Australia: Amendments To The Commonwealth Legal Services Directions And The New NSW Model Litigant Policy

Last Updated: 15 September 2008
Article by Michael Palfrey

Key Point

  • Just as the Commonwealth Government has implemented phase one of its revamp of the Legal Services Directions 2005, the NSW Government has introduced its own model litigant policy.

On 23 May 2008, the Attorney-General, the Hon Robert McClelland MP, announced the Rudd Government's first wave of reforms to the Commonwealth's procurement of legal services. The reforms seek to further the efficient resolution of disputes as well as greater transparency and competition in the Commonwealth legal services market. The reforms were implemented on 1 July 2008 by amendments to the Legal Services Directions 2005 (LSDs) made by the Attorney-General under section 55ZF of the Judiciary Act (Cth)1903.

Meanwhile, on 8 July 2008, the NSW Government introduced its own model litigant policy. The obligation to act as a model litigant, which applies to all NSW government agencies, largely reflects the Commonwealth equivalent prior to the recent amendments.

Commonwealth amendments

Additional expenditure reporting requirements

In addition to existing obligations in respect to recording, monitoring and publication of expenditure, each FMA agency (typically Commonwealth departments and prescribed agencies) must now report to the Office of Legal Services Coordination (OLSC) about the agency's legal services expenditure and legal work using a template approved by the OLSC within 60 days after the end of each financial year. This obligation extends to CAC Act bodies (typically Commonwealth companies and statutory authorities).

A template is now available from the OLSC website which specifies certain matters that must be reported, including a break down of expenditure on internal versus external legal services as well as counsel fees and external professional charges and disbursements.

Interestingly, in an attempt to promote equal opportunity briefing practices, the template also requires each agency/body to provide information on the number and value of briefs to male and female counsel.

Increased focus on alternative dispute resolution (ADR)

Paragraph 4.2 of the amended LSDs expressly provides that agencies must not commence legal proceedings unless satisfied that litigation is the most suitable method of dispute resolution. This obligation is reinforced in the Model Litigant Policy (at Appendix B of the LSDs), which states that acting as a model litigant requires:

  • making an early assessment of the Commonwealth's prospects of success
    in legal proceedings and potential liability;
  • even in cases where litigation is unavoidable at the outset, monitoring its progress and using appropriate methods to resolve the litigation, including settlement offers, payments into court or ADR; and
  • ensuring that persons participating in settlement negotiations have the authority to enter into settlement agreements.

As under the previous LSDs, the Model Litigant Policy applies to both FMA agencies and CAC Act bodies.

Changes to persons appointed to receive service

Under section 63 of the Judiciary Act, the Attorney-General may appoint persons (Appointed Persons) to receive service in proceedings to which the Commonwealth is a party. The amended LSDs clarify that external legal service providers may be appointed.

The amendments provide that Appointed Persons must report to the agency on whose behalf service is received using a template approved by OLSC. A template is now available from the OLSC website. Additional reporting requirements are also imposed on FMA agencies and CAC Act bodies in respect of Appointed Persons that the agency/body has used to receive service on its behalf.

Pro bono work undertaken against the Commonwealth

The amended LSDs also provide that each FMA agency must ensure that when procuring legal services, it does not adversely discriminate against legal service providers that have acted, or may act, pro bono for clients in legal proceedings against the Commonwealth. This obligation
does not apply where an actual conflict of interest would arise by engaging that provider.

NSW Model Litigant Policy

The new NSW Model Litigant Policy largely reflects the Commonwealth equivalent prior to the recent amendments and the principles contained in it would be well known to those agencies involved in litigation in NSW. It has been endorsed by Cabinet to assist in maintaining proper standards in litigation and the provision of legal services in NSW.

The NSW policy operates alongside other existing litigation policies which relate, amongst other things, to inter-agency litigation and the use of ADR. The Premier's Memorandum 94-25 reaffirms a commitment to use ADR as far as appropriate. The memorandum emphasises that the use of ADR techniques (such as conciliation, mediation or arbitration) rather than resorting to litigation, can reduce the time and expense of resolving disputes.

It is also interesting to note that the NSW policy permits the CEO of each agency to issue guidelines relating to its interpretation and implementation. While this has the potential to result in differing approaches to litigation management among NSW agencies, the Premier's Memorandum will continue to be a useful vehicle for supplementing and facilitating a consistent approach to the
NSW Policy.

What will the changes mean for your agency/body?

NSW agencies (and, of course, Commonwealth agencies) must follow their Model Litigant Policies. While this should not affect the normal operation and management of litigation, if a particular matter takes an unusual or unexpected course then refreshing your memory as to the Model Litigant Policy may be prudent.

Commonwealth agencies will need to have systems in place (and perhaps a nominated person) to record, in the correct form and by the due date, the legal services expenditure throughout the financial year - including internal versus external legal spend and the number and value of briefs to male and female counsel.

At all times and in all litigation before courts, tribunals, inquiries and in arbitration, agencies should consider and be predisposed to the use of ADR.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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