Five former Westpac employees have sued law firm Gillis Delaney alleging negligence in relation to settlement negotiations in the long-running employment lawsuit the firm brought on their behalf against Westpac.

In a directions hearing at in the NSW Supreme Court on Friday, Veronica Chapman, partner at Kennedys, which is representing Gillis Delaney, told Justice David Davies of the impending cross-claims.

“I do anticipate that on the next occasion the defendants will be serving on all five matters cross claims limited to the costs of the earlier proceedings,” she said.

The dispute stretches back to January 2010 when Gillis Delaney brought a lawsuit against Westpac in the Federal Court on behalf of seven former bankers seeking damages for alleged misrepresentations made regarding the bank’s retention incentive scheme and alleged breaches of contract resulting from a failure to pay bonuses, offer reasonable notice of termination, or calculate appropriate severance pay.

While the matter was wrapped up in March 2015, with Justice John Griffiths ordering the bank to pay over $1 million in compensation and interest to the seven former employees, Westpac successfully appealed this ruling, winning a reduction in compensation for one of the former bankers, Corey Wittenberg — from over $397,000 in total to $60,000 plus interest.

Five of the former Westpac employees — Danielle Lavars, Stuart Moore, Corey Wittenberg, Louise Murphy, and William Lawson — then launched separate proceedings in the Supreme Court, which were later consolidated, against Gillis Delaney, all of which centred on negotiations made to settle with Westpac in December 2011.

The former employees allege the offer to settle was sent to Westpac without their knowledge, that they were only informed of the offer 11 days later, and that Gillis Delaney rejected a counteroffer made by Westpac two days after that without their consent.

According to the statement of claims of four of the former workers, Westpac offered to settle all the proceedings for $4.45 million inclusive of legal costs. The final judgment awarded in March 2015 was for less than 25 per cent of this amount.

According to Lavars’ pleadings, Westpac’s counteroffer was to settle with her individually for $550,000 inclusive of costs. She ended up getting just under $372,000 including interest in Justice Griffith’s March 2015 judgment.

The employees also claim Gillis Delaney kept them in the dark about a key condition of the counteroffer — that it would only be accepted if all seven individuals agreed to it. Lavars accuses Gillis Delaney of having a conflict of interest in rejecting the counteroffer because it was acting for multiple parties in the proceedings.

Because of the rejected settlement, Justice Griffiths also ordered certain of the former bankers pay Westpac’s costs on an indemnity basis.

According to Wittenberg’s statement of claim, Gillis Delaney also told him in December 2011 that it had made an offer to settle with Westpac on his behalf for $1.25 million including legal costs despite actually making the offer for $1.49 million instead.

Gillis Delaney’s legal fees for the Westpac proceedings are currently being investigated in the Supreme Court for their reasonableness by an independent costs assessor. Any cross-claims by the law firm will be limited to any amounts determined by the assessor, the court heard Friday.

With the trial date for this matter set to commence on August 5, Justice Davies put the parties on notice that the late stage application for the cross-claim would not imperil the hearing.

“The parties are on notice that the hearing will be expected to go on on the 5th of August,” he said. “I just want to make it clear. These proceedings need to be heard.”

Lawyerly has reached out to Gillis Delaney and the five former employees for further comment.

Lavars is represented by Laxon Lex Lawyers. Moore, Wittenberg, Murphy and Lawson are represented by Somerset Ryckmans. Gillis Delaney is represented by Kennedys.

The Supreme Court cases are Danielle Lavars v Michael Joseph Gillis, Stuart Moore v Gana Holdings Pty Limited, Corey Wittenberg v Michael Joseph Gillis, Louise Murphy v Michael Joseph Gillis, and William Lawson v Gana Holdings Pty Ltd as trustee for Gana Holdings Trust trading as Gillis Delaney Lawyers.