Earlier this week, the Attorney-General, the Hon Robert McClelland MP, delivered a speech to the Government Law Group in Canberra on alternative dispute resolution in the federal justice system entitled 'Utilising ADR - The Evolving Landscape'.

The Attorney-General referred to the National Alternative Dispute Resolution Advisory Council's (NADRAC's) Inquiry into the use of ADR in the civil justice system which found that ADR has ‘expanded into a large, highly diverse and innovative field, it is still significantly under-utilised in many areas.’ The Attorney-General believes that, as the biggest single litigator in the federal justice system, there is an important leadership role for the Commonwealth and its agencies to increase the use of ADR in Australia. In fact, he has previously suggested that he believes there is a need for a different approach by government lawyers when dealing with claims against the Commonwealth and that there is an ‘opportunity for more innovation in how these claims are dealt with’. In his speech, he quite correctly pointed out that: "Even if a dispute is not resolved in an ADR process, the process itself can help draw out facts, identify issues and explore new options. This means that even if litigation is ultimately commenced, its duration, cost and potential distress upon parties can be reduced". He also commented that ADR should not be seen as a 'soft touch' approach to resolving disputes.

Importantly, the Attorney-General emphasised the fact that the obligation to act as a model litigant outlined in Appendix B of the Legal Services Directions 2005 extends to ADR processes as well as court-based litigation. In fact, amendments were made to the Legal Services Directions 2005 in 2008, which introduced paragraphs 5.1 and 5.2 in Appendix B. These paragraphs state that:

Alternative dispute resolution

5.1 - The Commonwealth or an agency is only to start court proceedings if it has considered other methods of dispute resolution (e.g. alternative dispute resolution or settlement negotiations).

5.2 - When participating in alternative dispute resolution, the Commonwealth and its agencies are to ensure that their representatives:

(a) participate fully and effectively, and

(b) subject to paragraph 2(e)(iv), have authority to settle the matter so as to facilitate appropriate and timely resolution of a dispute.

Paragraph 2(e)(iv) states that a Commonwealth agency must ensure that arrangements are made so that a person participating in any settlement negotiations on behalf of the Commonwealth or an agency can enter into a settlement of the claim or legal proceedings in the course of the negotiations. This is in addition to paragraph 2(e)(iii) which states that an agency must monitor the progress of the litigation and use methods that it considers appropriate to resolve litigation, including settlement offers, payments into court or alternative dispute resolution.

Therefore, at present, it is clear that:

  • agencies are required to make an early assessment of the Commonwealth’s prospects of success in legal proceedings brought against it and its potential liability in relation to a claim;
  • agencies must monitor the progress of litigation and use methods appropriate to resolve the litigation, including settlement offers or alternative dispute resolution;
  • the Commonwealth’s preference is for alternative dispute resolution rather than litigation as demonstrated by the fact that an agency is required to only start court proceedings if it has considered other methods of dispute resolution;
  • when participating in alternative dispute resolution, agencies are to ensure that their representatives participate fully and effectively, and have appropriate authority to settle claims;
  • the government is keen to encourage greater use of ADR by government agencies.

In his speech, the Attorney-General referred to the 2009 report by NADRAC entitled 'The Resolve to Resolve - Embracing ADR to Improve Access to Justice in the Federal Jurisdiction' which recommended that the Legal Services Directions 2005 be amended to require agencies to develop and regularly review dispute management plans that require appropriate use of ADR. He indicated that he has asked NADRAC to prepare a model dispute management plan that could be used by agencies to comply with their obligations under the Legal Services Directions 2005. In our view, this plan is likely to form the basis of an amendment to the Legal Services Directions 2005 in the foreseeable future.

Further, Commonwealth agencies involved in handling claims or conducting litigation should ensure that ADR is considered on an ongoing basis during the management of the claim or the litigation. Agencies are advised to conduct "ADR audits" periodically in relation to ongoing claims or litigation and apply lateral thinking to achieve a resolution at the earliest possible and practicable opportunity. We have considerable experience with assisting agencies in attempting to resolve claims, which are often complex and sensitive, through the use of an appropriate ADR process. It is important for an agency to have a significant understanding of the differences in ADR processes available to ensure the most appropriate ADR process is utilised at the most appropriate stage. This will greatly assist the likely success of resolution whereas the opposite applies if an incorrect ADR process is selected. Just like a golfer selects the most appropriate club based on the shot they want to play and the outcome they want to achieve, in a similar way, an agency should select the most appropriate ADR process that is more likely to assist reaching a resolution of a claim or a litigated matter.

A link to the full text of the speech can be found here.