What the new Legal Services Directions 2025 mean for Commonwealth entities and legal providers

• An entity can now put forward legal advice to Cabinet that was not obtained from a tied provider (eg the Australian Government Solicitor (AGS) or the Attorney-General’s Department) provided the advice was obtained before it was intended to go to Cabinet. The entity must expressly inform Cabinet the advice was not prepared by a tied provider and confirm the of the date of the advice and who provided it.
• In-house legal can now support engagement with tied providers in respect of a tied issue. For example, in-house legal can now advise on legislation, which is administered by the entity, if the advice involves no more than the application of a settled interpretation of the law.
• Constitutional law work and national security work are now defined, providing certainty to as to what constitutes tied work.
• The obligation to notify the Office of International Law and seek their view on the matter if they request public international law work from AGS has been clarified to extend to Commonwealth corporate entities and Commonwealth companies. Stakeholders will need to factor in this consultation step in considering deadlines and timeframes.

• Entities are reminded of the obligations under the Commonwealth Procurement Rules and the use of co-ordinated procurement arrangements; namely that there are circumstances where entities must use whole of government arrangements for procuring goods and services.
• Confirms that entities are required consider:
  • the number of hours and kind of pro bono work an external legal provider has undertaken or will undertake; and
  • whether the provider has signed up to the National Pro Bono Target of the Australian Pro Bono Centre, but it does not extend to government legal service providers such as AGS.
• There is now a positive obligation on entities to notify the Office of the Legal Services Coordination (OLSC) of where it can find published information on legal services expenditure of the entity. Legal services expenditure is now defined to capture both internal and external legal expenditure, including expenditure on Counsel.
• Entities should have procedures in place to ensure OLSC is notified in a timely manner once this information is published.

• Clarifies reporting requirements for significant issues arising in the performance of Commonwealth legal work, generally.
• Clarifies significant issues include where there is a reasonable prospect the Commonwealth, or a Minister or officer in their official capacity will be found liable for false imprisonment, misfeasance in public office, malicious prosecution or conspiracy or any other civil or criminal wrong based on malfeasance, fraud, bad faith or unlawful conduct.
  • The Directions expand on the non-exhaustive list included in the Legal Services Directions 2017 and ensures that these issues are front of mind to those undertaking Commonwealth legal work.
• Entities should take care to ensure they do not unduly limit consideration of significant issues to the examples identified in the 2025 Directions and seek guidance on a case-by-case basis if any potentially significant issues arise.

• Provides a new obligation to promote consultation, collaboration and information-sharing across government on the interpretation of legislation. This obligation extends to the following corporate Commonwealth entities:
  • the Australian Human Rights Commission;
  • the Australian Pesticides and Veterinary Medicines Authority;
  • the Independent Health and Aged Care Pricing Authority;
  • the Murray-Darling Basin Authority; and
  • the National Offshore Petroleum Safety and Environmental Management Authority.
• Introduces an exception to sharing where there is a written agreement between entities and OLSC has been notified of that agreement. This enables entities to manage situations where they may have a large volume of matters where consideration of the same legislation arises on a regular basis.

• A Commonwealth agency now must seek approval from the Attorney-General when submitting or objecting to the exercise of compulsory powers or decision-making authority, by all state and territory bodies. This ensures the Commonwealth’s position on compulsory powers and decision-making authority is consistent across all forums.

• Now distinguishes between claims brought against the Commonwealth and claims commenced by the Commonwealth, recognising the need for different criteria to apply to these distinct claims.
• Now permits the settlement of monetary claims against the Commonwealth without at least a meaningful prospect of liability being established if:
  • the parties have agreed to the claim being dismissed, discontinued and otherwise resolved; and
  • no financial commitments or concessions are made (other than agreeing not to seek a costs order).
• The settlement must still be in accordance with legal principle, taking into account the legal rights of the parties and the financial risk to the Commonwealth and entity of pursuing their rights. However, it provides entities flexibility to settle in circumstances where other factors involved.
• Introduces a discretion to settle monetary claims without including a suitable release and indemnity if, there are exceptional circumstances to justify doing so. This enables entities to make their own assessments and may facilitate the prompt resolution of claims that otherwise may not have settled.
• Clarifies the obligation to seek the Attorney-General’s approval to settle a significant claim extends to litigation.

• Encourages engagement of more diverse Counsel including women Counsel and Counsel:
  • who identify as LGBTIQA+;
  • who identify as First Nations;
  • who identify as culturally and linguistically diverse; and
  • with disability.
• While the 2017 Directions encouraged briefing of a broad range of Counsel and women Counsel, the 2025 Direction increases emphasis on diversity and promotes cultural change within the legal profession’s briefing practices.
• Increased daily rate thresholds to $3300 (GST inclusive) for junior counsel and $5000 (GST inclusive) for senior counsel. Indexation of daily rates has been introduced and occurs every second financial year starting on 1 July 2027. This will ensure that rates remain reflective of the market conditions over time.
• Hourly rates now must be negotiated having regard to the complexity of the brief and securing value for money for the entity.
• Entities must use reasonable endeavours to brief women Counsel with relevant seniority, expertise and experience in the relevant practice area with a view to women counsel accounting for at least 40 per cent of all briefs and at least 40 per cent of the total value of briefs. This marks a significant increase from the 25-30 per cent endeavours under the 2017 Directions.

Takeaway 

• Entities will need to ensure the above considerations are taken into account in approving Counsel and that they have suitable reporting systems in place to accurately record fulfilment of these targets.
• Legal service providers should also take proactive steps to recommend suitable Counsel in light of the above considerations. 

• A decision made under a provision of the 2017 Directions before its repeal on 2 March 2026 is treated as if it were a decision made under the corresponding provision of the 2025 Directions. For example, an approval for a legal services provider other than a tied provider to undertake tied work.
• Processes that began under the 2017 Directions but were not completed before its repeal on 2 March 2026 are treated as if they have begun under the corresponding provision of the 2025 Directions, providing certainty to entities who may have taken steps to comply under the 2017 Directions.
• If something had occurred that required action to be taken under a provision of the 2017 Directions before its repeal, and no action been taken, it must now be taken under the corresponding provisions of the 2025 Directions. For example, reporting on significant issues.

• Clarifies that the 2025 Directions do not apply to Commonwealth legal work carried out by or behalf of a Commonwealth prosecuting authority in relation to specific proceedings. This ensures that these authorities are not subject to direction or influence by other parts of the Executive Government.
• Clarifies that the 2025 Directions do apply to Commonwealth legal work undertaken while responding to or defending criminal prosecutions and related proceedings. This enables oversight by the Attorney-General and promotes the mitigation of legal risk. 

• Clarifies that the 2025 Directions do not confer powers to spend or grant indemnities but rather sets out the framework for entities to provide financial assistance to eligible persons.
• Confirms that it is the decision-making powers and obligations under the Public Governance, Performance and Accountability Act 2013 (PGPA Act) that confers the authority to spend and grant indemnities.
• Entities should ensure that their obligations and authority under the PGPA Act and 2025 Directions are considered in any decisions to provide financial assistance to Commonwealth employees in legal proceedings.