The Settlement Agreement in a dispute between Company and Director/Shareholder (my client) states settlement sum of £250,000 is for £72,000 for the payable for my clients legal fees, £30,000 for loss of office and £148,000 for the consideration of the transfer of shares.
I always believed that in such a dispute that the legal fees were a personal expense and therefore the actual consideration will be £220,000 not the £148,000 as the agreement states. Am I correct?
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Surely the first question to ask is what do these legal fees cover, are they solely in relation to the termination of the employment or do they also cover the purchase of the shares in the company?
Second question re the payment is who was the payment made to, was it to the lawyers direct or to the former employee to pay his lawyer?
They do look a tad beyond the norm re quantum at £72,000, why this high?
My limited understanding was that if the fees were paid solely re the termination, and direct from employer to solicitor, they were not part of any taxable part of the settlement, however here we appear to have two transactions (employment termination and a share sale) mixed together so it is not very clear what legal services are being paid.