The announcement of the Commonwealth Government’s Legal Services Multi-Use List(LSMUL) on 1 June continued the trend towards a reduction in the number of law firms used by the federal government. Moving forward the Commonwealth is now looking to brief out its $280 million plus of annual legal work to a panel of just 68 firms. To put that figure into perspective in the 2009/2010 financial year the Commonwealth briefed out to some 291 law firms (in 2010/2011 some 152 firms were used).
The streamlining of panel numbers is hardly surprising given the recommendations of the Blunn Krieger and Gruen reports but the results of the streamlining itself do raise a few eyebrows.
While the traditional approach to such dramatic panel culls is to focus on who dropped off the panel or missed out we’d suggest it’s more who made the panel that is of real interest.
The Big Firms
Of the 68 firms on the LSMUL there’s a dominance by the larger national firms. All bar one of Australia’s 20 largest firms by revenue (McCullough Robertson) gained a spot. The presence of such firms is hardly surprising given that some 86% of the Federal government’s legal spend previously went to just 10 firms and that the process of a panel cull is likely, at least in part, to retreat to the safe havens of larger providers.
Perhaps this explains the appointment of panel newcomer and UK Magic Circle firm Allen & Overy from the government’s perspective but less so A&O’s desire to attract government work. Since its launch in early 2009, A&O’s Australian operation has sought to position itself as focused principally on high end corporate and finance work. The firm has expanded its capabilities in the past 12 to 18 months but chasing government work doesn’t immediately appear to fit in with the public statements of A&O’s desired antipodean presence. Questions would also be asked just how the historically lower hourly rates demanded by the Commonwealth Government are viewed by UK management.
Despite the above, A&O isn’t the only “international firm” on the panel. They’re joined by UK based counterparts Ashurst, DLA Piper, Kennedys and Norton Rose and the Aussie-Sino alliance of King & Wood Mallesons. In contrast to Allen & Overy though, all but one of the above firms have Canberra offices and also enjoy a historical flow of work from the Commonwealth.
Other international firms with Australian operations such as A&O’s main rival Clifford Chance, Holman Fenwick Willan and US firm Jones Day aren’t on the panel and it it’s our understanding did not seek to tender.
The Specialists
The list has more than it’s fair share of specialist firms with firms focussing in areas such as insurance and intellectual property making up some 15% of the total panel.
Intellectual property firms led by the likes of Griffith Hack, Banki Haddock Fiora, Francis Abourizk Lightowlers and Simpsons Solicitors are there but the likes of Davies Collison Cave or Spruson & Ferguson don’t appear.
Within insurance, the respective South Australian and Western Australian offerings of Lawson Smith and SRB Legal are joined by the Sydney based Curwoods and Kennedys as well as the growing national footprint of Moray & Agnew. Adding to the importance of an insurance capability within the LSMUL framework is the presence of other strong full service firms noted for their insurance work such as Hunt & Hunt, Sparke Helmore, Lander & Rogers and McInnes Wilson.
The Bolters
There’s also a few firms on the LSMUL who may well play an interesting role moving forward:
- Proximity Legal – an outsourced “in-house” style provider set up in September 2011 by former DLA Piper Senior Associates Sean King James Dunn.
- Sage Legal Services – the Canberra based government specialist headed by former Clayton Utz Partner and AGS lawyer Wal Jurkiewicz. While Sage Legal are unlikely to secure a large portion of the Commwealth’s legal spend their appointment shows that firm size or even the most basic of websites runs a distant second to a knowledge of just what government clients want.
- Ally Group – A firm of not insignificant size who lists it’s core business as “to help you manage your relationships with your external lawyers and to put you in control of your legal relationships and legal spend. We are dedicated to improving the management of legal services from the client side by reviewing your internal and external legal management processes, advising on alternative fee arrangements, adding value through outsourced people/processes and project managing large cases.”
- Littles Lawyers – a Brisbane based firm who, not so long ago operated a small suburban practice in the inner Western suburb of Indooroopilly. The firm has expanded rapidly in recent times and operates a strong plaintiff personal injuries practice. It’s positioning in relation to government work is unclear.
The Result
For each of the 68 firms on the LSMUL the removal of 82 firms from the Commonwealth’s potential pool of providers theoretically allows for a greater share of the pie. That said much of this will depend upon:
- Whether the AGS is able to maintain or increase its position of dominance as a service provider. Currently receiving in excess of 40% of the Commonwealth’s legal work the AGS is best placed to pick up work that previously went to smaller providers.
- To what extent DLA Piper is able to maintain its position within the Commonwealth’s preferred legal suppliers now that the firm’s Canberra office is a shadow of its former self.
- Will Ashurst have the same appetite for the $25.3 government work that it did under the BlakeDawson name?