Will a lawyer take my breach of employment contract case?

Question:

I was recently fired from my job as Chief Financial Officer of a manufacturing company. I was a lateral hire into the position, and I insisted on an employment contract. I had concerns about how secure the position would be, mostly because the company has been family-owned and operated for many years, and I wasn't sure whether it was the right fit. I have a two-year contract term, during which I can be fired only for good cause. The owners pretty much admitted that they had no cause to fire me, but they wanted to hire their son-in-law for the job. They said they liked having family members in key company positions and that bringing me in had probably been a mistake. That's fine, but I still have four months on my contract, and they only want to pay me a month's severance. Do you think a lawyer will be interested in taking my case?

Answer:

A lawyer looks at a number of factors in evaluating whether to take a case. It sounds like you have a pretty straightforward, and strong, case for breach of contract, based on the facts you've related. But that isn't the whole story. A lawyer will also look at the damages available if you win, and here's where you might have a problem.

Disputes over broken employment contracts can be complicated. Often, the toughest hurdle for an employee is to show that there was a contract in the first place. If an employee is relying on spoken statements, promises during the hiring process, and similarly impermanent types of evidence to prove a contract, it can be hard to convince a judge or jury of what really happened. Who said what, and what did it mean?

In your case, however, you have a written document to prove exactly what was agreed to. And, you have your employer's straightforward statements about why you were fired, along with their subsequent hiring of their son-in-law for the job. All in all, this sounds like a good set of facts for you to prove that your employer is liable for breaching the contract.

However, your damages won't be significant. Typically, an employment lawyer who represents employees works on a contingency fee basis, which means the lawyer takes a percentage of whatever is recovered for the employee. Often, a lawyer will "discount" the fee if the employer has already put some money on the table when the lawyer enters the picture. In your case, your employer has already offered a month of severance, but you are entitled to four months. So, the lawyer might consider the amount "in play" -- from which he or she would earn a fee -- to be three months of salary. Considering that it's typical for a lawyer to take about a third of what the employer will settle for, this doesn't amount to much of a payout.

Contract claims are especially susceptible to this type of analysis because you can't collect extra damages for breach of contract. Your employer, if found liable, will have to pay what you would have received had the contract not been breached: your salary, and perhaps the cost of employee benefits for the four months remaining on your contract. However, even this amount will be reduced by any money you earn from securing another job in the next four months. You also can't collect damages for  pain and suffering  or punitive damages (intended to punish the employer for especially egregious behavior) for breach of contract; these are the damages that often make up the lion's share of a large jury award.

This doesn't mean you should give up. By all means, meet with an experienced employment lawyer to talk about your claims. You might find a lawyer who will take the case even with limited damages. Or, the lawyer might come up with some other potential legal claims that would yield a bigger damages payday. It's also possible you'll find a lawyer willing to help you negotiate behind the scenes, for an hourly fee.

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