Agreement: Firm’s interpretation made more commercial sense
A consultant solicitor in a long-running dispute with his former law firm over his entitlement to a share of its fees has failed in his appeal to the Employment Appeal Tribunal.
Judge Michael Ford KC held that Employment Judge Elliott in London had rightly interpreted Alastair Dobbie’s consultancy agreement with London firm Feltons as only entitling him to 40% of the fees he charged a particular client, rather than all the fees the firm charged that client.
The first ruling in Mr Dobbie’s dispute with Feltons was in 2017, the year after his consultancy ended, and has encompassed claims of automatically unfair dismissal for whistleblowing, breach of contract and unlawful deduction from wages.
The latest decision concerned the latter and focused on clause 3 of the consultancy agreement. This provided: “The Consultant shall be paid a consultancy fee of 40% of the fees billed which have been paid and received by the Practice net of VAT and disbursements on receipt of an appropriate invoice which shall be rendered at the end of each month by the Consultant.”
Mr Dobbie alleged that he was entitled to £10,000 for each of January and February 2016, being 40% of what the firm billed the client, rather than £5,000, as 40% of what he billed.
EJ Elliott found the solicitor was “not entitled to be paid at 40% of fees billed and paid in relation to work done by other fee-earners”.
Judge Ford agreed, rejecting the contention that EJ Elliott had implied a term into the contract rather than engaged in contractual interpretation.
He acknowledged that clause 3 was “somewhat ambiguous” as to what fees it referred to, but pointed to the “important contextual indication” of an invoice being rendered by the consultant.
“A consultant would not necessarily know, and probably would not know, how much work had been done by other consultants for a particular client. It is hard to see how an invoice simply stating, for example, that ‘I claim 40% of all the fees billed and paid in respect of client X’ would be an ‘appropriate invoice’ within the intended meaning of the clause.
“It suggests reasonable persons in the position of the contracting parties would have contemplated invoices only in respect of the consultant’s personal work for a particular client.”
The firm’s construction fitted “much better with commercial common sense”, the judge went on. “By contrast, some of the consequences of the claimant’s interpretation border on the ludicrous.
“At one stage the claimant was inclined to suggest that clause 3 meant that he was entitled to 40% of all the fees billed by the firm, even if he had never done any work for the particular client(s) – with the outlandish consequence that if the firm billed and was paid £100,000 for the work of 20 other consultants for a client, he was entitled to £40,000 for doing nothing (as would all the other consultants if they were engaged on the same terms): nice work if you can get it.”
Though Mr Dobbie later “seemed to accept that he had to have accepted some work for the particular client” to be entitled to 40% of the total fees, he contended that “even if he only did 10 minutes work for a particular client, he would be entitled to all the fees billed and paid by that client; if the firm billed £500,000, he would be entitled to £200,000 for those ten minutes of his time”.
Other provisions in the contract as a whole suggested that it was an agreement of remuneration in return for personal services by the consultant, Judge Ford added.
Though he found EJ Elliott had erred in another aspect of her decision, he said this was immaterial given the finding on clause 3.
