Dobbie v Feltons Solicitors – Why Clear Consultancy Agreements Matter
Hello and welcome back to this week’s case of the week. If you missed our May Newsletter, click here to read it. In this edition, we examine Dobbie v Feltons Solicitors, a dispute highlighting the importance of clear contractual terms in consultancy agreements, particularly around payment structures and contract variations.
Background
The Claimant was a solicitor and non-practising barrister, who worked for the Respondent under a consultancy agreement. Under this agreement, the Claimant was to receive 40% of fees billed, paid and received by the Respondent for work he performed. The agreement included standard terms such as a non-variation clause, meaning it could only be changed in writing, and an ‘entire agreement’ clause confirming it reflected all agreed terms.
A dispute arose concerning payments related to work undertaken for a particular client, referred to as ‘client A.’ The Claimant asserted that he was owed 40% of the total client fees, including for work carried out by other fee earners, or alternatively, that there was an oral agreement entitling him to a fixed monthly fee of £10,000 for two months. The Respondent maintained he was only entitled to 40% of fees directly attributable to his own work.
The Employment Tribunal (ET)
The ET initially found that there was an oral agreement to pay the Claimant £5,000 per month for 50 hours of work for client A. The tribunal rejected the Claimant’s claim for £10,000 per month, finding no evidence of a revised oral agreement. It concluded the Claimant was not entitled to 40% of fees for work he had not personally performed.
The ET reaffirmed that no valid oral variation of the written agreement had occurred, in line with legal principles, due to the presence of a ‘no oral modification’ clause.
The tribunal concluded that even under the original consultancy agreement, the Claimant’s entitlement was limited to 40% of the fees for work he personally performed, not the full amount paid to the client.
The Employment Appeal Tribunal (EAT)
The Claimant appealed on three grounds. The first ground was that there was an enforceable oral agreement entitling him to £10,000 per month. Secondly, that he suffered an unlawful deduction from wages. Lastly, that under the consultancy agreement, he was entitled to 40% of all fees billed to client A, regardless of who performed the work.
The EAT dismissed all grounds of appeal.
The EAT found that the ‘no oral variation’ clause was effective, meaning any oral agreement could not override the written terms. The written agreement, properly interpreted, did not permit the Claimant to receive a substantial amount of fees earned by others. The 40% fee applied strictly to work done by the Claimant. Consequently, there was no unlawful deduction from wages; the Claimant had received what was contractually due.
The EAT stated that the agreement was intended to reflect a fee-for-service model based on the individual consultant’s work, not a profit-sharing or collective billing arrangement.
Takeaway Points
Employers should ensure that they have well-drafted consultancy agreements, particularly with explicit terms on payment, work scope, and variations.
It is important that Employers define fee entitlements clearly. Be clear in consultancy contracts whether commission or percentage-based fees relate to individual or collective work. Ambiguity may invite legal challenges and misaligned expectations.
Avoid informal variations. Any amendment to fee arrangements must be formally drafted and signed by both parties, even mutual oral agreements may be unenforceable if the contract prohibits them.
While the Claimant was a self-employed consultant, disputes over payment, status, and entitlements can still lead to litigation. Employers should ensure clear boundaries and documented practices.
If you or someone you know are dealing with a similar issue, please contact us for further assistance.
