AG: ‘Reduce Our Dependency On Outsourcing’

October 19, 2017

“Since 2013 Government has retained approximately 65 outside legal service providers to pursue various matters at a total cost to date of approximately 24.5 million dollars,” Attorney-General Kathy Lynn Simmons said, adding that “measures are warranted to increase our capacity to internally meet Government’s legal services needs and to reduce our dependency on outsourcing.”

The Attorney-General said, “Upon taking office I requested information to assess how the previous Government had spent resources to obtain legal services outside of Chambers in order to determine the most cost-effective model for the delivery of these legal services.

“Since 2013 Government has retained approximately 65 outside legal service providers to pursue various matters at a total cost to date of approximately 24.5 million dollars. Currently, active civil matters are at various stages of litigation and expose the Government to financial liability of millions of dollars.

“Given the nature of litigation and for various other reasons, it is difficult to provide an estimate of the total cost that outstanding civil matters will eventually entail. However, it is reasonable to expect that cost to be in the millions of dollars.

“3 of the 11 active civil matters are outsourced directly to overseas counsel. These matters will entail some of the highest exposures to liability and promise to be among the most costly.

“Outsourcing is considerably more expensive than dealing with matters in-house. It is well known that members of the private bar charge hourly rates for legal services well in excess of the hourly rate paid to Government lawyers.

“Government lawyers’ hourly rates range from approximately $47.00 up to $99.00 per hour. The domestic and foreign private bar’s hourly rate range begins at $300.00 and can be as high as $1,600.00 per hour.

“These rates do not in any way reflect the lack of competency but are characteristic of public service models worldwide which are not profit-driven with regard to this particular service.”

“I have outlined how continued outsourcing of legal services is inconsistent with current Government policy objectives; how this practice runs contrary to the Bermuda first objective; how it is not fiscally prudent nor sustainable; and why measures are warranted to increase our capacity to internally meet Government’s legal services needs and to reduce our dependency on outsourcing.”

“Measures to contain the cost of outsourcing include: a focused commitment to develop expertise in specified areas of legal practice through increased professional development for present staff; availing our pupils of a richer pupilage experience; improving our recruitment strategy; and, where feasible, our compensation package in order to attract the best local talent.”

The Attorney-General’s full statement follows below:

Madam President:

This Government came to power on a platform promising the people of Bermuda that “it’s time to put Bermudians first” within their own country. Such a promise immediately evokes the questions; what does this mean and why is it not already the case?

To answer the first question, it means that Bermudians ought not to be discriminated against in practices of employment, promotion and other opportunities for development. In short, it means that as a Government we must ensure that our resources are effectively and appropriately used to develop our citizens.

As a Government, it is our responsibility to ensure that this goal is not confined to electioneering and political slogans. It must be consistently reflected in our policies and the way we govern. And as we move forward it must be evidenced by statistics, performance indicators, data and other information as relates to effectiveness.

With that mandate Madam President, it is incumbent upon me to apply it to the civil services that allow me to discharge my responsibilities as Attorney-General and Minister of Legal Affairs. At a time when we are still contending with unprecedented economic pressures, the way we spend money as a Government is crucial to upholding that platform promise. Therefore, upon taking office I requested information to assess how the previous Government had spent resources to obtain legal services outside of Chambers in order to determine the most cost-effective model for the delivery of these legal services.

Accordingly, Madam President the information that was provided is that since 2013 Government has retained approximately sixty-five [65] outside legal service providers to pursue various matters at a total cost to date of approximately twenty four and a half million dollars. Currently, active civil matters are at various stages of litigation and expose the Government to financial liability of millions of dollars.

Madam President, eleven [11] of the active civil matters are outsourced directly through Chambers. The others are outsourced through other Government departments hiring outside counsel with the approval of Chambers. Additionally, a significant portion of the legal services retained are through the Legal. Aid Scheme, particularly with regard to criminal matters. This amounts to approximately $10 million dollars of the total $24.5 million dollar figure; or forty percent [40%] of that total. Aside from Legal Aid expenditure, net outsourcing expense during that 3-year period, amounts to approximately $15 million dollars. That averages $5 million dollars per year.

Given the nature of litigation and for various other reasons, it is difficult to provide an estimate of the total cost that outstanding civil matters will eventually entail. However, it is reasonable to expect that cost to be in the millions of dollars. Furthermore Madam President, three [3] of the eleven [11] active civil matters are outsourced directly to overseas counsel. These matters will entail some of the highest exposures to liability and promise to be among the most costly.

The significance of this Madam President, is that outsourcing is considerably more expensive than dealing with matters in-house. It is well known that members of the private bar charge hourly rates for legal services well in excess of the hourly rate paid to Government lawyers. Government lawyers’ hourly rates range from approximately $47.00 up to $99.00 per hour. The domestic and foreign private bar’s hourly rate range begins at $300.00 and can be as high as $1,600.00 per hour. Let me be clear, these rates do not in any way reflect the lack of competency but are characteristic of public service models worldwide which are not profit-driven with regard to this particular service. In percentage terms, this is between approximately 85% and 95% higher respectively. Hence the huge costs of outsourcing legal services. These figures also indicate the very real challenges associated with attracting lawyers to Government service.

Another ramification Madam President, and equally important is the fact that legal matters are often outsourced to avail the Government of expertise in specialist’s areas. Of course this is partially due to the fact that it is not practical for us to cover all areas of legal expertise with the limited number of lawyers within the Civil Service establishment. However, there is undeniably room for us to broaden the experience of Crown Counsel to master additional areas of legal practice, particularly those areas which we typically outsource.

This is vital to the ‘Bermuda first’ policy Madam President; which demands that we develop our people to a standard that enables us to meet the various challenges we face as a nation in producing a highly skilled workforce.

One of the things we have done over the years Madam President, is to provide the opportunity for young Bermudian lawyers returning from overseas; to do their pupilage within the Ministry of Legal Affairs to qualify them to be called to the Bermuda Bar. This is a vital service not only to the legal profession but to the goal of ‘Bermuda first’. I consider it to be a responsibility of my Chambers to ensure that we maximize the availability of this opportunity for more Bermudians by increasing the number of pupilage positions.

What this means in the context of outsourcing, is that the more legal matters we are able to assign to in-house Counsel and the more expertise we cultivate; the more opportunities we will provide for our pupils to be outstanding professionals. Furthermore, the richer and wider their experience is during pupilage; the greater their chances are to be among the best qualified and the best prepared; and to contribute to manifesting the ‘Bermuda first’ policy within the legal profession.

Finally Madam President, I have outlined how continued outsourcing of legal services is inconsistent with current Government policy objectives; how this practice runs contrary to the Bermuda first objective; how it is not fiscally prudent nor sustainable; and why measures are warranted to increase our capacity to internally meet Government’s legal services needs and to reduce our dependency on outsourcing.

Measures to contain the cost of outsourcing include: a focused commitment to develop expertise in specified areas of legal practice through increased professional development for present staff; availing our pupils of a richer pupilage experience; improving our recruitment strategy; and, where feasible, our compensation package in order to attract the best local talent.

Thank you Madam President.

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Comments (2)

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  1. wahoo says:

    We cannot afford to hire full time quality lawyers no government can.

  2. Aware says:

    There is possibly some room to insource, but the risk of insourcing the big (and costly) cases is completely disproportionate to the risk. Bermuda needs world class lawyers on matters such as the Lahey dispute and cutting costs would be crazy. If the AG is correct that the competency of Government lawyers is as high as that of those in public practice, then I and many others will be thrilled. However, please have an independent assessment performed to ensure that is the case before entrusting highly complex matters to less experienced people.