Life’s tough at HWL Ebsworth … Salary partner booted by Juan when billings dropped … No need to have a meeting of equity partners … Benefit of incumbency vanishes … Court of Appeal chops the damages by 72% … Happy Christmas … Nathan Twibill reports on round two of the Martinez and Griffiths stoush
Martinez v Griffiths was an appeal by HWL Ebsworth (led by managing partner Juan Martinez) from a Supreme Court decision ordering damages to be paid for wrongful dismissal to Tim Griffiths, a salaried partner.
Griffiths’ monthly billables effectively collapsed as his main client introduced in-house counsel, resulting in Martinez issuing him a notice of termination on July 20, 2015.
A few weeks later, on August 12, following a string of events about which the managing partner was unimpressed, he requested Griffiths leave immediately and be paid one month’s salary. Griffiths departed, but later sued for wrongful termination.
Martinez’s method attracted the ire of Justice Stephen Robb earlier this year who concluded that Martinez did not have delegated authority from the equity partners of the firm to fire Griffiths, and did not have grounds for the purported summary dismissal in August.
He awarded the plaintiff damages of $450,000, funds that supposedly would have flowed if procedure was followed and three months’ notice given following a meeting of the equity partners.
There were a few controversial points on appeal. HWLE first challenged the primary judge’s finding that wrongful termination occurred at all.
Following some difficulty in amending pleadings, Martinez relied on the point that summary termination was warranted due to Griffiths printing off practice precedents for his brother’s use, and his subsequent lack of candour when questioned on the matter.
This assertion flatly contradicted Justice Robb’s acceptance of Griffith’s evidence that it was not his intention to do so, merely printing the precedents to inspect their contents.
The appellant was left with the unenviable task of meeting the Fox v Percy threshold, requiring the primary judge’s finding to be “glaringly improbable” to justify appellate intervention. Martinez failed at that hurdle.
The more pressing discussion in Justice Tony Meagher’s reasons (unanimously supported) concerned how the money should be counted. Bret Walker for HWLE successfully persuaded the court that Robb erred significantly in his construction of the most probable counterfactual had protocol been followed.
Following a decision by the equity partners, a salaried partner could be terminated, without cause, with either three months notice or three months pay in lieu of notice.
In the circumstances, Robb considered it more probable than not that the partners would have allowed Griffiths to work out his notice period, “if only to act decently”.
An expectation of “decency” was not granted similar weight by the appeal judges. Martinez had fired seven salaried partners of his own accord prior to August 2015, with no complaint by the equity partners.
His authority in determining the continued employment of salaried partners seemed to be assumed.
The urgency with which Martinez sought to remove Griffiths was clear from their email communications in mid-August. Given this, the court held it was most likely Martinez could have organised a teleconference within a week and achieved agreement to terminate Griffiths’ employment with 3 months pay.
Justification of dismissal was also not likely to be required. Griffiths’ collapse in billables was sufficient in an eat what you kill law shop.
The “overwhelming likelihood” was that wrongful termination did not result in Griffiths losing any “benefit of incumbency” in seeking future employment.
The lost opportunity to seek new employment while still located at HWLE was assessed by Robb at $305,000. Together with $145,000 awarded for lost salary that brought the money awarded, on a rounded-down basis, to $450,000.
Tony Meagher, with Taco Bell ACJ and Reg Barrett AJA, took away the $305,000 because no benefit of incumbency arose.
Meagher went further, saying that there was no evidence that “incumbency” was a distinct commercial benefit which was compensable at all.
Even if notice was required by the contract, Griffiths would not have been entitled to two-thirds of the damages initially granted to him.
The $145,000 for lost four month’s salary was reduced by $18,000 (about a fortnight’s pay) because if Martinez had called an “inferred” meeting of equity partners to get them to sign-off on Griffiths dismissal, then that could have happened slightly earlier, reducing the damages accordingly.
Instead of $450,000, poor old Griff wound-up with $127,000. Thanks Bret.
In September, Justinian reported Gary Rumble’s action over his dismissal by Juan for criticising of a client. The case in the Federal Court also considered the consequences of the firm failing to invite Dr Rumble to it’s Christmas party. See Rumble in the jungle
In September 2017 there were allegations by a female partner of sexual harassment, bullying and underpayment at the law shop. See Workplace grief