Monash Council spends more than $1,000,000 each year on legal expenses.
Unlike other areas of Council expenditure and procurement, there is no sophistication to Council’s purchasing of legal services and there is no competitive process undertaken.
Alternative arrangements that can reduce these costs and still deliver the required high level of professional advice and service in a timely manner are available to Council. These options should be explored to determine more cost-effective arrangements for the future.
I am pleased that Council supported my recommendations to the October Council meeting to:
- explore all suitable options available to determine the most cost-effective method of obtaining legal services into the future; and
- set a target for the Chief Executive Officer to reduce legal expenditure for 2016-17 by 40% from 2014-15 levels while maintaining the quality and appropriateness of legal advice obtained and relied upon by Council.
Section 186 of the Local Government Act 1989 requires councils to competitively tender for goods or services above a certain value. However, r 10 of the Local Government (General) Regulations 2004 provides that a contract for legal services is exempt from s 186 of the Act. Consequently, some councils, including Monash, have chosen over the years to obtain their legal services on an ad hoc basis without competitive tension.
While this arrangement provides flexibility in obtaining legal services from a range of legal firms, it does not take advantage of the cost savings for legal services that a contract arrangement based on a competitive tendering process or employing in house lawyers could achieve.
A properly structured contract arrangement could provide Council with options to obtain the best possible legal advice at a more competitive price. Additionally, an in-house arrangement, i.e. employing an experienced lawyer in-house has not previously been considered. A number of other councils have put such arrangements in place and those experiences suggest that this has been an effective strategy for reducing legal expenditure. These options ought to be explored by Monash.
I believe that it is appropriate for the Council to reconsider how it obtains legal services in an effort to increase value for money and to reduce the overall spend on legal services.
Council has several options available and these should be actively explored. A competitive tendering process for legal services should be instigated, with the appointment of a panel of service providers to ensure that a range of legal expertise and knowledge is available at competitive prices.
A competitive legal panel arrangement has worked well for the state government and has reduced the government’s legal spend. Other councils, including Melbourne and Glen Eira, have also reported the benefit of retaining the services of in-house legal counsel, with Melbourne’s arrangement being in place since the 1980s.
As well as a legal services panel, the other options worth considering are:
- appointment of a General Counsel and/or more junior in-house counsel position to assist Council with its legal advice needs, its procurement of external legal services and with reducing costs;
- establishing a centralised procurement point internally for approving and seeking all internal requests for external legal requests; and
- investigating alternative options for Council representation in VCAT planning matters such as relying more on existing town planning staff, utilising junior barristers who are briefed directly by Council rather than by a solicitor and engaging professional advocates rather than lawyers.
With a legal spend of more than $1 million per year, Council’s expenditure on legal services is sizeable and can likely be reduced by the Council using a range of options for the more sophisticated procurement of legal services. It is appropriate and necessary for the Council to focus on obtaining better value for money.
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