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Accepting a Severance Package: What Lawyers Need to Know

Jan. 10, 2022, 9:00 AM

Being terminated from your job always comes as a surprise. Even when there are warning signs, most people are able to rationalize them away and convince themselves that things are fine right up until the moment when they are shepherded into a conference room with a human resources representative and told that this is their last day at the company.

In that state of shock, they are then handed what could be a silver lining: a severance agreement that the HR rep suggests will make the experience less painful. It often raises more questions and concerns, however, because the soon-to-be former employee has to determine whether they are better off with the agreement or without one.

This can be the case for attorneys being terminated from law firms and in-house positions, as well. Just because you are an attorney does not mean that you understand all of the typical separation terms in a severance agreement.

Being presented with one may be the worst situation in which you find yourself, because you may not know where to turn for advice—or be concerned that the legal industry makes any city or town very small. But you need to understand and appreciate not only the legal language of the proposed contract, but the nuances and attorney ethics rules that apply to you as a licensed attorney, as well as the strategic considerations for you to exit one employer and obtain a position with a new one.

The single most important tip that I can provide, should you ever find yourself in this situation, is to pause to give yourself time to consider the options and talk to someone experienced with these issues. You may be tempted to get it over with and sign it right away. After all, the benefits of the severance agreement are usually pretty tangible, like cold hard cash, while any disadvantages are, at that point, more hypothetical, like giving up the right to sue the employer or disparage the company publicly.

As an attorney, however, getting the most out of your severance for you and your family, protecting your rights, and avoiding ethics problems, are all very important.

Take Time to Review

Initially, you typically have time to consider a severance agreement. It is rare for an attorney to be offered less than 21 days to review and consider accepting a proposed severance agreement. Federal and many state laws provide for varying time limits to consider a severance agreement under different scenarios.

For example, at least 21 days should be permitted if you are waiving age-discrimination claims, which is very common. Take this time to clear your mind and review the agreement, preferably with someone experienced with these issues.

Severance agreements for attorneys contain the typical provisions found in non-attorney agreements. These may include, a severance sum, benefits extension, confidentiality agreement, release of legal claims, non-disparagement clause, restrictive covenants, and others.

Likely most important to the attorney is the severance sum, not only the amount, but also how and when it will be paid out. Is it paid out in a lump sum, or stretched out over a period of months? Will the timing of the payment affect possible unemployment benefits?

Those are strategic considerations for you and why you need to ensure that any severance agreement you sign has the maximum possible financial benefit to you with the minimum possible limitations. The only way to determine that is to sit down with an experienced employment law attorney and go over your situation as the two of you review the offer line-by-line.

Restrictive Covenants, Workplace Harassment

The remaining provisions also involve typical considerations; but when it comes to restrictive covenants, there are special rules for attorneys. Restrictive covenants include non-compete agreements and client and employee non-solicitation agreements.

Permissive restrictive covenants for attorneys may include non-solicitation of fellow employees (i.e., other attorneys, associates, staff, etc.).Non-solicitation of clients is not permitted under ethics rules in many jurisdictions,however, including in New York state, because clients are entitled to their choice of counsel and employers may not interfere with the client’s possible choice of the terminated attorney by requiring a non-compete clause.

There’s one other situation that could complicate your decision to accept an agreement: If you were the victim of unlawful workplace harassment. Severance agreements always include a general release, including release of all employment violations such as unlawful harassment.

Under a typical severance agreement, you waive any right to damages under a claim of unlawful harassment. Thus, ensure that any severance pay you are to receive covers any probable damages that you could be awarded for their unlawful actions. If you are leaving due to unlawful harassment, in New York, you, the employee, may not be forced to sign a confidentiality agreement to remain quiet about the settlement.

As an attorney, you may understand the legal language of a severance agreement better than the typical employee being separated from employment. But only another attorney with expertise in handling these kinds of situations for attorneys, and who know the unique rules that apply to attorney separations, can give you the sound advice on your legal strategy that you really need to make sense of a severance agreement, to protect yourself and your family.

This column does not necessarily reflect the opinion of The Bureau of National Affairs, Inc. or its owners.

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Peter J. Glennon is a business and employment litigator who founded the Glennon Law Firm P.C. in 2014, a Rochester, N.Y.-based practice which focuses on serving clients throughout the state on matters of business and employment litigation, matrimonial law, and trust and estate litigation.