Legal fees in a settlement agreement

Agree in advance how much your employer will contribute towards independent legal advice on the settlement agreement.

Do not rely on an oral promise to reimburse legal fees

A contribution towards legal assistance is an important point for negotiation in a settlement agreement. It is not an amount that is automatically payable in every situation, so record the contribution clearly and in writing.

State the maximum amount, whether VAT and other costs are included, who receives the invoice and when the employer will pay. This makes clear in advance which part of the legal review will be reimbursed.

Why obtain independent advice?

The settlement agreement is usually drafted by the employer. Your own legal adviser specifically assesses your position, risks and negotiation options.

What should the legal-fees provision contain?

A workable provision makes the amount, scope of work and payment method verifiable in advance.

Maximum amount

Record a clear maximum amount and state whether it includes or excludes VAT and any additional costs.

Which work is covered?

Specify whether the contribution covers only a review, or also consultation, a counterproposal and finalising the agreement.

Invoice and payment

Agree whom the adviser should invoice, which details are required and within which period the invoice will be paid.

Costs above the maximum

Clarify in advance who will pay any balance. If necessary, request an estimate before additional work begins.

Why does an employer sometimes contribute towards legal fees?

A legal review can contribute to clear terms and a careful conclusion. Employers are therefore often willing to make an agreed amount available, but the amount and conditions vary.

Ensure that the contribution corresponds directly to the work required. A high stated maximum is of little value if important work is excluded or the payment method remains unclear.

View the full negotiation guide

Review the legal-fees contribution in four steps

1Check the amount
Review the maximum and whether VAT and additional costs are reimbursed separately.

2Define the work
Agree whether the contribution covers the review, advice, negotiations and finalisation.

3Arrange the invoicing route
Record who invoices, who pays and which payment period applies.

4Clarify excess costs
Agree what happens if more work is required than the maximum covers.

Look beyond the stated amount

The value of a legal-fees contribution depends on the surrounding conditions. Check that the provision is workable and contains no unexpected restriction.

Also compare it with the rest of the settlement agreement, including full and final discharge and the date on which all payments will be settled.

Have your proposal reviewed

Legal assistance and fees