On 15 August, Attorney-General Nicola Roxon emerged alongside the Health Minister Tanya Plibersek to address a joint press conference in Canberra.

Both women wore eager smiles as they approached the microphone stand to speak.

The world was watching.

“We have taken on big tobacco and we have won,” announced Roxon. “For anyone who has lost someone to smoking: this one’s for you,” followed Plibersek.

The High Court ruling on plain packaging laws for tobacco to which they were referring — passed earlier that day — has been as hailed one of the great constitutional cases of modern times.

The world-first legislation resonated around the globe and was deemed a “massive victory” for the Federal Government.

Although it was the Attorney-General who stole most of the limelight on the day, behind the scenes, away from the flash bulbs and sound-bites, one particular agency of government could be proud of its part in the achievement.

Without the key part played by Australian Government Solicitor (AGS) lawyers in the litigation subsequent to the legislation for plain packaging, it never would have gotten off the ground.

In fact, think of any major front page news story in the past couple of years — the Qantas dispute, live exports to Indonesia, gambling reform, carbon tax, energy market reforms, tax evasion matters under Project Wickenby, asylum seekers — and the AGS was there; getting its hands dirty at the coalface of

legislative, commercial and dispute resolution matters for the Government.

Variety of work

According to Ian Govey, chief executive officer at AGS, it’s this variety of high-profile, highly-pressurised work, not the financial reward, that keeps the firm’s lawyers motivated.

“Although we operate on a fully commercial basis, it’s not making money that makes us get up and go to work every morning, it’s doing what is mostly incredibly interesting work for the Government that drives us … it’s the fact we’re acting in the public interest that drives us,” says Govey.

An employee satisfaction survey conducted by the AGS earlier this year showed an overall employee satisfaction rating of 68 per cent.

AGS is one of Australia’s largest national law practices, with offices in every capital city. It is by far the largest single provider of legal services to Government agencies, servicing some 240 different clients.

Essentially, the AGS is the Federal Government’s full-service in-house law firm.

It also acts for state and territory government organisations at the request of their executive governments.

“We occasionally do a little bit of work for state government agencies, but for all intents and purposes it’s the Federal Government who we act for,” says Govey.

“In a way this is our strength and vulnerability. The fact we effectively only do work for government means we have that great specialisation, but it does mean that when agencies are looking to cut back on their legal services then we cannot really look for other markets,” he adds.

AGS employs approximately 320 lawyers — covering some 40 different areas of law related to government.

Since 1999, the AGS has been a separate government agency, established as a statutory authority and government business enterprise (GBE). Previous to that it was part of the Attorney-General’s department.

AGS operates within a unique legislative and accountability framework. It is accountable for its performance to its shareholder ministers: the Attorney-General and the Minister for Finance and Deregulation and, through them, to the Parliament and the Australian community.

It operates on a commercial and competitive basis against private firms.

“We get no budget funding from the Government,” says Govey.

“Every piece of revenue that we earn to keep us going is earned from our client agencies, so it’s a fully competitive model.

“We are treated in all respects as if we are the same as a private law firm: we have to make profits, we have to pay a dividend [to the Government] to demonstrate that we’re operating in accordance with the competitive neutrality principles that apply to all GBEs.”

AGS has been operating in this way for 13 years, returning a profit to Government each year.

It can boast a 40 per cent stranglehold of the external solicitor market for government work, three times as large as any private firms.

Rude health

Financial results for 2011-12, revealed last week in its annual report, showed the AGS is in the money.

Govey describes the results as “extremely positive” given the difficult trading conditions.

AGS’s trading revenue of $115.7 million was more than $8 million higher than targeted and, for the first time in several years, exceeded that of the previous financial year.

The firm’s profit including interest (before income tax) was $8.5 million, which was nearly 50 per cent higher than target. AGS paid an interim dividend of $3.5 million, together with a final dividend of $3.5 million for 2010–11.

Since AGS became a GBE in 1999, it has made profits totalling $151.9 million, from which it has provided $47.8 million in tax or tax equivalents and $99.8 million in dividends, special dividends and repayments of equity.

Govey says that “the requirement to make full competitive neutrality payments and to earn a commercial rate of return remains a driver of our service delivery to our clients and our reinvestment in AGS”.

As CEO, Govey is the firm’s sole director. AGS does not have a board of directors in the traditional sense that applies to corporate companies; it has an advisory board comprising the CEO and three to five external (non-executive) members who are appointed by the CEO on the nomination of AGS’s shareholder ministers.

The role of AGS’s advisory board is to advise the CEO on the strategic development of the firm and on its business performance.

Three in one

The structure of AGS is broken down into three separate groups: office of the general counsel (OGC), dispute resolution and commercial.

The OGC, which has 73 lawyers, acts for government agencies across the full spectrum of administrative decision making. It delivers specialist legal advice and constitutional litigation.

It is home to some of Australia’s leading specialists on constitutional and national security law.

OGC lawyers regularly advise on areas such as governance, administrative law, freedom of information and privacy, immigration law, health law, public revenue and finance, employment law and workplace relations.

Some recent examples of work it has advised on are the minerals resource rent tax, the new carbon tax and gambling reform.

The OGC also considers all submissions to Cabinet and has a constitutional litigation unit with specialist expertise, so it can be involved in every significant constitutional case in the High Court.

“This is possibly our most prominent team,” says Govey, “simply because they get involved in virtually every area of new government policy.

“Almost every new area of policy involves

legislation and constitutional issues, so every area of government policy that you can think of comes through our offices.”

AGS is also the Government’s specialist in

resolving and managing disputes – mainly through alternative dispute resolution (ADR). It has a team of 170 dispute resolution lawyers who appear in all Australian courts and tribunals.

While the Australian public watched the extraordinary events of the Qantas dispute unfold on the news a year ago this week, a handful of AGS lawyers were in the thick of it.

Andrew Berger, Sarah Wright, Karina Harvey, Tom Howe QC and Craig Rawson worked under extreme pressure to help get the Qantas planes back in the air.

In the commercial sphere, the firm worked on more than 3000 commercial matters in 2011-12, ranging from high-volume water-conveyancing, leasing and securities matters, to complex agreements supporting major government initiatives.

Recent examples of its commercial work include advising in relation to a new embassy in Jakarta and in relation to the future submarine projects for the Department of Defence.

Market leader

So how does AGS garner such a large chunk of the Government legal market year on year? And how does it maintain its competitive advantage over private firms?

“I think it’s a combination of reasons,” says Govey.

“One is that we know government. We know the agencies, we know the people, and we have the corporate memory about what legal advices have been given.

“We have particular expertise in knowing where all the traps are in operating as a government agency. The fact we are an agency ourselves, it puts us in a good position to relate to our clients.”

AGS sits at the head of the government legal market by what Govey refers to as “the old story” of service and price.

“We have an advantage on price in that we’re not driven by a commercial outcome,” he adds.

“On the quality side, we put a lot of emphasis on client services. I think if there’s a single reason why we set up as a GBE it is so we could improve our

efficiency and our responsiveness.

“There’s nothing that makes you more responsive than knowing that if you don’t do a good job a

private law firm will come in and get the next gig.”

The competition

Competing against the AGS for government work is no easy task.

In the most recent Commonwealth Legal Services Expenditure Report, Clayton Utz was second place in the table behind AGS for fees paid to firms by the Government. Ashurst, DLA Piper and Corrs Westgarth Chamber (in that order) made up the remainder of the top five.

The fact almost $90 million separated AGS and third-placed Ashurst tells its own story.

“There are number of markets that operate within the government legal expenditure market,” says Paul Vane-Tempest, partner at Ashurst’s Canberra office, which has 40 lawyers and seven partners.

“We tend to work on the high-value, high-risk, complex commercial contracting and procurement work, where we are competing successfully,” he adds.

“The Government is always on the look-out for value for money, not necessarily what is the cheapest price. We’ve been able to deliver value for money because of the strength of our expertise.

“In other parts of market we’re frankly not

competing in areas where the AGS is doing the work.

“In the areas that are truly competitive, where agencies have a culture of genuinely going out and testing the market for high-level expertise, we’re content to compete and we’ve been doing it successfully,” says Vane-Tempest.

AGS may enjoy market superiority but it still faces certain challenges.

In anticipation of market changes and a tightening of client budgets, AGS has worked hard to restructure and improve its business practices in the past 12 months to improve the consistency of its service.

AGS’s organisational changes, which began with the legal practice restructure last year, continued with the implementation of cost-saving measures in corporate services areas.

Pressure cooker

Dealing day-in and day-out with the Government can bring huge pressure.

“The timeframes can be extraordinarily gruelling,” says Govey. “Although I think our people get a buzz out of that type of work.”

Govey adds that he wouldn’t want to underplay the pressure on lawyers working at AGS.

“It’s high-pressure work, but they’re used to operating in that type of environment and they deal with it very well.

“I won’t hide the fact there’s a lot at stake when Government wants advice on whether legislation will hold up or whether they should fight a particular case …and it often plays out on the front page of newspapers.”

Like in any private law firm, this type of pressure can bring problems, such as depression, which is something Covey is very conscience of.

“Depression isn’t a major issue at AGS but we’re alert to it and try to be as proactive as possible in indentifying people who might have an issue. It’s something we need to remain focused on.”

The AGS has a set of diversity statistics that private firms can only dream about.

Almost 70 per cent of its total staff, more than 60 per cent of senior lawyers and just fewer than 50 per cent of its senior executive lawyers (partner level) are female, while more than 20 per cent of staff work part-time.

“It’s a reflection of both the interesting work we do and also our flexibility to allow people to have control over their work,” says Govey.

On the personnel front, AGS’s Glenn Owbridge was awarded the title of Government Lawyer of the Year at the Australian Corporate Lawyers Association (ACLA) Australian In-house Lawyers’ Awards last year, while the recently appointed High Court Judge, Stephen Gageler SC, the former Solicitor-General, is an alumnus of the firm.

“Our people worked very close with Stephen and it was a real buzz for us that one of our alumni was appointed to such a prestigious position,” says Govey.