Tribunal: Firm did not prove redundancy was cause of dismissal
A salaried partner in the London office of a leading Canadian law firm has won his case for unfair dismissal after a tribunal rejected its claim that he was made redundant.
Employment Judge Anthony was not persuaded that McCarthy Tétrault’s requirement for employees to do litigation work had either ceased or diminished.
Allan Reason, a highly experienced solicitor, became a litigation partner at the firm in November 2018 on a salary of £305,000 plus discretionary bonus. His annual billing target was 1,400 hours.
The firm said Mr Reason only met this target in the first year. In an informal discussion with managing partner Robert Brant over drinks at the Coq d’Argent restaurant in December 2022, Mr Reason was offered a 460-hour reduction in his target in return for his salary falling to £110,000.
Negotiations over this continued for some months. Judge Anthony found “Mr Brant’s informal approach to underbilling was not [McCarthy Tétrault’s] accepted practice”; rather, there would be a warning at annual reviews, which did not happen.
There was also nothing about underbilling, or the firm cutting back on litigation work, in Mr Reason’s 2022 performance review.
The judge rejected the firm’s suggestion that he should have seen the absence of a ‘cost of living’ salary increase as “stark warning” that he was at risk of redundancy.
His employment contract did not “provide for an expectation that there would be any salary increase unless there was a significant change in the claimant’s practice or financial performance”.
Judge Anthony added: “I find there can be many reasons for a fee earner’s underbilling and that a diminishing need for employees to carry out such work is just one of those reasons.
“The burden lies on the respondent to show that, in this particular situation of fee earner underbilling, that redundancy was the reason or principal reason for the dismissal.”
McCarthy Tétrault would have had “valid concerns” about Mr Reason’s years of underbilling and failure to meet performance expectations, she acknowledged, but that was not the issue before her.
Redundancy was only raised in March 2023. The judge said: “If a reduced requirement for employees to do litigation work was indeed a material matter, it is curious that the [firm] did not think it was relevant to highlight this earlier than 17 March 2023.”
Then, on 31 March, McCarthy Tétrault formally offered Mr Reason a “smaller role” at a reduced salary as an alternative to redundancy.
The letter said: “[Your] current role is not sustainable and the situation is not tenable given that your hours and revenue generation have been well below expectations for more than three years now.”
This offer was withdrawn on 12 April. The judge did not accept the reasons given by the firm for this – as nothing had changed in the intervening period – and said it “appears to be for another reason which the respondent has not articulated in the evidence before me”.
Indeed, the firm’s comments in the 2022 feedback form were “positive in terms of future projection of litigation and arbitration work” and there was nothing to suggest that anything had changed thereafter, or that Mr Reason’s performance was directly linked to the insufficient litigation/arbitration work in London.
“In fact, it would be wholly surprising if the respondent, an established international legal practice, did not know the state of health of its litigation practice between the end of 2022 and early 2023, and only suddenly became aware in or around March 2023. I do not accept this is the case.”
Further, Judge Anthony asked, if this was the case, why did the offer of an alternative employment arrangement remain open? “I find the respondent has failed to provide a cogent explanation for what had changed.”
This meant that the law firm had offered no potentially fair reason for Mr Reason’s dismissal. “The claim of unfair dismissal is accordingly well founded and succeeds.”
There will be a separate hearing on remedy.
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