Junior lawyer awarded $157k in backpay from small firm
A small law firm has been ordered to pay a paralegal-turned-junior lawyer $157,000 in backpay after a court found it was underpaying him on the lucrative employment contract that should have guaranteed him up to 50 per cent of his clients’ fees.
Law firm James McConvill & Associates and its principal James McConvill have been ordered to back pay Joseph Carbone over $157,000 and an additional $5,051 in annual leave entitlements after the Federal Circuit Court of Australia found that his lucrative employment contracts and related financial privileges were not being met.
Mr Carbone was employed by the firm as first a paralegal and then a junior solicitor under what he called a “post admission agreement”. As part of the agreement, he submitted that he would be remunerated “50 per cent of the fees, less disbursement, received by the partnership from files of which I had carriage”.
Between July 2015 and August 2016, he received a salary of $35,000 per annum and would be entitled to the 50 per cent commission. Based on a second contract, he was still paid the same annual salary, but the commission dropped to 40 per cent.
Based on the second contract, Mr Carbone submitted that he should have received $940,000 but that he was instead only paid $594,383. This and his request for $345,617 in compensation, however, were based on his assumption that he would have gone on to be employed for longer if his employment was not terminated.
The Federal Court noted that the breaches in relation to his termination occurred when there had been a breakdown in the relationship between Mr Carbone and Mr McConvill. While Mr Carbone was a junior solicitor, he and the firm had negotiated and proceeded on the basis that he received a significant share of profits, which meant that in a sense “his position was more akin to that of an executive employee”.
“There are allegations, and cross-allegations, passing between [Mr Carbone] and [Mr McConvill] in relation to each other’s conduct/conduct towards the other, and in relation to [Mr Carbone’s] conduct towards other employees,” the judgement read.
“These are outlined in the applicant’s affidavit where, amongst other things, he alleges that Mr McConvill, in the course of employment, systematically abused him and allowed other staff members to do the same, placed his practicing certificate at risk and subjected him to discrimination. What is apparent is that, in the context of a small employer, an employee and principal were not working cooperatively.”
Given this, the judge did not believe that Mr Carbone’s employment may have continued for a further two years, as he submitted.
The Federal Court also considered a without prejudice offer to re-employ Mr Carbone on the basis of him receiving approximately 33 per cent of the billings and $75 an hour for non-billable work. The judgement read that this did not necessarily mean Mr Carbone would have continued to be employed at the firm for longer.
“I note that the offer was rejected by [Mr Carbone] and, further, the offer was made in the context of seeking to resolve legal proceedings rather than as a genuine statement of intent to employ the applicant over a long-term period,” the judgement read.
The entire judgement can be read on AustLII: Carbone v James McConvill & Associates  FCCA 661 (9 April 2021).