When a senior executive is offered a settlement agreement, the employer’s fee contribution can sometimes feel like a rubber stamp. In reality, the legal work involved in advising on an executive exit is detailed and strategic. A settlement agreement is not simply a document to be signed – it is a binding contract that shapes your financial position, professional reputation and future career prospects.
Below is an outline of the key things the legal fees will cover:
- A full risk assessment of your legal position
Your legal fees will cover a detailed analysis of potential claims such as unfair dismissal, discrimination, whistleblowing and breach of contract. Whilst Tribunal claims might not be actively contemplated, it is useful to benchmark the potential value of a claim While compensation for unfair dismissal is capped, discrimination and whistleblowing claims are uncapped, making this assessment commercially critical. The advice you receive determines whether the financial offer properly reflects the parties’ legal leverage or whether the employer’s position is exposed to significantly greater financial risk. - Detailed financial and tax structuring
Remuneration packages are rarely straightforward especially for senior-level executives. Your lawyer will look at your salary, bonus and deferred compensation, share options, long-term incentive plans, carried interest, pension entitlements and the tax treatment of settlement payments. A poorly structured settlement can result in unnecessary tax exposure or lost contractual value. Negotiating this correctly is often where the most meaningful financial gains are achieved. - Protection of your reputation through NDA advice
For senior executives, confidentiality provisions can be as commercially significant as the financial terms themselves. You need advice on the scope and appropriateness of non-disclosure obligations, what can be said to future employers, how references are handled and how media risk is managed. A overly restrictive NDA can be a legal overreach on the employer’s part and might inadvertently limit what can be said about your employer in the future. - Post-termination restrictions and future employability
Executives are often subject to non-compete clauses, client and supplier restrictions, team movement provisions and wide geographic limitations. These restrictions directly affect where and how quickly you can move into your next role. Legal advice ensures they are commercially proportionate and legally defensible and where possible, removed or the scope renegotiated. - Director-specific liabilities and insurance protection
Where an executive also holds directorships, legal fees include advice on directors’ and officers’ liability protection, run-off insurance provisions, ongoing regulatory exposure and personal liability across group structures. These issues are frequently overlooked in lower-cost reviews, yet they can carry significant personal financial risk years after departure. - Strategic negotiations
The legal fees for a settlement agreement will also reflect strategy and the time involved in handling the negotiations with your employer. A senior employment lawyer will engage directly with the HR tea, management team or lawyers, identify commercial opportunities on your behalf, negotiate without inflaming disputes and protect future professional relationships. This approach avoids unnecessary escalation while still securing improved financial and contractual outcomes – a balance that is particularly important for executives operating in closely connected industries.
How much should an employer contribute to the legal fees of a settlement agreement?
Many employers offer a basic contribution towards legal fees, often around £500. While this may be sufficient for very junior or straightforward exits, it rarely reflects the legal complexity involved in senior-level departures. For senior executives, proper advice will extend over hours from understanding the context of the exit, negotiating the financial and non-pecuniary terms from director liabilities, post-termination restrictions, communication strategy As with most professional services, meaningful expertise takes time and time is what protects long-term interests.
Even when departures are complex there is usually shared desire to facilitate a smooth and timely exit, most employers recognise that improving the contribution towards legal fees will help this along. Where they do not, an experienced employment lawyer will address this as part of the wider negotiations, ensuring that you are not left out of pocket for obtaining the level of advice your situation genuinely requires and seeking for legal fees to be paid in the most efficient manner.