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Government cuts legal fee spending

News

Cite as: (2004) 78(1-2) LIJ, p. 32

A report into the first year of the state government’s new arrangements for tendering legal work shows fees paid to firms have been cut by more than a third.

The state government’s reformed tendering of legal services has delivered on a promise to cut the amount of money paid to law firms, according to a Justice Department report into the first year of operation.

The government spent $22.2 million on legal services during the 2002/03 financial year – a drop of more than $13 million on the last time spending on legal work was measured in 1998/99.

Of the $22.2 million, $18.2 million went to the 33 law firms on the government legal services panel, while $2.6 million was paid to barristers. The balance of $1.4 million was used for “other expenses”.

State Attorney-General Rob Hulls said the report’s findings hailed a new era in accountability of firms doing government legal work.

“Until this major reform, the provision of legal services was an unsupervised feeding trough for law firms.

“These reforms save taxpayers’ money by ensuring that the government gets the best advice for the best price.”

Mr Hulls launched the new system of legal service tendering in June 2002. The system cut the number of firms receiving government work from 75 in 1998/99 to 33, and arranged them on panels of expertise.

The legal services panel comprises a general panel of nine firms that can bid for nearly all government legal work and specialist panels that can tender for work in specific practice areas.

All panels must also compete with the Victorian Government Solicitor’s Office (VGSO).

The report found that the general panel firms and the VGSO received $19.2 million in fees, while the specialist panels shared $3 million.

Despite the work being restricted to fewer firms, the report noted that “some firms expressed concern that the possibility of using them may not always have been adequately considered when clients required legal services.

“The Departmental Legal Services Contract Managers [who manage the arrangements between departments, law firms and the VGSO] are alert to the requirement of equality of opportunity when engaging, or advising business units intending to engage, firms or the VGSO.

“However, ultimately the choice of provider is driven by the nature and extent of the legal services required and the legal expertise, capability and capacity needed to provide them efficiently and effectively.”

The report, which was released on 21 November last year, said all nine general panel firms and 20 of the 24 specialist panel firms received work during the year.

In other major findings of the report:

  • one specialist panel firm has been voluntarily suspended and given six months to restructure its operations and prove “it had acquired sufficient resources to meet its contractual obligations”;
  • more than 90 per cent of government clients surveyed indicated they were satisfied or very satisfied with the legal services provided by the firms and the VGSO; and
  • the firms tendered at rates discounted from those normally charged for corporate clients. Exact figures were not provided.

There were mixed results stemming from the social justice elements inserted into the panel contracts signed by the 33 firms.

Firms tendering for a place on the government panel were asked to dedicate themselves to pro bono and to follow model litigant principles and the Victorian Bar Council’s Model Briefing Policy.

The tender required firms to commit at least 5 per cent of fees collected from the government to pro bono. Some firms in their tender applications dedicated 15 per cent of fees to pro bono.

The report into the first year of the legal services panel found that firms completed almost 7 per cent or the equivalent of $1.5 million in pro bono legal services.

It found that all firms and the VGSO adopted both the Model Briefing Policy and the model litigant principles.

However, female barristers received 17 per cent of briefs from firms and earned just 6 per cent of fees. Women barristers comprise 18.6 per cent of the Victorian Bar.

Mr Hulls said he would write to all 33 firms on the panel reminding them of their obligations under the tender contracts to equal opportunity briefing practices. (For more information on the report’s briefing practices figures, go to page 28 of this edition.)

Jason Silverii

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