Have you ever wondered what sets apart a successful legal partnership from an unsuccessful one? The answer lies in the details. A well-drafted lawyer letter of engagement can make all the difference in ensuring that a client’s legal needs are met, their expectations are set, and your relationship with them is off to a strong start. The relationship between advocate and client warrants transparency from beginning to end.
In this article, we'll cover everything you need to know about lawyer letters of engagement from the basics. We'll explore the rules of creating it and tips on how to write one.
What Is an Engagement Letter?
An engagement letter is a formal agreement between a lawyer and client that outlines the scope and terms of the legal representation or services to be provided. It confirms that an attorney-client relationship has been established and clarifies expectations regarding matters like fees, billing practices, conflicts of interest, and the client's responsibilities. A proper engagement letter helps avoid misunderstandings and a legal malpractice claim by spelling out the ground rules upfront.
Rules of Creating Engagement Letters
A strong engagement letter establishes the terms of your legal representation and sets the tone for a productive and professional relationship with your client. We will discuss the ABA rules regarding the creation of engagement letters to guide you accordingly.
— Engagement Letter Ethics
Rule 1.5 (b) of the ABA Model Rules of Professional Conduct guides the requirements for a lawyer's fee agreement with a client. According to Rule 1.5 (b), the following information must be communicated to the client in writing:
- The specific legal services and limitations or exclusions.
- How the lawyer will be compensated including hourly rate, flat fee, contingency fee, or other basis.
- Any expenses the client will be responsible for.
- Any changes in fees or expenses will be communicated in writing.
These requirements aim to ensure the client clearly understands the terms.
— Engagement Fees
ABA Model Rule 1.5(c) discusses requirements when a lawyer charges a contingent fee. Such fees must be spelled out clearly in a signed written agreement that discloses how the fee will be determined based on specific outcomes.
The engagement letter must address:
- The percentage of any recovery going to the attorney under various scenarios.
- Whether expenses incurred will deducted from the client's recovery or charged separately.
The rule also mandates disclosure of any expenses the client may have to pay regardless of case outcome. Upon conclusion, the attorney must provide a full written accounting.
What’s Included in Engagement Letters?
Since written engagement letters serve as a line of open dialogue about how you will serve clients, include the essential specifics of your agreement to represent their interests under the law. But what exactly is included in this document?
— Engagement Details
When a client hires a lawyer, they want to know that you’re committed to their case and have the necessary expertise to handle it effectively. Engagement details are the key elements that outline the scope of your representation. These typically include:
- The type of legal service being provided (e.g., representation in a court case, drafting a contract, etc.).
- The specific legal issue or matter being addressed.
- The jurisdiction(s) where the legal service will be provided.
- Any relevant deadlines or timeframes that need to be met, like the statute of limitations for filing the claim.
You might not work on a case alone. There may be other team members or support staff who will assist with the case. Staffing details are important in the engagement letter to ensure the client knows everyone involved in the case, their role, and their responsibilities.
You have to specify precisely which tasks you and your firm are committing to handle as part of the representation. Focus on core activities like legal research, drafting documents, court filings, client consultations, and negotiations with opposing counsel. Depending on the matter, you may list additional work, such as requesting records, advising on settlement options, or conducting discovery.
— Possible Service Changes
Of course, the scope of your services may change over time as your client's needs evolve. That's why it's important to include a section in your engagement letter that addresses possible service changes.
Imagine your client is a small business owner who initially hires you to handle their business formation and drafting contract. However, as their business grows, they realize they need ongoing legal support for issues like employment law and intellectual property protection. In this case, your engagement letter might include a section that allows for possible service changes, such as:
"As your business grows and evolves, we understand your legal needs may change. We are committed to adapting our services to meet those changing needs, and we will work closely with you to identify any additional services that may be necessary. For example, suppose you need ongoing support with employment law or intellectual property protection. In that case, we can adjust our services to include these areas and provide you with the necessary legal support."
— Payment Structure
One of the most important aspects of an engagement letter is the payment structure. This section outlines how and when you will be paid for your services. It's important to be clear and transparent about your fees so that your client knows what they can expect to pay.
When drafting the payment structure section of your engagement letter, you can add the hourly rates, flat fees, and contingency fees, depending on the one you use. Furthermore, specify how often you will bill your client, such as monthly or upon completion of specific tasks. Clearly state your payment terms, including any due dates, late fees, and penalties for non-payment.
— Communication Details
Accessibility is key to serving your clients well, so outline how and when they should expect to receive case updates and responses to questions. Your engagement letter should include details about how you will communicate with your client, including:
- Contact information: Provide your client with your contact information, such as your phone number, email address, and any other relevant contact information.
- Communication method: Specify the method of communication you prefer, such as email, phone, or in-person meetings.
- Frequency: Explain how often you will communicate with your client, such as weekly or bi-weekly status updates.
- Confidentiality: Remind your client that all communications between you and your client are confidential and protected by attorney-client privilege.
— Dates, Service Terms, and Period of Engagement
Provide clear dates in your engagement letter to assist in planning and managing the case timeline. Be sure to note when legal representation will commence upon receiving a signed agreement from the client.
You'll also want to estimate important future dates like filing deadlines, scheduled hearings, or the anticipated completion time frame, barring unexpected delays. Always include a disclaimer that these projected times are estimates only since legal matters evolve along with changing circumstances.
Additionally, specify your services' terms, such as a 30 or 90-day notice policy, should either party wish to terminate the professional relationship before completion. Some firms choose to continue working on month-to-month retention after the initial period concludes, as well as if a matter is still pending.
— Possible Conflicts
Discussing potential risks for conflict of interest protects confidentiality and integrity. For instance, if your law firm previously represented a spouse, new involvement for their former partner requires full disclosure to obtain informed consent. While directly opposing current clients is prohibited, revealing all connections maintains ethical standards.
Even seemingly unrelated legal work for a prospective client's family, friends, or business ties warrants transparency.
Clearly outlining and managing client expectations is crucial for any new attorney-client relationship. As the representative, it's important to communicate what clients can depend on from you and your firm throughout the legal process.
Rather than just stating obligations, take a personable approach to help clients understand they are partnering with knowledgeable guides invested in their case's success. Spell out services like gathering facts, researching statutes, filing documents, attending hearings, and more - painting a tangible picture of the work ahead.
— Terms and Conditions
This section of the engagement letter covers several crucial aspects of the legal relationship. It helps prevent misunderstandings and ensures both parties are aware of their rights, limitations, and the scope of the engagement.
Under terms and conditions, lawyers typically address matters such as the scope of the representation, the duration of the engagement, and any limitations on the services provided. They may also include details about fees and billing arrangements, including payment terms and potential advances or retainers required.
While everyone hopes for smooth, conflict-free relationships, it's essential to have a clear plan for handling disputes that may arise during legal representation. So, what does this entail?
- Specify whether disputes will be resolved through mediation, arbitration, or by pursuing litigation.
- Identify the jurisdiction and governing law that will apply in the event of a dispute.
- Define the process for initiating a dispute, including any notice requirements. Outline any steps to be taken before resorting to formal dispute resolution methods.
- Include a severability clause that states that if any provision of the engagement letter is found to be unenforceable or invalid, the remaining provisions will still be in effect.
- Address the confidentiality of the dispute resolution process, emphasizing the importance of maintaining the privacy and confidentiality of the parties involved.
— Document and File Retention Policies
It's important to notify clients how long physical and electronic documentation will be kept following representation. Legal and ethical standards often require multi-year storage of items like pleading drafts, correspondence, and invoices. Specify how long you will retain documents and files related to your client's matter. The storage period should comply with state rules since they differ by jurisdiction.
For instance, an attorney can maintain client files for 7 years in Washington, D.C; however, in Los Angeles, files can only be retained for 4 years.
— Client's Signature and Dates
Completing the engagement letter process with dated signatures signifies a full agreement between the attorney and client. It marks the formal commencement of legal counsel.
Request separate signatures for every party to the professional relationship. For example, if representing a married couple jointly, both spouses should authorize the arrangement with their inked initials.
In addition to signing blocks, include the date each individual endorses the engagement terms. This date should be when you are both physically signing the letter, not the date on which you are sending it or receiving it. Make sure you use the correct date format (e.g., month, day, year) and are both aware of the date you are signing.
3 Tips on How to Write an Engagement Letter
Keeping the needs of the individual client in mind allows the terms of representation to be tailored specifically for their situation and objectives. Since an engagement letter defines the scope of services by providing a specific description of the work to be performed, here are a few suggestions for developing one.
— Set Correct Expectations
The well-written engagement letter sets the stage for understanding between lawyer and client. Take care to paint an accurate picture of the process ahead so there are no surprises or rushed changes later. Be upfront about your qualifications and experience handling similar matters.
Clearly define the scope of representation so your client fully understands what legal services you have agreed to and what issues fall outside the engagement. Furthermore, give estimations of the time commitment or costs involved to avoid unrealistic expectations. Leave room for uncertainties, but commit to informing your client of progress.
— Be Personal to Your Client
While engagement letters cover important legalities, remember a real person will read them. Referencing these personalized touches signals your thoughtful attention to their needs as a person, not just a file number.
You also need to use a warm, empathetic tone to make the letter personal and build trust with your new client. A friendly yet professional touch leaves clients at ease in what may be a difficult process.
— Be Clear
Precision removes doubt and minimizes second-guessing down the line. Define important terms concisely, check for clarity, and confirm understanding face-to-face before finalizing the letter. Stick to everyday language over complex legal terminology whenever feasible to communicate expectations effectively. Furthermore, offer to address any questions the client may have.
Engagement Letter Examples
Example 1: The engagement letter template from eForms.com provides a straightforward overview of key aspects of the attorney-client relationship. These include scope of representation, fees based on options of hourly or flat rates, expenses, payment schedule, and amount of initial retainer required. It outlines mutual responsibilities and expectations in accessible language appropriate for clients to understand obligations clearly. Its simplicity makes this a starting point many law firms can modify for common case types.
Example 2: The sample from the South Carolina Bar Association goes into more detail desirable for complex matters. It specifies anticipated legal services to manage client expectations while limiting scope. Moreover, it flags optional value-added billing practices attorneys may apply. Such details give clients confidence their costs remain transparent and work subject to quality reviews. The level of definition helps establish trust for representations involving substantial fees or time commitments.
Example 3: The letters provided by the State Bar of Nevada demonstrate how engagement discussions can address multiple prospective client needs. The first letter under this example details common billable matters but also flags disclosures around conflicts and confidentiality. The second sample switches to a contingency fee structure and outlines procedures if the attorney exits the case.
Example 4: The sample engagement letter from Clark Cunningham provides a very comprehensive template addressing an extensive set of topics attorneys may need to broach. It delineates not just scope and fees but also aspects such as documentation policy, estimated timelines, and succession planning. Covering such breadth helps ensure representation aligns with a law practice’s standards and risks are properly managed. The level of forethought sets a gold standard for documenting new matters.
To Sum Things Up
A well-drafted engagement letter sets the stage for a productive professional relationship by getting all parties on the same page. Furthermore, engagement letters promote ethical and compliant legal practice while giving clients confidence their interests will be well represented.
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