Address the invoice to your client, mark it as payable by whoever has agreed to pay, and get that payer's agreement, contact details and any cap in writing before the work starts. On a settlement agreement, that's usually a clause saying the employer pays the employee's reasonable legal costs up to a fixed amount, direct to you, against an invoice addressed to the employee. Anything above the cap, or anything the payer doesn't pay, is easier to collect if your engagement letter already says who covers it.
In this article
The short version
- Invoice your client, not the person paying, and mark the bill as payable by the third party.
- On settlement agreements, the employer usually pays the employee's costs up to a cap, direct to the adviser.
- Agree the cap, the payer's contact and who covers any shortfall before the work starts.
- Check who is paying and why, as your anti-money laundering checks require.
- A payment link can go to whoever pays, while reminders go to your client.
Who your client is when someone else pays
A third party paying your fees doesn't change who you act for. The employee taking advice on a settlement agreement is your client, not the employer funding the advice. The same goes for an artist whose label has agreed to cover a contract review, or a director whose company is paying for advice on a personal matter. Your duties, your engagement letter and your bill all sit with the client.
It can feel simpler to address the bill to whoever's paying, but the usual approach is an invoice addressed to your client and marked as payable by the third party. That keeps the bill with the person you act for, while the payer can see exactly what they've agreed to cover. If you're unsure how VAT applies to a particular arrangement, check with your accountant.
How the employer pays on a settlement agreement
An employee has to take independent advice for a settlement agreement to be binding, and employers commonly offer to pay for it, though they don't have to. The usual shape is that the employer contributes towards the employee's legal costs up to a capped amount, paid directly to the adviser, against an invoice addressed to the employee and marked payable by the employer. The Acas template agreement follows this pattern.
That wording leaves you with a few decisions to make early.
- Ask for the cap before you start and tell your client what your advice is likely to cost against it. If the matter grows into negotiating the terms, the cap may not stretch that far, and it's easier to agree who covers the difference at that point than once the bill has gone out.
- Read the costs clause in the draft agreement. It's the employer's commitment to you, so it's what you'll quote if payment is slow.
- Talks sometimes fall through before anything is signed. Your engagement letter can say what your client pays in that case.
- Check when the employer has agreed to pay, so you know when to follow up.
Other people who offer to pay
Outside employment work, the payer is often family, such as a parent paying for a divorce or a relative helping with a dispute.
Before you accept money from anyone other than your client, find out whether they're covering all of the bill or part of it, and check who is paying and why, as your anti-money laundering checks require. An employer paying under a settlement clause has an obvious reason; someone with no clear connection to the matter would usually prompt more questions.
Get the arrangement in writing from the payer, with a named contact for invoices, and confirm it with your client. If the payer sends money before you've billed, handle it under your usual client account procedures.
How to make the bill easy for the payer to settle
Third-party payments slow down when the invoice lands with the wrong person, or without enough detail for an accounts team to approve it. A few habits help:
- With your client's agreement, send a copy of the invoice to the payer's named contact, as well as to your client.
- Put the employee's name, the agreement and the costs clause on the invoice, so the payer's accounts team can match it without coming back to you.
- Include a way to pay that doesn't involve typing in your bank details.
- Diary the date the payment is due under the agreement, and follow up with a short, polite note quoting the clause if it hasn't arrived.
Adfin lets you send the payment link for an invoice to whoever is paying it, so the employer's accounts team or a client's parent can pay by card, Apple Pay, Google Pay or pay by bank from one page, and the payment is matched to the invoice in Xero or QuickBooks. Its reminders go to your client's contact, so a nudge to an employer is still an email from you. Where part of the bill is your client's to pay, such as fees above the employer's cap, Adfin's Customer Agents can follow that up with your client on the schedule you set.
Common questions
Should a settlement agreement invoice be addressed to the employer or the employee? To the employee, who is your client, marked as payable by the employer where that's been agreed.
Who pays if the employer's contribution doesn't cover my fee? That's between you and your client, so agree it in your engagement letter at the start and raise it again if the work grows beyond the cap.
How much do employers usually contribute to settlement agreement advice? There's no set figure. The amount is negotiated and written into the agreement, so check the draft before you quote.
Can the employer pay me directly? Yes, where the agreement says so. Send the employer's named contact a copy of the invoice and a way to pay it online.
Do I need to check who a third-party payer is? Yes. Check who is paying and why, as your anti-money laundering checks require.
When does the employer usually pay? When the settlement agreement says. Check the costs clause in the draft so you know the timing before you invoice.
Sources
- Acas - Settlement agreement template (accurate as of October 2026) https://www.acas.org.uk/settlement-agreement-template
- SRA - Sectoral risk assessment: anti-money laundering (accurate as of October 2026) https://www.sra.org.uk/sra/research-publications/aml-risk-assessment/
- Adfin - Accept payments (accurate as of October 2026) https://adfin.com/accept-payments
