A jury verdict last week against a large regional Baltimore-based firm, Miles & Stockbridge, highlighted a recurring question in employment disputes involving law firms: Should partners be considered workers or owners under employee protection laws?

A jury in Baltimore City Circuit Court awarded $231,000 to plaintiff Donald English, now a principal at Jackson Lewis, for claims against Miles & Stockbridge under a Maryland wage law and for breach of contract. The law firm could be liable for much more: English's attorneys intend to seek at least $500,000 in attorney fees and expenses in light of the verdict.

Miles & Stockbridge said it intends to appeal the verdict.

English practiced at Miles & Stockbridge for more than 13 years, including three as an equity principal. At the firm—an Am Law 200 firm with 216 lawyers that generated $116.5 million in revenue last year—he was to make $223,000 in 2017, including salary, bonus and other payments.

After he gave notice last year that he was leaving to join Jackson Lewis, English expected a full return of his capital contributions to the firm, totaling about $68,000.

Instead, he received far less, when the firm determined that money was “advanced” or “loaned” to him between January and June 30, 2017, and it should be recouped from his capital account. According to his court papers, the firm told him the $107,866.51 in salary he was promised, earned and was paid in the first half of 2017 had been retroactively reduced to $49,386.

Ultimately the firm sent English a check for $9,519, reflecting his capital minus the setbacks.

English filed his lawsuit in August, asking for at least $68,682.

According to its court papers, Miles & Stockbridge argued English was a stockholder and so part owner of the firm, and like other stockholders, his compensation was calculated based on his share of the firm's profits. To help its stockholders during the year, Miles said it “advances” to its stockholders draws against their share of the firm's projected profits.

The firm argued that, at the time of his resignation, English's draws against his compensation exceeded his share of the firm's earnings by about $58,000.

But English asserted he ought to have been paid for work he performed. He argued that documentation produced during discovery demonstrated he was paid a salary and bonuses, rather than a percentage of profits. He argued the firm's clawback of his salary violated the Maryland wage payment and collection law, which requires employers to pay employees their wages by their regular pay period and prohibits them from making unauthorized deductions from wages.

At trial earlier this month, seven former Miles principals testified for English, plaintiffs attorney Tonya Baña said, including some who had complained about the firm's reduced payments to outgoing partners.

Baña said four of the seven witnesses are now practicing at Nelson Mullins Riley & Scarborough after leaving Miles early this year.

After deliberating for a couple of hours, the jury on June 13 awarded English the amount he was seeking on the wage claim, trebled under the wage law, and an additional $25,000 for the breach of contract claim, according to Baña. English's lead counsel at trial was solo practitioner Kenneth Ravenell as well as co-counsel Baña, also a solo practitioner.

Baña said she anticipates submitting a fee petition for at least a half a million dollars, in light of her repeated attempts to settle the case before and during the litigation, and she intends to appeal the pretrial dismissal of English's fraud and conversion claims. “They are engaging in a scheme to steal from their principals,” she said.

'Huge Vindication'

She said the case raises an issue of whether a law firm—Miles & Stockbridge is a professional corporation—can “pretend” its employees are partners in a true partnership for wages and tax purposes.

“They're picking and choosing wither they're going to treat you as an employee or partner,” Baña said, adding she imagines other law firms, maybe regional firms just inside and outside the Am Law 200, “are using the ambiguities [between employee and partner]” to take advantage of those not familiar with employment and wage laws.

The question of whether law firm partners should be treated as employees under the law has arisen in high-profile law firm discrimination cases, including those cases against Chadbourne & Parke and Proskauer Rose. In both cases, the firms have maintained the plaintiffs were partial owners of their law firms and don't qualify for certain employment protections.

Still, Baña said the trial did not focus on whether English was a partner or employee, and Miles & Stockbridge did not dispute he was an employee for purposes of Maryland wage law. The material issue of the case, she said, was what compensation they had promised English for the work he had performed.

The verdict “is a huge vindication of my client,” she said.

Despite her satisfaction with the verdict, Baña noted she was formerly an associate at Miles & Stockbridge for three years before a series of career moves, including serving as an associate at Jones Day for several years, and she said she still has great affection for some lawyers there.

In an interview, English, a defense-side employment lawyer, said he knew bringing the case could affect his practice. But he said he now has a new appreciation for what it means to be a litigant and that has improved his advocacy skills. “It made me a better lawyer,” he said.

In a statement, Miles & Stockbridge, represented by Gallagher Evelius & Jones, said it was pleased the court dismissed English's fraud claim before trial. It added: “The simple fact is that Mr. English claimed more compensation than he was due under the terms of the agreements he signed when he became a stockholder and owner of Miles & Stockbridge. His obligations were fully outlined in his agreements with the firm and consistent with the law and long-standing practices for the firm's owners and compensation practices in the profession.”

It also addressed the Nelson Mullins witnesses at trial. “The firm will resolve any outstanding issues with those principals in the time and manner provided for in their employment and shareholder agreements,” the firm said.