McCarthy was admitted as a Solicitor of the Supreme Court of NSW in 1972, as a barrister of the Supreme Court in 1976 and appointed Queens Counsel in 1988. McCarthy has appeared in the High Court of Australia, Privy Council, Federal Court of Australia, Supreme Court of New South Wales, Australian Industrial Relations Commission, NSW Industrial Relations Commission, Family Court of Australia, NSW Land and Environment Court, Independent Commission Against Corruption, District Court and Magistrates Court. McCarthy has had an ongoing involvement with constitutional, electoral and organisational issues relating to indigenous associations, educational institutions and sporting organisations. McCarthy was Senior Counsel for the Dunghutti people in 1996 and participated in the negotiation and settling of the first Deed of Agreement between the Crown in New South Wales and an indigenous people in respect of native title. He then appeared as Senior Counsel in the Dunghutti case in the Federal Court in 1997, in which for the first time on the Australian mainland there was a determination of native title under the Native Title Act. McCarthy has represented Catholic bishops and Catholic agencies and institutions in many cases. He has also acted as Senior Counsel for the National President of the St Vincent de Paul Society in Australia. McCarthy is Senior Counsel for the Church of the Torres Strait, an indigenous church of former Anglicans and for the Anglican Catholic Church of Australia, both of which are seeking full communion with the Catholic Church under the Apostolic Constitution, Anglicanorum Coetibus. McCarthy has appeared in cases in the High Court on native title, trade practices and electoral matters. He has also appeared in several cases in relation to the NRMA and the . He was also Senior Counsel during the revision of their constitutions and rules. Other important cases in which he has appeared include the Maralinga and Voyager compensation cases. McCarthy has appeared in ICAC inquiries, a Royal Commission and similar public investigations and inquiries. McCarthy became Senior Counsel for the Labor Party in NSW in 1988. He appeared for the ALP in courts of disputed returns, electoral boundary commissions and supreme court proceedings. He also advised the ALP National Secretariat on legal and constitutional issues.
On 29 April 2012, Australian Prime Minister, Julia Gillard, and Foreign Minister, Bob Carr, announced the appointment of McCarthy as Australia's Ambassador to the Holy See. McCarthy discussed the position with The Catholic Weekly: "It is always a privilege and an honour to be called on to represent your country. I am thankful to our Government for the opportunity to represent Australia in this important role in this great place, and to be able to go with Christine to the Eternal City and to have the occasion, opportunity and the presence of the Holy Father to put Australia’s case and to represent my country in that way. I am on a 90-degree learning curve, I learn more every day. Ambassadors to the Holy See go back into the fable of time. The journey I undertake for Australia is the oldest continuous political journey in the world and in history. It goes back to the fourth century of the Christian era." Acknowledging his predecessor in Rome: "Tim Fischer is a benchmark; he is also a challenge. There are some challenges I will not take up. I will never compete with Tim about trains and about the range of hats that I may have. However, I do hope to follow him in being able to put to the dicasteries and congregations of the Holy See, positions that Australia has on human rights, inter-faith dialogue, food security, peace in our world and region, all areas in which the Holy See has influence." Taking up his posting in August 2012, McCarthy presented his diplomatic credentials to Pope Benedict XVI on 5 November 2012. He led the development of St Peters Cricket Club in 2013 and then the Vatican Cricket Team in 2014. McCarthy concluded his mission to the Holy See on 29 January 2016.
Family life
McCarthy married concert pianist Christine Slattery in 1973. Christine is the National Convenor of the Society for Eucharistic Adoration, serves on the Liturgical Commission for the Archdiocese of Sydney, and has written and lectured extensively on Catholic themes. The McCarthys have three daughters and three sons. Their second daughter, Claire McCarthy is an acclaimed Australian film director. Their second son, Father James McCarthy, is a priest of the Archdiocese of Sydney; he studied for the priesthood in Rome and was ordained in 2009.