Know the Rules of Engagement
Always leave a paper trail.
Too often, attorneys cite great client relationships as their reason for not using official letters. But even long-time clients may second-guess your work or the outcome of a legal issue. If you rely on handshakes and verbal agreements, you may lack crucial documentation to help defend your reputation and career against claims.
Always leave a paper trail, and consistently use engagement and non-engagement (declination) letters to reduce your risk.
The essential points that should be addressed in an engagement letter are:
Identity of the Client and the Attorney Handling the Case
The engagement letter should clearly identify the client. Specify any individuals or entities who should be classified as non-clients, and send them a copy of the engagement letter or a separate non-engagement letter.
A common example is a closing where you represent the lending institution, and the buyers do not have their own counsel. You may want to offer advice or answer a question during the closing to keep the proceedings on track. This could leave an impression in the buyers’ minds that you represent them, and this might open the door to a claim. Protect yourself by communicating effectively with clients through engagement letters, and send a standard non-engagement statement to non-clients.
Consider an engagement on behalf of a corporate client. Do you represent the corporate entity only? The owners? The director and officers? Are you representing all of the owners or only some of them? If there are two or more owners, their interests may not align. Again, the engagement letter should spell out who is a client and who is not.
Scope of Services
The client may have several pending legal issues. Clearly outline the specific services to be rendered. If there is any chance for ambiguity, the letter should go on to state what is outside the scope of the engagement. It also helps to state when the engagement ends. Rather than citing a specific lawsuit as the subject of the engagement, you may also state that you will not handle the appeal or ancillary litigation.
Right of Withdrawal
The engagement letter should detail your right to withdraw from representation. If you do withdraw, you should send a disengagement letter to the client. You should not rely on the filing of a motion to withdraw with the court in litigated cases, as the client may not receive notice of this motion, and you cannot control the timely delivery of that notice.
Communicate all billing details to the client, including the basis for the fee and the frequency of billing. The letter should specify if the basis for the fee is flat, hourly, or contingency. Also state when the payments are due to the firm and what out-of-pocket charges will be billed to the client. If expert witness fees are to be billed back to the client, you should put this in writing again when discussing the hiring of any expert.
Close the Case
Once a legal matter is concluded, you should issue a closing letter to the client. This can be a standard letter delivered with the final documents for the case, also thanking the client for the opportunity to be of service. This letter can set the statute of limitations date if a claim arises. The cleaner and earlier the termination of the engagement, the stronger the statute of limitations defense will be.
The use of engagement letters should provide clear and concise communication throughout the course of your client relationship. If any disagreements occur, you can rest assured knowing you are protected with a signed, detailed engagement and/or disengagement letter.
How do you use engagement letters in your field of law? Respond in the comments below.