Legal supervision a requirement for the legal profession
A lawyer graduated in September 2018 and was admitted as a solicitor in NSW in December 2018. He was a restricted legal practitioner because he had not yet completed the legal supervision requirement. Legal supervision does not always require employment at a law firm. The supervision must be provided by a registered and licensed solicitor.
Solicitor terminated engagement under legal supervision
The lawyer entered into a legal supervision arrangement with a law firm on 17 January 2019 that was supposed to last for one year or until 17 January 2020, but in April 2019 he wrote to the firm expressing his wish to cease the arrangement.
Solicitor sought legal supervision from another law firm
While the first legal supervision arrangement was still in place, the solicitor sought legal supervision at a second law firm. The solicitor walked into the second law firm’s premises and proposed to fulfill his legal supervision requirement at the second law firm.
He informed the law firm’s managing partner that he had found their law firm through a Google search. At that time, the law firm was not looking to hire solicitors either as employees or contractors. The solicitor presented himself as a fully-licensed migration agent as well. He then informed the second law firm that he had resigned from the first law firm over the issue of non-payment.
Term of the solicitor’s engagement under legal supervision
The second law firm agreed to the terms proposed by the solicitor that were similar to the terms entered into by the solicitor with the first law firm. The engagement under the legal supervision had a term of 12 months or until April 2020.
Compensation of the solicitor under legal supervision
Under the terms of the legal supervision, the solicitor will be entitled to 40% of the gross professional fees generated by the solicitor up to $100,000 per annum. If the gross professional fees generated by him exceed $100,000, he will be entitled to 50% of the professional fees in excess of $100,000. The solicitor was properly advised that it was his responsibility to charge and bill the clients he brings into the firm for services provided by him and by the firm.
The firm also advised the solicitor that he ought to invoice the firm, describing the clients and the services rendered to the clients so that he can be paid his percentage share in the professional fees from clients and business generated by him.
Undertaking as to conduct whilst under legal supervision
The solicitor agreed that during the term of his engagement under the legal supervision, he will conduct himself in a proper, prudent, and professional manner required from a registered legal practitioner. He also agreed to fulfill all the licensing and qualification requirements necessary to perform his duties and to strictly adhere to the Rules of Conduct and Code of Ethics. The solicitor registered himself with the Australian Tax Office and obtained his own ABN.
Offer of employment from law firm, refused by solicitor
All went well and around April 2020, at the end of the term of the supervision, the second law firm offered the solicitor employment with their firm but the solicitor refused. Thus, the business relationship defined under the terms of the legal supervision continued.
Solicitor claimed benefits under Job Keeper arrangements
When the Covid-19 pandemic began, the government of Australia mandated the JobKeeper arrangements. The solicitor then claimed to be a full-time employee of the firm. He claimed to be rendering 50-60 hours of work every week with overtime and that he even worked on weekends. At the time, the solicitor had established his own migration agency and he had received full JobKeeper payments arising from his employment at his own migration agency.
Review by the firm of some concerning behaviour of the solicitor
The firm then began approaching the solicitor regarding his behaviour, particularly, his lack of polite dealings with members of the firm and clients. The solicitor was called to a weekly review meeting on 26 August 2020. The solicitor was requested to attend the premises for the meeting but the solicitor attended the meeting remotely.
At the meeting, the head of the firm began to speak directly about some behaviour of concern that the solicitor had exhibited at or around 17 August 2020. The solicitor was highly and personally affronted by the words of the head of the firm. The head of the firm them suggested for the solicitor to come and speak privately with him at the firm’s premises.
Hostile and aggressive behaviour during the meeting
During the in-person meeting at the firm’s premises, the solicitor yelled at the head of the firm. Disturbed by the solicitor’s aggressive and hostile behaviour, the head of the firm told the solicitor to leave the premises. The head of the firm advised the solicitor that if he refused to leave the premises, the head of the firm will call the police.
Solicitor stole electronic files belonging to the firm
Instead of leaving the premises as requested, the solicitor sat at an office desk, opened up a computer and refused to leave. The police were called. The head of the firm had asked the members of the firm to leave the premises while he himself waited for the police at the reception.
Even when the police arrived, the solicitor refused to leave the firm’s premises, insisting that he was an employee. The solicitor then busied himself on his workplace computer stating that he had to send urgent emails. The solicitor told the police that the head of the firm had been violent toward him. All that time, the solicitor had taken his work emails from the firm’s account and stored them on his own unsecured personal server. He then deleted the firm’s copy of all his personal and work emails, in effect, stealing emails and other data from the firm.
Firm terminated the solicitor’s engagement under legal supervision
The head of the firm sent the solicitor an email requesting return of all firm property including files he still had in his possession. He also advised the solicitor that his behaviour will be reported with the Legal Service Commissioner Board and that an investigation will be held at the firm. The head of the firm then advised the solicitor that he will no longer be able to supervise the solicitor. Thus, the supervision arrangement was terminated on 26 August 2020.
Solicitor demands payment in exchange for firm’s electronic files
However, the solicitor began to accuse the head of the firm that his supervision arrangement with the firm was exploitative. The solicitor refused to return the files he had taken from the firm’s computer until the amount of $93, 736.58 representing amounts due on invoices and claims for reimbursement and other entitlements had been paid to him.
Application for unjust dismissal
The solicitor also filed an unjust dismissal application with the Fair Work Commission claiming that he had been engaged as an employee of the law firm. In its response, the firm contested the solicitor’s claims and asserted that the solicitor was an independent contractor and not an employee. The firm stressed that under the terms proposed by the solicitor himself the parties intended not to create an employer-employee relationship.
FWC’s characterisation of the relationship between the solicitor and the firm
The relationship was neither an employer-employee relationship or one of a principal-independent contractor relationship. The terms show that the principal purpose of entering the relationship was to provide a period of legal supervision so that the solicitor can fulfill the requirements of the legal profession. However, there was a provision for remuneration.
Behaviours indicating employment relationship
Despite the explicit terms of the legal supervision that stated that the parties do not intend to create an employer-employee relationship, both the solicitor and the law firm behaved and presented themselves to others as having an employer-employee relationship.
The solicitor registered himself with the local law society and self-identified as an employee of the first law firm as well as the second law firm. He also identified himself as an employee of a law practice in his application for renewal of an Australian practicing certificate as a solicitor and member of the law society. The solicitor even used business cards using the law firm’s name, address, logo, trademark, and other contact details.
On the part of the law firm, it completed documents that were submitted to the Law Society, the Legal Aid and its own professional indemnity insurer indicating that the solicitor was its employee.
Right to control work and manner of working
The firm exercised control or at least had the right to exercise control over the legal work performed by the solicitor. However, the firm did not have any right to control the solicitor’s work as a migration agent.
Used his own tools and equipment
The solicitor used his own mobile phone for outgoing communications but used the firm’s subscription to legal software and computer systems. The firm allowed the solicitor to use and maintain its computer software for accounting and for recording transactions with clients including bank account information. The firm also provided the applicant with a desk and a computer at the law firm’s premises.
Expectation of regularity
Because the firm undertook to supervise the solicitor, there was an expectation that the solicitor attended the premises of the firms and render certain days and hours of work. However, at the time of the legal supervision, the solicitor was also still undertaking further studies in law and was seeking accreditation as a mediator. He was not required, however, to render a prescribed minimum number of hours of work per week. The firm, however, recorded the solicitor’s attendances and departures from the premises.
Performing work for others
The solicitor had other businesses and he was an investor and director in his own investment company. He had business activities in businesses that were different from the ABN-identified entity in the invoices submitted by the solicitor to the firm. The solicitor performed work on his own behalf as a registered migration agent and he had separate business ventures and did not rely solely upon the firm for his financial means.
Compensation and reporting for taxation purposes
The firm did not send compensation to the solicitor through electronic fund transfer as the firm never obtained the solicitor’s bank or financial institution details. The compensation of the solicitor was sent through bank cheque.
The solicitor was not remunerated periodically through a wage or salary nor was he remunerated by reference to the completion of tasks. Instead, the solicitor was remunerated after he sent monthly invoices to the firm. The invoices submitted by the solicitor contained requests for payment for services such as assembling furniture, removing furniture and for IT services.
The firm never provided the solicitor with paid holidays or sick leave or any paid leave entitlements. It was also clear that the firm never deducted income tax from the amounts paid to the solicitor nor do the invoices submitted by the solicitor for payment by the law firm contain a component for GST.
No right to dismiss or suspend solicitor
The terms of the legal supervision did not give the firm any right to suspend or dismiss the solicitor which would imply an employment relationship. The solicitor claimed that on 26 August 2020, the firm dismissed him three times when the head of the firm asked him to leave the premises and when he informed the solicitor that the firm was no longer able to continue with the supervision.
Irreparable damage to the business relationship
It is true that the relationship, whatever it was, was irreparable damaged in connection with the aggressive encounter and the involvement of the police. The relationship continued until 28 August 2020 when the head of the firm explicitly stated that the engagement of the solicitor was terminated with immediate effect. Granting for the sake of argument that the solicitor was an employee of the firm, the immediate termination of the engagement of the solicitor on 28 August 2020 was a summary termination of the solicitor.
Fairness in summary dismissals
It is fair for an employer to dismiss an employee without notice or without warning when there are reasonable grounds to believe that the employee’s conduct was sufficiently serious to justify immediate dismissal.
Not only did the solicitor fail to maintain behaviour in accordance with his undertaking under the terms of the legal supervision, his aggressive behaviour toward his colleagues at the firm showed that he had no respect for them. Also, he took files belonging to the firm and refused to return them unless he was paid the amounts he had demanded. He never returned those files that did not belong to him.
Application for dismissal, dismissed
The application for unjust dismissal was dismissed on two grounds: that there was lack of evidence that the solicitor was an employee of the law firm; and that even if the solicitor were found to have been an employee, the law firm was justified in its immediate termination of their business relationship with the solicitor
Prateek Patial v. Kailash Lawyers Pty Ltd T/A Kailash Lawyers and Consultants  FWC 4167 (6 August 2021)
When verification was a team responsibility, evidence from the entire team must be considered or the investigation will be deficient
Exceptional circumstances: When a late application for unjust dismissal can still be heard by the Fair Work Commission