Losing $50,000 by Being "Clever": Why Trying to Negotiate Your Own Severance Can Cost You Tens of Thousands of Dollars

I spoke with someone about two weeks ago regarding their termination. Based on their age, position, and length of service, I advised that they might be entitled to a maximum of approximately 22 to 23 months of severance. I also explained that the number they might reasonably settle for could be somewhat lower once mitigation is factored in. Mitigation refers to the prospect of reemployment during the notice period, which can reduce the employer’s actual financial exposure. This back-and-forth between legal entitlement and practical settlement range is one of the central elements of a severance negotiation handled by experienced employment lawyers on both sides.

This individual decided that to “save some money” he would try negotiating on his own, armed with bits of information from an initial consultation. He assumed he could take a shot at the severance package himself and bring in a lawyer later if needed. Instead, it backfired. He ended up with no improvement to his severance offer and, ultimately, no lawyer to take the file on afterward.

There are several ways severance negotiation can backfire when an employee tries to handle it alone:

Loss of Leverage When the Employer Knows You Won’t Sue

The first major problem arises the moment an employer receives a response directly from the employee rather than counsel. Employers and their lawyers interpret this as a sign that the employee is unlikely to commence litigation. That signals a lack of willingness to fight and, therefore, a lack of leverage. This allows the employer’s lawyer to confidently recommend settling for a modest figure with little or no increase. Once that position is taken, it becomes extremely difficult for the employer’s legal counsel to later convince their client to meaningfully increase the offer. Even if the employee eventually hires a lawyer, the damage is already done. The result is usually a lower severance payment and a much longer process. A negotiation that would have taken one month can easily turn into a year with less money recovered. Just as countries may maintain peace by demonstrating strength, an employee who shows readiness to enforce their rights is far less likely to ever need to fight at all. 

How One Wrong Email Instantly Caps Your Severance at the Lowest Number You Mention

The second and more severe risk happened with the individual I spoke with a few weeks ago. They attempted to “save money” on legal fees by reaching out to their employer directly and providing a settlement range. Their range was 18 to 23 months. To any employer, the lowest number in the range is understood as the minimum the employee is willing to accept. This instantly sets a ceiling for future negotiations. Instead of meaningfully engaging, the employer rejected the proposal outright and maintained their previous offer of 11.5 months.

The employee then returned to me after weeks of back-and-forth and asked if I would send a demand for 23 months. I explained that this would make no sense. They had already told the employer that 18 months was an acceptable number. Demanding 23 months now would not be taken seriously. The employer would simply view the lower end of the employee’s own range as the true starting point. What could have been an opening demand at 23 months is now an unrealistic position. Realistically, the negotiations would begin at 18 months and only go down from there. Instead of taking on the case and aggressively pursuing the matter, we refused to take it on at all.

Losing $50,000 Being "Clever"

Their attempt to avoid legal fees will ultimately cost them, by my estimation, approximately $50,000 based on their income, in addition to significant delays. It is a textbook example of being penny wise and pound foolish.

The lesson is simple: severance negotiation is not a DIY project. Just as you would not google your medical symptoms and rely on online advice for treatment, you should not attempt to negotiate a legal severance package on your own. The financial consequences can be significant, and the damage is often irreversible.

Hire a professional before you communicate with your employer. The difference can easily be tens of thousands of dollars.