Why instruct solicitors to manage a settlement agreement project — 6 key benefits explained

Settlement agreements — commonly seen as part of employer restructuring or outsourcing exercises — are pivotal in resolving disputes without the need for employment litigation.

They’re a crucial mechanism for both employers and employees — offering a structured resolution to conflicts that might otherwise escalate into prolonged and expensive tribunal claims and/or feelings of ‘death by a thousand cuts’ for employees. 

When it comes to managing a settlement agreement project, it's invaluable to have specialist solicitors acting on both sides. They can be instrumental in ensuring a fair, efficient and legally sound resolution. 

Here, experienced employment lawyer Andy Graham delves into six key benefits of instructing solicitors to oversee settlement agreement projects.

1. Ensuring legal compliance

Settlement agreements must comply with a complex web of legal requirements to be enforceable — including the obvious need for the employee to take independent legal advice. 

Solicitors are adept at navigating these legal intricacies to ensure that the agreement isn’t only fair but also legally binding. This compliance is crucial to avoid future disputes or claims that might arise from an improperly drafted agreement.

2. Expertly negotiating terms

Solicitors bring significant negotiation experience to the table. Any project that’s going to rely on settlement agreements being entered into should ideally front-end negotiations in relation to the template settlement agreement. This will involve a company or its solicitors engaging with a firm that it wants to recommend to its workforce.

Front end negotiations mean that a business doesn’t have to repeat negotiations on the same points with different lawyers. For example, if the company’s position is that it won’t reverse the tax indemnity, this can be made clear at the outset so that your employee’s solicitor is clear on this and doesn’t waste time pursuing the point. Alternatively, if the recommended solicitor suggests a point that’s likely to become contentious, this could also be addressed at an early stage. 

Your solicitor’s ability to negotiate terms effectively can make a significant difference to the outcome of a settlement agreement. Solicitors are skilled at balancing the interests of both parties, understanding the legal issues at play (along with the value to a claim), striving to achieve a resolution that’s acceptable to all involved and removing any emotion from the process. This all helps to foster a cooperative environment, reduce the likelihood of conflict and pave the way for amicable settlements that allow parties to feel as if the exit was handled in a dignified and respectful way.

It’s also worth remembering that having a good lawyer on the other side is actually a huge benefit in settlement agreement projects. While this may seem counterintuitive, it actually stops your ‘high street, Jack of all trades’ lawyer from getting involved and point-scoring — whether just for the sake of it or because they aren’t familiar with employment law. 

3. Protecting client interests

Another significant advantage of instructing solicitors is their unwavering commitment to protecting their clients' interests. 

You may be wondering whether there’s a danger that a recommended firm of solicitors who have agreed to advise on settlement agreements at reduced rates won’t be acting in your employees’ best interests. However, this is absolutely not the case. Whether they’re representing you as an employer or your employee(s), solicitors are duty-bound to ensure that they act in their clients’ best interests — regardless of who pays the legal costs.

Any employee will have the ability to instruct their lawyer to negotiate terms even if front-end negotiations have taken place. In those circumstances, it’s likely that the employee would be told that:

• this would come at a cost in terms of additional legal fees

• the company is unlikely to change its position and/or increase its contribution to legal fees because the point has already been considered (unless there’s a factual matrix which is inconsistent with the position that the company initially outlined).

   

4. Streamlining the process

Settlement agreements can be complex, involving multiple steps and detailed documentation. Solicitors play a critical role in streamlining this process — handling the drafting, reviewing and finalising of all necessary documents to ensure that nothing is overlooked. This professional management leads to a more efficient and timely resolution, saving both parties considerable time and effort.

Solicitors acting for employers will always be able to assist with the preparation of documents to assist with any project and manage the signature process. 

Solicitors that act for employees should also be able to streamline the process by offering:

• written advice notes on the template terms
• virtual or in-person meetings (depending on preference)
• group meetings (if requested) with a follow-up individual meeting
• composite billing to ease the strain on the company’s finance team. 

5. Providing objective advice

In emotionally charged situations, objectivity can be hard to maintain. Solicitors provide an impartial perspective, offering objective advice that’s grounded in law and best practice. Their detached viewpoint helps in making rational decisions that are free from emotional bias — something that’s crucial for the integrity of the settlement process.

6. Cost effectiveness

Companies are used to working with their own lawyers and likely to have established fee arrangements in place. However, they can also ensure that the independent advice their employees receive is managed in the most cost-effective manner to the business.

Clearly, since employees can choose any legal representative, a company can’t guarantee that an employee will choose a firm of solicitors recommended by the company. However, the company can agree a figure that’s reasonable with a firm and that figure is likely to be lower if the firm is likely to get (notwithstanding that this can never be a guarantee) a significant number of instructions. The legal fee contribution amount can therefore be set at the lower amount, which is likely to entice employees to use the recommended firm rather than having to top-up any contribution — especially if the company makes is clear that it won’t increase its contribution. 

Will employees be sceptical about recommendations to use certain law firms?

Typically, employees are always sceptical about anything that a company does. So, the short answer to this question is ‘yes’. Whether the scepticism remains depends on the reputation of the firm that the company chooses to recommend as well as the service levels offered. 

It shouldn’t be forgotten that while settlement agreements are common for businesses, employees are often encountering them for the first time. It’s therefore unlikely that employees will have a hotline into an employment lawyer, so with the correct messaging an employee may very much welcome a referral to a reputable firm. 

Talk to us

Instructing solicitors to manage a settlement agreement project will provide many benefits that extend beyond mere legal compliance. Their expertise in negotiation, protecting client interests and ability to streamline the process are all invaluable in achieving a fair and efficient resolution for all parties.

Our experienced employment lawyers provide tailored settlement agreement services for employers and employees alike. 

If you need advice, give us a call on 0333 004 4488, email us at hello@brabners.com or complete our contact form below.