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To Represent or Not Represent: Either Way, Put it in Writing

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An article on Law360 makes a persuasive argument for engagement letters and provides:

Law firms facing malpractice claims are often the victims of their own failure to use strongly worded engagement letters that clearly define the limits of legal services being offered to clients…[1]

I also recently attended a CLE where the speaker said something that really caught my attention: Out of the several hundred malpractice cases filed, only a small handful had an engagement letter in place. And of those, only two truly contained the essential elements of an engagement letter.  Those numbers seem to strongly indicate two things: (1) attorneys are not seeing the value, and are not using, engagement letters; and (2) engagement letters are almost always necessary.

Engagement Letters

In certain situations, such as with contingency fees and business transactions with clients [See “Doing Business with Clients? Better Think Twice”], the Rules of Professional Conduct require that the agreement be in writing. However, even when it is not required, memorializing your agreement to represent a client in writing is a sound business practice and something we consistently do at my firm. A good engagement letter can promote communication, eliminate misunderstandings, and potentially prevent a malpractice claim.

All engagement letters are, however, not created equal.  A good letter will provide: (1) the nature of the services you will provide; (2) any exclusions from the scope of the engagement; (3) the fees and billing arrangements; (4) procedure for retainers; (5) specific requirements and responsibilities of the client during the engagement; (6) costs the client will be responsible for; and (7) when the engagement will begin.  Have the client sign the letter to acknowledge they have read, understand and agree to the terms.

An engagement letter is the best way to document and communicate the terms of the representation. When you and the client are on the same page, malpractice claims and complaints to the State Bar become far less likely.

Letters of Limited Engagement

The provision of unbundled legal services has become popular, particularly where clients would like to control costs or do not want or need full service.  If you do provide unbundled services, it seems a letter of limited engagement is essential.  Rule 1.2 of the Rules of Professional Conduct provides that a lawyer may limit the scope of the representation as long as the limitation is reasonable under the circumstances. Further, Comment 8 of the Rule provides that “a specification of the scope of representation will normally be a necessary part of any written communication of the rate or basis of the lawyer’s fee.”

If you don’t limit the scope of services in the engagement letter, you will likely be held to the default, and much higher, standard of “full service.”  A good letter of limited engagement will identify both the services that are being provided and specify which are not.  Once you set out the terms of the limited engagement, don’t stray from it into other services or matters without entering into a separate agreement.

Non-engagement, or “I’m Not your Lawyer” Letters

Non-engagement letters are a good idea in every situation where a prospective client inquires about legal services but does not follow through and engage your services or if you decline the representation. This can include not only potential clients who you meet in-person, but also people who submit web inquires or emails, or even your neighbor looking for some legal advice.  The letter needs to clearly state that you will not be undertaking the representation of the client.  If the potential client provided any documents, you would want to return those with the non-engagement letter. You would not want to offer specific legal advice in the letter. However, if there is a pending deadline or a statute of limitation issue, you should note that and include a strongly-worded statement that s/he should immediately seek legal counsel.

Disengagement Letters 

Once the representation of a client has concluded, a disengagement letter is an effective way to make sure the client is aware that the work has been completed and that you are no longer acting on their behalf.  Disengagement letters can also be used to thank clients for placing their trust with you and your firm and letting them know you are there if they should need assistance in the future. So, not only can the letter potentially protect you from a malpractice claim or grievance, it can also be a good marketing tool.

*The above is provided for general information purposes and is not legal advice or opinion.

[1] Jeremy Heallen, “Weak Engagement Letters Fueling Malpractice Litigation.” Law360, 2 May 2014. Web. <https://www.law360.com/articles/533985/weak-engagement-letters-fueling-malpractice-litigation>.