EXPLANATORY STATEMENT
Issued by the authority of the Attorney-General
Judiciary Act 1903
Legal Services Amendment Directions 2010 (No 1)
Section 55ZF of the Judiciary Act 1903 provides that the Attorney-General may issue directions (Legal Services Directions) that are to apply generally to Commonwealth legal work. ‘Commonwealth legal work’ is broadly defined in section 55ZF(3) as any work performed by a person for the Commonwealth; or for a body established by an Act or regulations, including a company in which the Commonwealth has a controlling interest.
Schedule 1 repeals the $2,400 and $1,600 threshold amounts set out in paragraph 5 of Appendix D to the Directions, and replaces them with amounts of $3,500 and $2,300 respectively.
Appendix D sets out directions in relation to the engagement of counsel by agencies themselves, by the Australian Government Solicitor, or by private lawyers who are acting for the Commonwealth or its agencies. The policy applies to briefs to advise and briefs to appear before courts, tribunals or inquiries and to the use of counsel to represent the Commonwealth and its agencies in arbitration and other alternative dispute resolution processes.
The aims of Appendix D are to maximise benefits arising from the Commonwealth’s position as a major purchaser of legal services when agreeing on fees payable to counsel, while ensuring that a range of counsel are skilled in undertaking work for the Commonwealth, and that and that they provide services that offer value for money.
Paragraph 5 of Appendix D provides that an FMA agency may engage counsel up to the threshold amounts (currently $2,400 per day for senior counsel and $1,600 per day for junior counsel, inclusive of GST) without the Attorney-General’s approval. The thresholds were last increased in 2000. At that point, it was considered that $2,400 and $1,600 were unusually high amounts beyond which the Attorney-General (by his delegate) should personally consider and approve.
As a large and increasing proportion of counsels’ fees are now beyond the thresholds, it is appropriate to increase the thresholds to $3,500 per day for senior counsel and $2,300 per day for junior counsel (inclusive of GST). This will allow Commonwealth agencies an appropriate level of freedom to negotiate fees directly with counsel, while preserving the aims of Appendix D and the Attorney-General’s oversight role in approving unusually high fees.
These Directions commence on the day after they are registered.
The Legislative Instruments Act 2003 requires an explanatory statement to describe the nature of any consultation that has been carried out or, if there has been no consultation, to explain why none was undertaken.
In March 2010, the Office of Legal Services Coordination in the Attorney-General’s Department issued a consultation paper on four issues – one of which was the counsel engagement policy as set out in Appendix D to the Directions. Comments and submissions were requested within a six week period following the circulation of the paper, and 28 submissions were received from Commonwealth agencies and major private sector legal services providers. A majority of respondents favoured retaining the existing framework of the counsel engagement and fee structure system, but noted that the threshold fee levels in the Directions no longer accurately reflected the market value of legal services. The majority of respondents supported an increase to those thresholds to reflect the market more accurately.
Overview
The Legal Services Amendment Directions 2010 (No 1) were enacted to amend the Judiciary Act 1903 by updating the thresholds for the fees of counsel engaged by Commonwealth agencies. This legislative instrument was introduced to address the issue of outdated fee thresholds which no longer accurately reflected the market value of legal services, while maintaining the balance between providing Commonwealth agencies with appropriate fee negotiation freedom and the Attorney-General's oversight role in approving unusually high fees. The Directions were issued by the Attorney-General and aim to ensure the Commonwealth’s position as a major purchaser of legal services is leveraged to achieve value for money. The enactment was preceded by consultations with Commonwealth agencies and major private sector legal services providers, which largely supported the update to the fee thresholds to better align with current market values.
These Directions were issued under section 55ZF of the Judiciary Act 1903, which allows the Attorney-General to issue directions governing Commonwealth legal work. The policy objective of these Directions is to revise the fee thresholds for counsel to $3,500 per day for senior counsel and $2,300 per day for junior counsel, inclusive of GST, thereby reflecting contemporary market values while still preserving the integrity of the counsel engagement policy and the Attorney-General's oversight. This amendment is designed to maintain the balance between providing agencies the necessary autonomy in fee negotiations and ensuring that the Attorney-General retains the ability to approve unusually high fees.
Scope and Application
The Legal Services Amendment Directions 2010 (No 1) apply generally to Commonwealth legal work, which encompasses any work performed by a person for the Commonwealth or for a body established by an Act or regulations, including a company in which the Commonwealth has a controlling interest. The Directions pertain specifically to the engagement of counsel by agencies themselves, by the Australian Government Solicitor, or by private lawyers acting for the Commonwealth or its agencies. This applies to briefs to advise and briefs to appear before courts, tribunals or inquiries, as well as to the use of counsel in arbitration and other alternative dispute resolution processes. These Directions aim to balance the Commonwealth’s role as a major purchaser of legal services, ensuring that a range of counsel are skilled in undertaking work for the Commonwealth, and that their services provide value for money. The amendments to the Directions, such as the increase of fee thresholds, are designed to reflect the current market value of legal services, thereby allowing Commonwealth agencies more freedom in negotiating fees directly with counsel while maintaining the Attorney-General's oversight role in approving unusually high fees.
Key Provisions
The Legal Services Amendment Directions 2010 (No 1) primarily amend the fee thresholds for the engagement of counsel by Commonwealth agencies as outlined in Section 55ZF of the Judiciary Act 1903. Specifically, Schedule 1 of these Directions replaces the previous threshold amounts in paragraph 5 of Appendix D with new figures: $3,500 per day for senior counsel and $2,300 per day for junior counsel, inclusive of GST (Section 55ZF(3)). These changes are intended to reflect current market values and provide Commonwealth agencies with an appropriate level of autonomy in negotiating fees directly with counsel while ensuring the Attorney-General’s oversight remains effective for unusually high fees.
The obligations imposed by these Directions on the parties involved are primarily centred around fee negotiation and reporting. Commonwealth agencies, including the Australian Government Solicitor, are now permitted to engage counsel up to the revised threshold amounts without needing specific approval from the Attorney-General (or their delegate) (Section 55ZF(3)). This is applicable to briefs to advise and appear before courts, tribunals, inquiries, and for representation in arbitration and other alternative dispute resolution processes. Agencies must ensure that any fees negotiated are within the new thresholds unless they obtain prior approval for amounts exceeding these limits. Additionally, agencies are required to maintain records and provide reports as necessary to demonstrate compliance with these Directions.
Failure to comply with the provisions of these Directions could potentially result in civil or criminal consequences. While specific offences and penalties are not explicitly detailed in the Directions themselves, breaches of the Judiciary Act 1903 or any related regulations could lead to penalties under those statutes. For instance, if a Commonwealth agency engages counsel beyond the specified thresholds without proper approval, it could be seen as non-compliance with the overarching legal framework, potentially leading to disciplinary action or other legal repercussions. The maximum penalties for breaches of related provisions in the Judiciary Act 1903 could include fines or other sanctions as prescribed by law.
These Directions also reflect a consultation process undertaken in March 2010 by the Office of Legal Services Coordination in the Attorney-General’s Department, where feedback was sought on various issues, including the counsel engagement policy. The consultation revealed that while the majority of respondents preferred to retain the existing framework, they acknowledged that the threshold fee levels were no longer reflective of the market. This feedback supported the decision to revise the thresholds to better align with current market values. The amendments aim to balance the need for efficient legal service procurement with the Attorney-General’s role in overseeing unusually high fees, ensuring value for money and maintaining a skilled pool of counsel for Commonwealth work.