I agree with the spirit of what's being said here, but there are parts that are problematic. For example, explaining that someone won't get a good reference if he sues is almost certainly illegal (extortion). Of course, any reasonable person would know not to use a company that one is suing as a reference. You'd do better to say, "I'm not using them as a reference because I'm suing them" (since it's already a matter of public record) than to use them. Still, saying, "you shouldn't sue us because <retaliation>" is on the wrong side of the law.

That said, I agree that PIPs are the worst. They're a way for scummy managers in scummy companies to... well, the common explanation is that they're a lawsuit shield, but that's not really true because it's actually harder to run a lawsuit-proof PIP than to just fire someone. The real purpose of the PIP is less documented and more insidious.

Companies don't actually fear lawsuits that much. They're a black-swan risk, but less than 1% of people fired will ever litigate. They're much more worried about disparagement and impaired relationships. You write a generous severance and give a good reference (which you should, in most cases) when things don't work out because, if you do things right, the odds are good that the person's career will go unimpeded, and this pays off for you because they're likely to feel good about that episode in their careers and say good things about you in the future.

The purpose of a generous severance and positive reference is to make the fired employee feel good about the company, preventing any sort of moral indignation. The purpose of a PIP is to make the employee feel bad about himself (under a parallel theory that a humiliated employee will feel weak, not morally superior, and therefore not disparage or litigate). It has almost no legal value, because wrongful PIPs are just as common as wrongful terminations. Its purpose is to shame the employee into silence. Of course, it often doesn't work, but that's a discussion for another time.

PIPs (which, considering morale, are far more expensive than severance payments) are also a common way for HR offices to claim they "saved money" on severance payments when they're actually externalizing the costs to the manager, who has to conduct a kangaroo court, and the team, which has to deal with an already-fired employee coming into work for 2 months.