Guidance Note 6 – Settling significant issues

Key topics covered in this guidance note are:

• what a settlement is
• when settlement approval is needed, and
• the process for seeking settlement approval.

1. Section 36 of the Legal Services Directions 2025 (Directions) provides that a claim or litigation¹ which is reportable as a significant issue under section 35 of the Directions² is not to be settled without the Attorney-General’s (or their delegate’s) approval.

2. This obligation works alongside section 35, ensuring the Attorney-General has visibility of, and where necessary, the ability to influence significant settlements.

3. The Office of Legal Services Coordination’s (OLSC) role is to provide advice to the Attorney-General about whether the proposed settlement should be approved. This includes working with the entity to ensure that any settlement recommended is consistent with legal advice, the broader Directions and Government policy.

What is a settlement?

4. Section 4 of the Directions defines settlement as the consensual resolution of a claim or litigation. The note to this definition also provides examples of settlements clarifying that the definition is intended to include:

• settlements facilitated by a mediator (this includes roles akin to a mediator for example, arbitration or conciliation), and
• settlements that will be the subject of further approval or consideration by a court, tribunal, other person or body.

5. For the purposes of this definition:

• Consensual means shared agreement, arrangement or understanding, and
• Resolution includes amendment, abandonment, withdrawal, acceptance or concession.

6. Unlike Part 6 of the Directions³, section 36 is not limited to monetary claims.

7. Examples of settlements include:

• agreeing to consent orders disposing of the claim or litigation (for example, by way of dismissal or discontinuance)
  • Note: this includes where a ‘walkaway offer’ is agreed to (i.e. the parties bear own costs)
• the entering into of a deed of settlement
• the parties agreeing on a penalty or monetary amount (for example, as compensation) to be put to the court for approval
• agreeing to pay a monetary amount (for example as compensation)
• for contractual disputes where the outcome also involves a payment in relation to some other alleged breach of contract or other claim, and
• agreeing to non-monetary terms to resolve the matter (for example, the issuing of a media release, apology or remediation steps).

8. Additionally, if the entity is being prosecuted then examples of settlements include:

• the entering of a guilty plea
• negotiating charges or plea bargaining, and
• negotiating reparations.⁴

When is settlement approval needed?

9. The Attorney-General’s approval is required before settlement occurs. An entity must not commit to a position or give ‘in-principle’ agreement before the Attorney-General (or their delegate) decides.

• Note: this does not stop an entity from having discussions with the other party(s) to inform settlement negotiations. If an entity requires guidance on the limits of these discussions they should contact OLSC.

10. Settlement approval is required even if the claim or litigation has not been reported as significant under paragraph 35 of the Directions but should be.

11. Generally, approval is not required for discrete aspects of the litigation or claim unless that aspect is itself a significant issue. However, OLSC should be notified of these developments as part of the entity’s ongoing reporting obligations under section 35.⁵

12. Examples of discrete issues which may require settlement approval include:

• admitting or conceding liability for a substantive part of the matter which made it significant even though the Commonwealth continues to defend other aspects of the claim
• consensual resolution of a discovery dispute which involves issues of precedential relevance for the broader Commonwealth or a key issue in the proceeding, and
• agreeing on costs or a ‘cap’ on damages or penalties where the quantum may be reportable as significant.

13. Entities should contact OLSC if they need guidance about whether settlement approval is required.

The process for seeking settlement approval

14. Requests for approval under section 36 of the Directions should be made at least 20 business days prior to the date on which a decision is needed. OLSC will seek to expediate consideration of urgent requests where necessary.

15. Entities are encouraged to provide advance notice to OLSC of settlement requests and provide copies of material supporting the request where possible (particularly if an urgent decision is being sought).

16. Requests should be made in writing by completing the request form on the department’s website and emailing it to OLSC@ag.gov.au. Any request for approval should outline:

• a summary of the claim or litigation (including prior offers and related claims or litigation)
• the proposed settlement and justification for it
• the supporting legal advice (including legal advice which confirms that the settlement is in accordance with legal principle and practice)
• potential impacts on other entities/broader Commonwealth
• reasons for the deadline for decision, and
• consultation and briefing which has occurred.

17. Settlement requests should be accompanied by all relevant supporting documents. This must include written legal advice which confirms that the proposed settlement is in accordance with legal principle and practice.

• Note: who must provide the legal advice depends on the nature of the matter (including complexity and quantum). Generally, it is sufficient for it to be provided by an external legal services provider (who may be already representing the entity in the matter). On some occasions OLSC may request advice be provided from a more senior provider.

18. If the claim or litigation is also a monetary claim within the meaning of Part 6 of the Directions, then the settlement request must also comply with that Part.⁶

19. The same process applies if a variation to a settlement approval is required.

Who is the decision-maker?

20. Either the Attorney-General or their delegate within the department can consider a settlement request.

21. OLSC works with the Attorney-General’s office to determine whether the settlement request is appropriate for delegate consideration. This is assessed on a case-by-case basis.

22. Factors which may be relevant in determining decision-maker include precedential impact, quantum or government policy and whether the settlement request relates to an isolated claim or litigation, or a broader cohort/group of matters.

Other approvals required

23. It is the entity’s responsibility to satisfy any other statutory or administrative requirements to permit the entering into of a settlement (for example, under the Parliamentary Governance, Performance and Accountability Act 2013).

Approach to confidentiality

24. Section 47 of the Directions also applies to the settlement of a claim or litigation which is a significant issue for the purposes of section 35 of the Directions. It prescribes transparency in Commonwealth settlements as the default approach, with confidentiality only to be sought where necessary to protect the Commonwealth’s interests.

25. Generally, it is only appropriate for a settlement to be confidential where it is in the Commonwealth’s interests.

26. There is no test or set criteria in the Directions for when confidentiality is in the Commonwealth’s interests. This should be assessed on a case-by-case basis, including being informed by legal advice and with reference to relevant Commonwealth policy.

Assessing a settlement request

27. Settlement requests are considered on a case-by-case basis. Ultimately, it is for the Attorney-General (or their delegate) to be satisfied the proposed settlement is in the best interests of the Commonwealth.

28. Factors which may be relevant in determining whether to approve a settlement request include:

• the nature of the claim, including the basis of claim, the remedy sought and the existence and strength of relevant evidence
• the Commonwealth’s prospects, as supported by legal advice and the likely remedy a court would award
• the proposed settlement terms, including how they are logically derived from the details of the matter, the assessment of prospects and whether they are in accordance with legal principle and practice
• the Commonwealth’s legal and financial interests in defending or pursuing the matter where arguments in support of the Commonwealth’s position are available
• the Commonwealth’s model litigant obligations
• whether the approach to confidentiality (if applicable) is consistent with section 47 of the Directions
• any risks to the Commonwealth if the matter proceeded to trial or in settling the matter, and
• broader policy considerations, such as the Government’s policy position and priorities relevant to the subject matter of the claim.

29. OLSC supports the decision-maker by:

• providing advice about whether the proposed settlement request should be approved
• working with entities to clarify aspects of or fill gaps in the settlement request (or supporting documents) when identified, and
• where necessary, liaising with entities on alternative or modified settlement proposals (for example, to ensure clarity in the settlement terms or consistency with previous approvals or government policy).

Where can I get further help?

30. If you have any questions about settling significant issues, please contact OLSC at olsc@ag.gov.au.

Office of Legal Services Coordination 
Phone: 02 6141 3642
E-mail: olsc@ag.gov.au
Issued: March 2026

This guidance material is of a general nature only and does not convey or contain legal advice.