Severance Agreement Lawyer Fees

How severance lawyers charge: a flat review fee, hourly to negotiate

Most severance work is quoted as a flat fee because the first task is well defined. A standard package — a few pages, a fixed number of weeks’ pay, a general release — is commonly reviewed for $500–$1,500, which buys a full read of the agreement and its attachments, an explanation of what you are signing away, a view on whether the number is defensible, and a list of the terms worth asking to change. A short read-and-advise call runs $300–$500 in many markets.

Negotiation moves to hourly billing at roughly $250–$500. Two to ten hours is the usual span, so a negotiated engagement typically lands between $1,000 and $5,000; an executive package with equity, deferred compensation, and a long-form agreement runs higher. Some firms quote a flat review fee and an hourly rate if you decide to push back, others a single flat fee that includes one round of counter-proposal.

A percentage arrangement shows up occasionally — the lawyer takes something like 15–33% of the improvement over the original offer, sometimes blended with a reduced hourly rate. It aligns incentives where the offer is large and the employer has room to move, but it is not the contingency model used in injury work, and the base offer is normally carved out of the calculation.

Whichever model applies, the fee agreement should say whether the lawyer will contact the employer directly, how many rounds the quoted fee covers, and what happens if the employer simply refuses to move.

What the fee buys — and why there are almost no case costs

Severance review involves no filings, no experts, and no depositions, so the usual split between attorney fees and case costs largely collapses. The quote is attorney time, and the only common add-on is a tax or equity specialist brought in on a complicated executive package.

A competent review is broader than reading the severance letter. It takes in every attachment — the OWBPA disclosure list in a group layoff, the equity plan and grant agreements, the bonus plan, and the confidentiality or non-compete agreement you signed at hire, which the severance agreement usually reaffirms. It values the offer against your tenure, the employer’s written severance policy or its past practice, and the market, and it identifies which claims you actually hold.

If the review turns up a real claim, pursuing it is a different engagement. A demand letter, an EEOC or state agency charge, mediation, or a suit for wrongful termination or discrimination is normally taken on contingency with statutory fee-shifting, and that is where costs finally appear.

What the flat fee does not include is worth confirming: detailed tax planning, drafting the revised agreement rather than commenting on it, and appearing as counsel of record. One tax point is worth raising early — severance is W-2 wages, but attorney fees paid in connection with an unlawful-discrimination claim are deductible above the line under Internal Revenue Code section 62, so how any settlement is allocated matters.

The OWBPA clock: 21 days, 45 days, and the 7-day revocation

If you are 40 or over, the Older Workers Benefit Protection Act — the 1990 amendment to the ADEA — sets out what an employer must do before your waiver of an age-discrimination claim counts. The agreement has to be written so you can understand it, refer specifically to ADEA rights, give you something beyond what you were already owed, advise you in writing to consult an attorney, and allow at least 21 days to consider it.

The window becomes 45 days when the offer is part of an exit-incentive or other termination program offered to a group or class. That version also requires the employer to disclose the job titles and ages of everyone selected and everyone not selected within the decisional unit. Employees routinely ignore that list; it is evidence, and a pattern in it is among the first things an experienced lawyer looks for.

After you sign, a further seven days to revoke applies to the age-claim waiver, and it cannot be bargained away. The agreement is not enforceable until that period runs. You may sign before the 21 or 45 days are up, but doing so buys you nothing, and a material change to the offer generally restarts the clock unless both sides agree otherwise.

Under 40 there is no federal clock at all — whatever deadline the employer sets governs, and an exploding “sign by Friday” is usually softer than it reads. Some states add their own consideration or rescission periods on top, so ask for an extension in writing before the deadline rather than after it.

What you are actually releasing — and what cannot be waived

The heart of the document is a general release of every claim arising through the signing date: discrimination, harassment, retaliation, wrongful discharge, breach of contract, unpaid wages and bonuses, and assorted torts. Most agreements add a waiver of unknown claims — in California that appears as an express waiver of Civil Code section 1542. The severance is the price of that release, so the only way to judge whether the price is fair is to value what it extinguishes.

Several rights survive whatever the paper says. You cannot release claims that have not yet arisen. You cannot be barred from filing a charge with, or cooperating with, the EEOC, the NLRB, or the SEC, though a properly drafted agreement can waive your personal monetary recovery from an agency-initiated action.

SEC Rule 21F-17 prohibits impeding a report to the Commission, and agreements conditioning severance on surrendering a whistleblower award have drawn enforcement.

Unemployment benefits cannot be waived, and in most states neither can workers’ compensation claims or vested retirement benefits. Minimum-wage and overtime claims under the FLSA generally cannot be released privately without Department of Labor or court approval, which is why agreements routinely recite that you have been paid all wages owed.

Most departing employees, assessed honestly, have no provable claim — and then the release costs nothing and the review simply confirms the deal is safe to sign. Where a documented complaint was followed by a firing weeks later, the offer is often a fraction of what an employment claim is worth, and the real advice is about which path to take.

Confidentiality, non-disparagement, and non-competes after McLaren Macomb

In February 2023 the National Labor Relations Board decided McLaren Macomb, holding that an employer covered by the National Labor Relations Act violates section 8(a)(1) merely by offering a severance agreement whose confidentiality or non-disparagement terms are broad enough to chill section 7 rights — discussing pay and working conditions, or assisting coworkers. The decision reaches non-supervisory private-sector employees whether or not a union is involved. Board doctrine shifts with the Board’s composition, so confirm where the rule currently stands, but the practical effect has been narrower clauses with explicit carve-outs.

Those carve-outs are now the drafting battleground: protected concerted activity, communications with government agencies, and disclosure to your spouse, lawyer, and tax adviser should all be excluded. The federal Speak Out Act of 2022 separately bars pre-dispute non-disclosure and non-disparagement provisions covering sexual assault and harassment claims, and several states restrict such clauses after a dispute too.

Restrictive covenants deserve their own look. A non-compete or non-solicit appearing for the first time in a severance agreement is a new obligation you are being asked to sell, so price it or strike it. Enforceability is a state question — California voids nearly all employee non-competes, and the FTC’s nationwide ban was set aside before it took effect — so identical wording behaves very differently across a border.

It is the analysis a contract review lawyer applies at hiring, arriving late.

Finally, read the ancillary terms. Non-disparagement should be mutual and should name which company representatives are bound; a cooperation clause should provide for your fees and expenses if you are called to testify later; and any clawback provision should be checked for what could cost you the money back.

The money terms: severance formulas, WARN, COBRA, and unemployment

There is no general legal right to severance in the United States. The common private-sector benchmark is one to two weeks of pay per year of service, with senior managers at three to four weeks and executives on contracted multiples of monthly salary. The number reflects the employer’s written policy, its past practice, and its appetite for risk — which is why a documented claim moves it and a polite request rarely does.

The WARN Act is the first thing to check in a layoff. Employers with 100 or more employees must give 60 days’ written notice of a plant closing or mass layoff, and a violation entitles affected workers to back pay and benefits for each day of the violation, up to 60 days. Employers routinely fold that obligation into the offer as “pay in lieu of notice,” so establish whether the package is more than what you were owed anyway.

Health coverage is often the easiest win. COBRA runs up to 18 months but at 102% of the full premium, commonly $1,500–$2,500 a month for family coverage, so an employer-paid subsidy of three to six months can be worth more than an extra week of pay and costs the company less. Equity is the other soft spot: accelerated vesting, and extending the standard 90-day post-termination exercise window, cost nothing in cash today.

Two tail items matter. Severance is W-2 wages subject to withholding and FICA, and installments or a release deadline straddling two tax years can raise Section 409A problems. And unemployment eligibility survives a layoff — a release does not waive it — but states differ on whether severance is allocated to weeks and delays benefits, so the stated reason for separation should be drafted with care.

Why your state matters: claim strength, mini-WARN laws, and NDA limits

Leverage in a severance negotiation is simply the value of the claims you would be releasing, and state law sets that value. States with a strong fair-employment statute reach employers below the federal 15-employee threshold, add protected classes, and allow higher or uncapped damages plus fee awards — California’s FEHA, New Jersey’s Law Against Discrimination, and New York’s Human Rights Law are the standard examples. Where only the federal floor applies, the same facts support a smaller claim, and employers price their offers accordingly.

State mini-WARN laws then sit on top of the federal one, often with lower thresholds and longer notice. New York requires 90 days’ notice and reaches employers with 50 or more employees; California’s statute reaches 75; and New Jersey requires covered employers to pay one week of severance per year of service in a mass layoff, the only state that mandates severance outright. In a group layoff that is frequently the largest term in play.

Restrictions on what the agreement may contain vary just as much. California’s Silenced No More Act bars provisions preventing disclosure of unlawful workplace conduct, requires specified enabling language, and gives at least five business days to consult counsel; New York limits confidentiality in discrimination and harassment settlements to what the complainant prefers. Several other states have adopted comparable rules.

Underneath all of it, at-will exceptions differ — Montana alone requires good cause to fire an employee past a probationary period — as do agency filing deadlines and non-compete enforceability. Hire a lawyer licensed where you worked, and ask which state rules actually bear on your package.

Choosing a severance lawyer and keeping costs down

Firstly, hire an employee-side employment lawyer rather than a generalist. Ask how many severance packages they see in a month, whether they act for employees or employers, and whether they will negotiate or only advise — a firm that reviews these weekly knows what a given employer typically concedes, and that is most of what you are buying.

Secondly, buy the right tier. A flat-fee review with a defined deliverable is enough for most people, and plenty of clients then do the negotiating themselves by email, using their lawyer’s language and keeping it inside a normal employee-to-HR conversation. Putting counsel on record costs more and signals escalation, which helps where there is a real claim and can harden the employer where there is not.

Thirdly, prepare the file before the first call. Send the complete agreement with every exhibit, your offer letter, equity and bonus documents, the handbook’s severance policy, recent performance reviews, and a short timeline including any complaint you made and to whom. Say what you actually want — cash, COBRA, an agreed reference, a narrowed non-compete, neutral wording that protects unemployment — because priorities shape the strategy and shorten the work.

Finally, use the clock and the cheap routes. Most employment firms offer a free consultation and will tell you within fifteen minutes whether a paid review is warranted; bar-association referral panels and the options when you cannot afford a lawyer cover the rest. Do not sign on the day you receive it, and do not let a deadline you are entitled to extend decide the question.