The Report of the Review of Commonwealth Legal Services Procurement (the Report) shines the spotlight on current practices for the procurement of legal services by the Commonwealth. The Report highlights the need for greater attention to, and better strategic direction of, the management of legal services across the Commonwealth. According to the Attorney-General, Robert McClelland, the recommendations put forward in the Report are being considered as part of the Commonwealth Government's "commitment to closely monitor legal services expenditure and achieve greater value for taxpayers' money" (Robert McClelland MP, Attorney-General, Release of Commonwealth Legal Services Procurement Report, Media Release, 8 January 2010).
The last major review to consider the needs of the Commonwealth in relation to legal services was the Report of the Review of the Attorney- General's Legal Practice of March 1997 (Logan Review). The Logan Review concluded that these needs could be best met through a combination of a central legal services provider together with private sector and in-house providers. Its proposals also sought to increase contestability of legal services, particularly in litigation, and maximise choice for Commonwealth purchasers of legal services. Since that time, individual agencies have generally been free to manage their own legal service requirements, including litigation, and to decide when to use in-house lawyers, the Australian Government Solicitor or private lawyers.
Further attention on the Commonwealth's legal services arrangements followed a report of the Australian National Audit Office in 2006, which found that the quality of agency management of legal services was variable and many lacked an "informed purchaser", with good knowledge of agency "business" and the law and legal practice who could coordinate all legal service arrangements and ensure value-for-money (Australian National Audit Office, Legal Services Arrangements in Australian Government Agencies: Better Practice (2006), Ch 4 [http://www.anao.gov.au].)
Following a significant increase in Commonwealth legal services expenditure in the 2007-08 financial year, on 20 March 2009 the Attorney- General announced the appointment of Tony Blunn AO, a former senior public servant, and Sibylle Krieger, a former partner in a private law firm, to conduct a broad review into the procurement of legal services by the Commonwealth and to provide advice on the adoption of alternative models of procurement (the Blunn Krieger Review). The Blunn Krieger Review was also asked to examine how the Commonwealth can best make use of in-house legal services within departments and agencies. The Blunn Krieger Review delivered its Report on 6 November 2009 and it was publicly released by the Attorney-General on 8 January 2010.
The Report finds that in the last financial year, the Commonwealth legal services market grew to an estimated $555 million (this figure is based on data relating to total spend on legal services by agencies regulated by the Financial Management and Accountability Act 1997 (Cth)). Notably, the Report does not identify any significant savings that can be achieved in the short term and cautions against arbitrary cuts to legal services, which could expose the Commonwealth to considerable risk.
The Report does identify a number of challenges associated with existing agency-based procurement processes. These include:
- the lack of adequate data on the costs of internal legal services, and the relative costs and efficiency between agencies
- the lack of clarity about the role of in-house lawyers, including their responsibility for procuring legal services from external providers.
- The authors draw on insights into how large corporations manage the procurement and provision of legal services and deploy in-house lawyers.
- One clear message is that the individual tender processes used by agencies to select legal service providers have proved to be administratively burdensome and costly for both agencies and prospective providers.
The Report puts forward 23 recommendations, which emphasise the need for a more coordinated and strategic approach to the provision of legal services to the Commonwealth. It considers several possible models to coordinate tendering processes for external legal services procurement that may reduce costs and better leverage the purchasing power of the Commonwealth. These include:
- a single Commonwealth panel selected through a centralised tender process, which allows individual agencies to select providers from that panel
- a multi-use list of pre-qualified providers, and
- a hybrid model based on a panel of first and second tier firms established by open tender with a multi-use list to pre-qualify smaller firms for specialist and regional services.
Web-based Commonwealth legal services interface
The Report recommends the introduction of a web-based Commonwealth legal services interface as a central entry and data collection point for all aspects of a coordinated legal services structure and procurement process. The interface would support more centralised tendering processes, provide information to agencies who seek services from external providers, collect data on legal services expenditure, host an in-house costing tool and advices database as well as monitor litigation involving the Commonwealth.
Commonwealth as an "informed purchaser"
Underpinning a number of the recommendations is a strong endorsement of the need to recognise and develop "informed purchaser" skills, as exist in the corporate sector, across the Commonwealth as a key tool to ensure the effective and efficient procurement and management of external legal services.
Professionalisation of in-house legal practices
The recommendations also encourage the "professionalisation" of in-house legal practices within agencies, in terms of client focus, responsiveness, and recognition of the proper role of in-house lawyers and their ongoing professional development. According to the authors, this is needed both in order to improve service delivery and to improve the procurement, management and cost control of external legal providers.
Australian Government legal service network
The Report also puts forward the concept of an "Australian Government legal service network" based on the obligation of government lawyers to serve the rule of law and support the role of the Attorney-General. The intention behind this recommendation is to provide a platform for information and experience sharing, and to provide a "professional network" for lawyers across all Commonwealth in-house practices. Agency heads would also have a role in ensuring that in-house lawyers develop and maintain their skills through continuing professional training. The Attorney-General's Department would be tasked with developing appropriate standards and suitable training.
While the Report does not go as far as recommending the adoption of a particular model for legal services procurement, it appears to favour a more centralised arrangement of panel firms over individual agencybased panels. This would avoid elaborate and costly open tender processes by individual agencies and rely instead on informed purchaser skills and knowledge of the market. While the Government is yet to provide its response to the recommendations, following the release of the Report the Attorney- General re-emphasised his commitment to implement common tender arrangements for agencies seeking to purchase legal services and to increase competition in the Commonwealth legal services market.
The Report can be accessed at http:// www.ema.gov.au/www/agd/agd.nsf/ Page/Organisational Structure_ LegalServicesReviewTeam
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.