies are free to engage private law firms for court litigation without first obtaining approval from the Australian Government Attorney-General's Department.
- Why open the Commonwealth legal services market to competition?
- Legal Services Directions
- Legal work tied to government lawyers
- The Australian Government Solicitor
Why open the Commonwealth legal services market to competition?
Opening the Commonwealth legal market to competition from the private sector has introduced substantial benefits:
- departments and agencies have a greater freedom of choice when purchasing their legal services
- competition stimulates private and public providers to contain or reduce their costs and increase their quality of services
- competition enhances the ability of departments and agencies to ensure they receive value for money in purchasing legal services, and
- private firms can contribute their expertise to the delivery of Commonwealth legal services.
Legal Services Directions
How will the Attorney-General ensure that the quality of Commonwealth legal work is maintained and the public interest protected?
The Judiciary Amendment Act 1999 inserts new section 55ZF in the Judiciary Act 1903, which gives the Attorney-General the power to issue Legal Services Directions (Directions) in relation to Commonwealth legal work.
The Attorney-General has issued Directions that apply to the performance of Commonwealth legal work generally with effect from 1 September 1999. The Directions are available from the Office of Legal Services Coordination.
The Directions are designed to enable the Attorney-General to manage and reduce risks inherent in the provision of legal services to the Commonwealth and to ensure that these services are of a high standard and consistent with the public interest.
Who must comply with the Directions?
Section 55ZG enables Directions to be applied to Commonwealth Departments and agencies (including bodies covered by the Commonwealth Authorities and Companies Act 1997 (the CAC Act)) and AGS, and private lawyers when they provide legal services to Commonwealth Departments or agencies. The Directions issued by the Attorney-General provide that the Chief Executive of an agency is responsible for ensuring that the agency's arrangements for legal services are handled efficiently, effectively and comply with the Directions.
The Directions also require the Chief Executive to ensure that lawyers (whether AGS, the Australian Government Attorney-General's Department, private lawyers, in-house lawyers or counsel) who provide legal services to a Commonwealth agency are aware of, and assist the agency to comply with, the Directions.
What do the Legal Services Directions cover?
As outlined above, the Attorney-General has issued Directions in relation to Commonwealth legal work generally. The Attorney-General is also able to issue Directions in relation to Commonwealth legal work being performed in relation to a particular matter.
The Directions are substantially based on the various policies that have governed the conduct of Commonwealth litigation in the past.
Bodies subject to the FMA Act
In relation to agencies that are subject to the Financial Management and Accountability Act 1997 (the FMA Act), the Directions deal with:
- arrangements for the provision of legal services to agencies to ensure the delivery of efficient and effective services
- the categories of work (tied work) for which agencies are required to use government lawyers (discussed below)
- the obligation to report to the Attorney-General or the Office of Legal Services Coordination (OLSC) significant issues that arise in the provision of legal services (especially in handling claims or conducting litigation)
- the handling of claims and litigation in accordance with legal principle and practice
- the handling and settlement of monetary claims against the Commonwealth
- the requirement for agencies to rely on statutes of limitations as a defence unless specifically exempted
- the restrictions on the use of in-house agency lawyers for court litigation
- the handling of claims of immunity on a public interest ground during the conduct of litigation
- the requirements for consultation and the provision of copies of legal advice on legislation administered by other agencies
- the obligation on the Commonwealth to act as model litigant
- the rules for providing assistance to officials in relation to legal proceedings arising from their employment, and
- the rules for engaging counsel, including the fees at which they may be engaged.
Bodies that are not subject to the FMA Act
The application of the Directions to bodies that are not subject to the FMA Act (in particular, bodies that are covered by the CAC Act). These bodies are generally required to:
- inform the Attorney-General or OLSC of details of litigation that gives rise to constitutional issues and comply with instructions concerning the conduct of that litigation
- inform the Attorney-General or OLSC of any claim or litigation proposed to be brought against, or involving, another Commonwealth agency
- act as a model litigant in the conduct of litigation
- engage counsel in accordance with the Directions on Engagement of Counsel, and
- comply with the requirements for handling claims of immunity on a public interest ground during litigation.
Government Business Enterprises and Corporations Law companies
The Directions provide that a body that is prescribed a government business enterprise (GBE) under the CAC Act or is a Corporations Law company controlled by the Commonwealth is not required to comply with the Directions.
Such an approach recognises that these bodies are often in competition with other entities in a market place or that the application of the Directions could adversely affect the interests of other shareholders.
It should be noted that paragraph 12.3 of the Directions provides that the Attorney-General may decide in relation to a particular agency or body that the agency is or is not required to comply with some or all of the Directions. The Attorney-General can also approve the modified application of the Directions to particular bodies.
Who is responsible for compliance with the Directions?
As outlined above, the Chief Executive of an agency is responsible for ensuring that the agency's arrangements for legal services comply with the Directions and that the agency's lawyers assist the agency to do so.
The expenditure of public moneys on legal services in a manner inconsistent with the Directions by an agency covered by the FMA Act may constitute a breach of the Regulations under that Act. The Regulations require that a person to whom they apply must not approve a proposal to spend public money unless satisfied, after making such enquiries as are reasonable, that the proposed expenditure is in accordance with the policies of the Commonwealth.
The Office of Legal Services Coordination (OLSC) provides advice to the Attorney-General on the operation and administration of the Directions. OLSC is also available to assist agencies in ensuring compliance with the Directions.
Under new section 55ZG, compliance with the Directions is enforceable by the Attorney-General. To protect the interests of the Commonwealth, this power enables the Attorney-General, in an extreme case, to seek an injunction to address a breach. Non-compliance with the Directions will be able to be raised in proceedings only by or on the application of the Commonwealth. Thus, it will not be possible for a party other than the Attorney-General or the Commonwealth to assert non-compliance as the basis of any claim or defence in legal proceedings.
It is not intended that litigants opposed to the Commonwealth should be able to rely on the Directions to challenge Commonwealth actions. Rather, the question of compliance with the Directions will be a matter primarily between the Attorney-General as First Law Officer of the Commonwealth and the relevant department or agency. Any other approach could give rise to technical arguments and result in additional costs and delay in litigation involving the Commonwealth.
Legal work tied to government lawyers
What work is tied to government lawyers?
The Directions on Tied Areas of Commonwealth Legal Work (at Appendix A of the Directions) set out the categories of legal work that are tied to government providers of legal services. The categories of tied work are those involving Cabinet, national security, public international law and Constitutional matters. (International law work is provided to Commonwealth departments and agencies by the Office of International Law in the Australian Government Attorney-General's Department, AGS, and the Department of Foreign Affairs and Trade, under existing arrangements.
These matters remain tied to Government lawyers (mainly AGS and the Australian Government Attorney-General's Department), and are not able to be performed by private law firms unless special exemption is given by the Attorney-General or his delegate.
The tied categories of work relate to the core executive activities of government and are strategically or politically sensitive.
By tying these areas to government lawyers, the Government seeks to achieve a consistent, whole of government approach to the interpretation and application of these central areas of law. This is designed to protect the Commonwealth's financial and legal interests.
In addition, drafting legislation is tied to the Office of Parliamentary Counsel and drafting subordinate legislation, Proclamations and other types of legislative instruments is tied to the Office of Legislative Drafting and Publishing in the Australian Government Attorney-General's Department.
How will the Government ensure that tied work is only performed by Government lawyers?
As mentioned above, the requirement that tied work only be performed by government legal service providers is set out in the Legal Services Directions issued by the Attorney-General.
Commonwealth departments and agencies bear the responsibility of ensuring that they recognise a 'tied' matter and engage Government lawyers to provide the relevant legal advice or litigation services.
If departments and agencies are unsure whether a particular matter is tied, advice should be sought from OLSC.
The Australian Government Solicitor
How does AGS operate?
From 1 July 1997 AGS operated independently (both administratively and financially) from the Australian Government Attorney-General's Department, although it remained part of the Department until the Judiciary Amendment Act 1999 commenced on 1 September 1999.
On 1 September 1999, Part VIIIB of the Judiciary Act 1903 established AGS as a separate statutory authority, but within the Attorney-General's portfolio. It operates as a Government Business Enterprise under the CAC Act with the Minister for Finance and Administration and the Attorney-General as joint shareholders. The Chief Executive Officer (CEO) of AGS is appointed by the Attorney-General and the Minister for Finance and Administration and has the function of managing the AGS. The CEO is the director for the purposes of the CAC Act.
AGS is financially independent from the Commonwealth, generating income from the legal services it provides to Commonwealth departments and agencies. AGS continues to liaise closely with the Department on issues of common interest, especially those involving the Attorney-General and his role as First Law Officer.
Does AGS function in the same way as a private law firm?
AGS resembles a private firm in many respects, while remaining fully owned by government and providing specialised legal services to government.
New section 55ZE of the Judiciary Act provides that the Attorney-General and the Minister for Finance and Administration (acting jointly) may, after consultation with the CEO of AGS, inform the CEO in writing of corporate governance arrangements that are to apply to AGS.
AGS can be required to make a payment to the Commonwealth for the purposes of ensuring that AGS does not enjoy net competitive advantages over its competitors by virtue of its public sector ownership. In particular, it will be required to pay dividends and make tax equivalent payments. AGS employs its staff on terms and conditions it sets not under the Public Service Act 1922.