Is My Solicitor’s Fee Covered In The Settlement Agreement?
By Geoffrey Caesar, specialist settlement agreement solicitor.
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Yes, it is common practice for an employer to cover a portion of the solicitor’s fees when an employee is offered a settlement agreement. This fee coverage is intended to ensure you receive the independent legal advice required to make the agreement legally binding. However, there are some important considerations around how much is covered, what’s included, and whether this amount will fully cover your legal expenses. Here’s a detailed look at what’s usually covered, why employers offer this benefit, and what to expect in terms of costs.
1. Why Employers Typically Cover Solicitor Fees
For a settlement agreement to be legally valid, UK law requires that the employee obtain independent legal advicebefore signing. This advice ensures that you understand the terms and implications of the agreement, including any rights you may be waiving. Since this requirement benefits both the employee and employer by reducing the likelihood of future disputes, it’s standard practice for employers to contribute toward the cost of that legal advice.
By covering your solicitor’s fees, employers demonstrate their commitment to fair practices and make it easier for you to obtain the advice necessary for an informed decision. Without this contribution, employees may hesitate to seek legal advice due to out-of-pocket costs, potentially leaving them uninformed about their rights.
2. How Much Does the Employer Typically Cover?
The amount your employer offers for solicitor fees can vary, but it’s usually intended to cover the basic cost of legal advice for reviewing the agreement. The typical contribution is often between £350 and £750 plus VAT, though it can sometimes be higher, particularly for complex agreements. However, this standard contribution may or may not fully cover the total cost, depending on factors such as:
- Complexity of the Agreement: If the agreement contains detailed terms like restrictive covenants, complex compensation structures, or additional non-financial clauses, more time may be needed to review it thoroughly.
- Negotiations: If your solicitor negotiates the terms on your behalf to improve the offer, secure higher compensation, or remove unfavorable clauses, additional time and fees may be involved.
- Additional Services: If you require specific advice on tax implications, pensions, or ongoing benefits, these discussions could go beyond the standard review, incurring extra costs.
It’s worth asking your solicitor upfront if they believe the employer’s contribution will cover all necessary services. If not, they can provide you with an estimate of any additional fees before proceeding.
3. What Does the Covered Fee Typically Include?
The employer’s contribution usually covers the basic review and explanation of the settlement agreement. This includes:
- Initial Consultation: Your solicitor will go over the agreement’s terms with you, explaining each clause and what it means for your rights and obligations.
- Waiver of Claims: Settlement agreements typically require you to waive certain legal claims against your employer. Your solicitor will explain which claims you are waiving and ensure that you understand the implications.
- Financial Review: Your solicitor will review any financial components, including severance pay, redundancy payments, and other compensation, to ensure they align with your entitlements.
- Advice on Terms: Common terms, such as confidentiality clauses, restrictive covenants, and non-disparagement agreements, will be reviewed to make sure they’re fair and won’t unduly limit your future options.
In many cases, this basic review and consultation will be covered by the employer’s contribution. However, if you need additional services, such as negotiating for a higher payout, your solicitor may charge for that time separately.
4. What if Additional Fees Are Required?
If the settlement agreement is straightforward and doesn’t require negotiation, the employer’s contribution will often be enough to cover the solicitor’s fee. However, if further services are needed, such as:
- Negotiating Improved Terms: If you want to negotiate for higher compensation, extend health benefits, or adjust restrictive covenants, your solicitor may need additional time.
- Tax Advice: Some settlement payments may have tax implications. If specific tax advice is required, it may incur extra costs.
- Additional Document Review: Occasionally, settlement agreements come with supplementary documents that require review, which may not be included in the standard fee.
If additional fees are necessary, your solicitor will inform you in advance, so there are no unexpected costs. You may also consider asking your employer if they’re willing to increase their contribution, particularly if the agreement is complex or requires further negotiation.
5. Can You Negotiate for a Higher Contribution?
Yes, in some cases, you can request a higher contribution from your employer to cover legal fees, especially if the agreement is lengthy or contains complex clauses. Here’s how you might approach this:
- Explain the Need: If the agreement includes unusual clauses or complex financial terms, highlight these to your employer as a reason for needing extra legal time.
- Justify the Cost: Inform your employer that obtaining thorough legal advice will ensure the agreement is sound for both parties, reducing the chance of misunderstandings or disputes later.
- Consider Compromise: If the employer is hesitant to increase the contribution, you could agree to cover a small portion yourself while requesting a modest increase from the employer to bridge the gap.
Employers are sometimes willing to increase the contribution if it means finalizing the agreement efficiently and ensuring you’re fully advised.
6. Do You Have to Pay Any Upfront Fees?
Most settlement agreement cases don’t require upfront payment from you because the employer’s contribution usually goes directly to the solicitor. Typically, the solicitor’s invoice is sent directly to the employer for the agreed-upon amount. If additional fees are required, you may discuss payment arrangements with your solicitor, but in many cases, basic review fees are covered without upfront payment by the employee.
7. What to Do If the Employer Doesn’t Offer Fee Coverage
If your employer doesn’t initially offer a contribution for legal fees, it’s reasonable to request one. Explain that independent legal advice is a legal requirement for the agreement to be binding, and mention that it’s common practice for employers to cover this cost. If they decline, be prepared to cover the cost yourself if you choose to proceed with the agreement. However, in most cases, employers recognize the need and value of covering this expense.
Final Thoughts
While employers aren’t legally obligated to cover the cost of legal advice, it’s standard practice, and most employers will offer a reasonable contribution. This coverage typically applies to basic review and consultation fees, though complex agreements or negotiation may incur additional costs. If you’re unsure whether the employer’s contribution will cover everything, ask your solicitor for a clear breakdown of what’s included and any potential additional fees.
By securing thorough legal advice, you protect your rights, ensure a fair deal, and can move forward confidently, knowing you fully understand the terms of your settlement.
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