Lincs Law

Fees & Funding: Settlement Agreements

A Settlement Agreement (previously called a Compromise Agreement) is a contract which will bind both you and your employer to its terms. Usually, in a Settlement Agreement the employer will offer a compensation payment to an employee in exchange for that employee leaving their job, giving up their employment rights and agreeing not to bring any claims against their employer. There can be a number of variations and sometimes an employee may agree to take a different job or move to a different location; however there will be a bargain or exchange between the Employer and Employee in the Settlement Agreement.

Whilst a Settlement Agreement may appear to be a normal contract, due to the inequality of the relationship between an employer and an employee, there are a number of additional legal requirements which are required before it can become binding and be enforced (if necessary) by the parties signing it. One of those requirements is that the employee must receive independent legal advice before signing the Settlement Agreement. Often the lawyer will also have to sign a declaration in the Settlement Agreement confirming they have given such advice and that the Employee fully understands the consequences of signing.

At LincsLaw Solicitors, we understand that one of the main concerns clients have about seeking legal advice are the costs involved. Whenever we can, we will give a Fixed Fee or Capped Fee estimate for our work so you have absolute clarity before instructing us.

Settlement Agreement Fixed Fees

If you have been offered a Settlement Agreement (previously called a Compromise Agreement) by your employer, you must obtain independent legal advice before signing. LincsLaw Solicitors charge £300.00 (£250.00 plus vat) and to advise you on your Settlement Agreement. The convention (although it is not a requirement) is that your employer will pay our fees for advising you.

Our fee includes a meeting with your solicitor to discuss the background of your situation and advise you on the terms of your Settlement Agreement. We put no time limit on your meeting as we understand the decision to sign a Settlement Agreement is important and has potentially life changing consequences. Put simply, we are happy for your meeting to take as long as you need. The fee also includes written confirmation of advice following the meeting.

For most people, a Settlement Agreement is dealt with at the first meeting and no further assistance is required. However, the reason we take the time to discuss the full background of your situation is to ensure you are being properly compensated for circumstances surrounding you being offered a Settlement Agreement. If you are not being properly compensated, we will advise you fully on the alternatives available to you. For example, if you are being made redundant, but are being offered the same or less than the amount to which you are already entitled by virtue of your years of employment, then there is no benefit to you in signing the Settlement Agreement. Your employer is asking you to sign away all your employment rights for monies you already have a legal entitlement to receive.

If you wish to enquire about your Settlement Agreement, please contact Lincoln based LincsLaw Solicitors for a free, no obligation discussion.

Fixed and Capped Fee Arrangements for Renegotiations of a Settlement Agreement

Following our meeting with you about your Settlement Agreement, you may decide you wish to re-negotiate the amount of compensation you are being offered (and/or some of the other terms within the Settlement Agreement). In those circumstances we could agree a Fixed Fee with you to undertake those negotiations or re-negotiations. The Fixed Fee will, of course, depend upon the amount of work anticipated. However, we are usually able to offer a Fixed Fee of between £630.00 (£525.00 plus vat) to £1,050.00 (£875.00 plus vat) depending on the complexity of your matter.  Often we are able to recover those fees by asking the employer to increase their contribution.

A Capped Fee is where we work on an hourly rate but agree to cap our fees at a certain amount. This type of arrangement is usually more appropriate where there is the possibility of some variation in the amount of work required. For example, if we were instructed to undertake negotiations for significant changes to the Settlement Agreement on your behalf (for example, to argue about a restrictive covenant or how payments are being structured) it would be difficult to predict how long these would take. We would normally suggest a Capped Fee of around £1,050.00 (£875.00 plus vat) to £2,100.00 (£1,750.00 plus vat) depending upon the complexity of your matter.

As our fees are capped, you only pay for the work we have actually done at our usual hourly rate, up to the agreed limit. Therefore, if the matter is resolved quickly you could pay significantly less than the Capped Fee amount. That being said, if the matter became more difficult and protracted, you could relax in the knowledge that fees were not escalating and would never be greater than the Capped Fee agreed at the outset.

Hourly Rate Arrangements

Following our meeting with you about your Settlement Agreement, you may have an issue which does not lend itself to a Fixed or Capped fee. For example, you could have decided against signing the Settlement Agreement and require our assistance with a grievance or disciplinary matter. In such circumstance we charge a competitive hourly rate of £210.00 (£175.00 plus vat) per hour. We will always provide you with an estimate of what our fees are likely to be and explain the work we intend to do for the estimate. However, we prefer wherever possible to provide our clients with the certainty of Fixed or Capped Fee Arrangements.

If you wish to enquire about your Settlement Agreement, please contact Lincoln based LincsLaw Solicitors for a free, no obligation discussion.

Conditional Fee Agreements (reduced fee arrangements)

Following our meeting with you about your Settlement Agreement, you may decide you wish to re-negotiate the amount of compensation you are being offered (and/or some of the other terms within the Settlement Agreement) and would prefer not to use Fixed, Capped or Hourly Rate fee arrangements. Dependent upon your circumstances, LincsLaw Solicitors may be able to offer a Conditional Fee Agreement to you.

Essentially, how these arrangements work is that you pay us a significantly reduced hourly rate to undertake the negotiations. Then, if the matter ends successfully for you, you will pay us a success fee. If we don't achieve success for you, then the success fee is not payable.

At the outset, you discuss with your lawyer what would be a "success" for you and would trigger the success fee to become payable. For a Settlement Agreement matter, this is usually defined as LincsLaw Solicitors achieving a certain amount of compensation for you, over and above the original offer made by the employer (although “success” need not be restricted to finances).

Our usual rates are £210.00 (£175.00 plus vat) per hour; such rates are already extremely competitive given the experience of the lawyers at LincsLaw Solicitors. However, under a Conditional Fee Agreement those fees would reduce to £120.00 (£100.00 plus vat) per hour. The Success Fee depends on your particular circumstances, but for Settlement Agreement negotiations is usually somewhere between £600.00 (£500.00 plus vat) and £1,200.00 (£1,000.00 plus vat). However, we would stress that the Success Fee is not payable until such time as we have achieved success, in whatever form, for you.

By way of example, if you instructed us to renegotiate your Settlement Agreement using this type of funding, we would first discuss what the "success" would be. This might be as simple as your being offered an additional £2,000.00 or more by your employer (over and above the amount initially offered by them within the Settlement Agreement). In those circumstances, we would agree a Success Fee of £600.00 (£500.00 plus vat) and you would pay us for our work at a rate of £120.00 (£100.00 plus vat) per hour.

Continuing the example above, say we undertook two hours work for you renegotiating the Settlement Agreement. If we were not successful in getting you £2,000.00 additional compensation, you would pay us £240.00 (£200.00 plus vat). If we were successful and you got your additional compensation, you would pay us for the two hours at the reduced rate and £600.00 (£500.00 plus vat) success fee. Therefore the total you would pay to LincsLaw Solicitors in the event we were successful would be £840.00 (£700.00 plus vat).

If you wish to enquire about your Settlement Agreement, please contact Lincoln based LincsLaw Solicitors for a free, no obligation discussion.

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