What is a reasonable legal fee for advice on Settlement Agreements? The Solomon v University of Hertfordshire case discussed

£350? £500? Or more? The Employment Appeals Tribunal have given some guidance on what is a reasonable contribution to an employee’s legal costs for them seeking the independent legal advice required to sign off a settlement agreement.

In June 2019, the Employment Appeals Tribunal heard an appeal by Mrs Solomon in her case for unlawful discrimination and unfair dismissal against University of Hertfordshire.

What has been of most interest to settlement agreement solicitors like us were the comments made by His Honour David Richardson, the main Judge in the matter.

He said:

We wish to say a word about the offer of £500 to the Claimant to obtain legal advice. We think it clear that the advice which the Claimant could expect to receive for this sum (or any sum remotely like it) would only relate to the terms and effect of the proposed settlement and its effect on her ability to pursue her rights thereafter (see section 203(3) of the Employment Rights Act 1996). Any advice as to the merits of the Claimant’s claim and the likely award of compensation would require reading and consideration on a quite different scale. So even if the Claimant had sought advice, she would still have had to make her own lay assessment as to the merits of her claim and the likely award of compensation. The ET said, in paragraph 10 of its reasons, that the offer of £500 plus VAT was for a solicitor “to advise on the merits of a settlement”. If so, the offer was wholly unrealistic.

In short, an offer of £500 plus VAT was wholly unrealistic in anything more than a simple standard redundancy based settlement agreement.

It is our view therefore that any agreement which involves:

  • actual or potential claims
  • a grievance being already raised
  • discrimination of any kind
  • additional terms such as LTIPs, share schemes, restrictive covenants and other non-standard terms
  • a re-affirmation certificate

Then we would expect the employers contribution to legal costs to be at least £500 plus VAT.

We always try to limit our settlement agreement fees to the contribution paid by the employer. We do, very often, seek to agree increases to our legal fees with your employer directly, in the above more complex cases.

If you have a question about settlement agreement fees, taking advice on a settlement agreement or anything else related to settlement agreements then get in touch today.

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