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Severance agreements/settlement negotiations

Advice for the nervous client during settlement negotiations

Let’s say you think you were fired for illegal reasons. The employer either offered you no severance or an amount that you don’t think reflects the value of the legal claims they are asking you to release. Negotiation, not immediate litigation, is a good approach, unless there is a looming statute of limitation deadline. With the right approach and client, negotiation works. If if it doesn’t, litigation may be necessary. Just don’t get ahead of yourself and abandon hope while the negotiation process is under way.

The negotiation process starts with what is known as a settlement demand letter. The letter is several pages long. The demand letter presents a detailed summary of the facts and applicable law.  It is based on available records, including the employee’s personnel records which the employer must produce upon request under Massachusetts law. The lawyer will run the letter by the client for factual verification. This phase allows clients to see how strongly their case sets up under the law that applies to their work situation.

If you have a viable case, a solid letter will give the employer second thoughts, even if they won’t say so. Employers don’t like to admit they did anything wrong.  They never read the demand letter and immediately call your attorney and say, “I just slapped myself in the forehead! Goodness, gracious! How ever could we have done such a terrible thing to your fine client? How much money can we give you please?” Careful, skilled negotiation is how settlement is achieved, with the backing of a brave client.

If the employee is at least 40 years old, the law requires the employer to give the employee at least 21 days to consider the offer.  In the demand letter, your attorney will likely ask for and receive a  brief extension of time while the employer conducts an internal investigation of the claim.

Infrequently, the employer won’t agree to extend the deadline to accept the original severance offer. It doesn’t mean the case won’t settle. It may just mean the employer is hoping you will blink first. Plenty of cases end up settling where the employers initially played hard ball.  They settle without filing suit or prolonged litigation.  The key is for the client to conduct a thoughtful self examination as to whether he/she has the stomach for this process.

Rarely will the employer pull the existing offer off the table during the negotiation process, but it can happen. You are right to wonder about this risk. It doesn’t necessarily mean your case will fail to settle or that the employer won’t eventually put the offer back on the table. Remember, the employer wants the case to go away, but at a price they can accept, even if it’s a grudging acceptance.

Aggressive posturing, stalling, and wearing the client down are recognized, effective defense strategies. Your attorney won’t be bothered by this reaction because he/she understands the process.  It can, however, make clients very nervous.  Remember that this is a process that needs to unfold. Understand how the process works and make an objective assessment of the risks/rewards.

An effective tool to use if settlement talks stall is to send a copy of the draft court complaint to defense counsel.  This tool can be particularly effective in claims for illegal retaliation against an employee who identifies financial irregularities.  Many companies don’t want their dirty financial laundry aired.

What if you think the severance package is sufficient or you don’t feel you have the right mindset for the nerve-wracking back and forth of the negotiation process?  Go ahead and settle!  It’s the sure thing. You can go on with your life and look for another job.  There is absolutely nothing wrong with that decision.  But don’t be bullied into settlement just because the employer is aggressive or insists it did nothing wrong. Consider whether you will kick yourself down the road when the severance money has run out and you wish you pushed for a better settlement package.

Often, clients will ask, “What would you do if you were me?”  The attorney may respectfully reply that he/she cannot answer that particular question.  The attorney doesn’t walk in your shoes. The attorney can’t fully appreciate your emotional and financial concerns.  Instead, the attorney may patiently explain the strengths and weaknesses of the case and if the case has merit.  There are no guarantees of course. Nevertheless, many clients are glad they were patient and allowed the negotiation process to unfold so that they could get a proper settlement.

Ultimately, only the client can decide if the risk is worth the possible reward. I have great respect for how stressful this process can be for clients and never second guess a client’s decision to move on.

Pamela A. Smith
Law Office of Pamela A. Smith
233 Needham Street, Suite 540
Newton, MA 02464


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