Engagement letters can play an important role in establishing productive attorney-client relationships and reducing the likelihood of legal malpractice claims. This article brings together a handful of tips on how to write better engagement letters that you may find helpful in your practice.
The Many Benefits of a Well-Drafted Engagement Letter
An engagement letter may be critical to laying a solid foundation for your future relationship with the client. You can leverage a well-written engagement letter to set your professional boundaries by clearly defining:
- The services you will be providing
- You and your client’s respective duties
- Your billing and fee structure
- How you will handle the representation
In doing so, you may reduce the probability and severity of potential malpractice claims, manage client expectations, and define the parameters and goals of your services.
Are Engagement Letters Mandatory?
The ABA’s Model Rules of Professional Conduct
prefer, but do not generally require, written engagement letters.
That said, Rule 1.5(c) expressly requires contingency fee agreements to be set out in writing. The Comments accompanying Rule 1.5 further state that it is “desirable” to provide the client with a memorandum or statement containing:
- The general nature of the services provided
- The basis, rate, or total amount of the fee
- Whether and to what extent the client will be liable for any costs, expenses, or disbursements
Furthermore, per Rule 1.8(a), you may not enter into a business transaction with a client unless you disclose the terms fully and in writing.
The Model Rules notwithstanding, some states require written engagement letters, including California, Washington, and New York. With this in mind, consider consulting the rules of professional conduct for your jurisdiction before settling on a template for your standard engagement letter.
How to Write Better Engagement Letters: Elements to Consider
Including the elements below in your engagement letters can help serve the best interests of both your practice and your clients.
1. The Identity of the Client
The first step in drafting a strong engagement letter may be to identify the client(s). This can limit the class of persons that could later assert a legal malpractice claim, as attorneys typically only owe duties to parties with whom they are in an attorney-client relationship
If the client is an organization, consider specifying whether or not its owners, principals, directors, officers, and/or managers are your clients for the representation. You may also use exclusionary language to preclude other parties from asserting an attorney-client relationship. This could be something along the lines of “No duties have been undertaken or assumed for any person or entity that has not been specifically identified as a client.”
2. The Scope and Duration of the Representation
It may be prudent to clearly articulate whether the representation is for:
If the representation includes civil or criminal litigation, the engagement letter should state whether this extends to:
This may provide a defense against potential malpractice claims in which the claimant asserts that you should have done more.
3. Fees, Expenses, and Billing Practices
Another good practice is for your engagement letters to set forth:
- The billing structure and terms of payment, including the possible provision of a retainer
- The frequency of payment and billing
- Whether you bill your services at a flat rate, a contingency fee, or an hourly rate
- The rates for different types of attorneys, such as associates, senior associates, partners, and senior partners
- Any applicable rates for non-attorney staff like paralegals or medical paralegals
- All expenses for which the client would be responsible
- The consequences of late or missed payment
You should also clearly set out your right to recover fees and costs in the event of severance of the attorney-client relationship, including the ability to recover quantum meruit fees.
It may also be a good idea to provide an estimated budget for the representation to help avoid misunderstandings and encourage cost transparency.
Per Rule 1.5 of the Model Rules of Professional Conduct, you should also communicate any changes in the expenses or your fee to the client.
4. Staffing Details
Although not mandatory, it may be helpful for your clients to know the name(s) of the attorney(s) that will be representing them. If applicable, you should also inform clients of the use (or possible use) of paralegals and support staff.
5. Client Communication
Rule 1.5 also requires that you keep clients reasonably informed of the status of their matter. To help ensure effective and timely communication, consider setting out the frequency and means by which you will communicate with clients in your engagement letters. You may also wish to discuss your clients’ preferred means of communication in advance.
As you draft your engagement letters, you should also consider the issues of security, privacy
, and confidentiality. It may be advisable to put in writing any special security measures such as encryption that may apply. You may also advise clients to avoid unnecessary sharing of attorney-client privileged messages and use secure email addresses that are not accessible by non-represented parties.
6. Conflicts of Interest
Your engagement letters should set forth how your practice will handle an actual or potential conflict of interest.
7. Document and File Retention
Consider outlining how you will maintain client files both during and after the representation, including how long you will keep file materials per the rules in your jurisdiction. Your engagement letters should also mention the clients’ duty to preserve documents and information in the event of a dispute.
8. Signature of Counsel and Client
Last but not least, all engagement letters should have the signatures of:
- A representative of your practice
- The client or their designated representative
A representation agreement without the client’s signature may be less enforceable and may give rise to disputes about the client’s receipt or acceptance of the agreement.
Other Types of Letters to Consider
While an engagement letter can help set the tone for your future relationship with the client, the following letters may help end the relationship risk-free.
Letters of Non-Engagement
Sending a formal letter of non-engagement
may be good practice in situations where you have an initial consultation with a potential client, but they choose not to retain you or you decline representation.
Letters of non-engagement can help send a clear signal to the prospective client that you are not representing them, especially when:
- You do not have the resources and/or expertise to handle the case
- The client’s position may lack merit
- There is a conflict of interest
- You have not heard from the prospective client since the initial consultation
- The case may not be a good fit for your practice
There may be circumstances where you may seek to terminate an attorney-client relationship
- A difference in opinion as to strategy
- An irreparable breakdown in the attorney-client relationship
In such cases, you should withdraw from representation by obtaining the client’s consent and, if necessary, court approval.
You should also consider drafting a disengagement letter to outline the basis of your attorney’s disengagement, warn the client of any upcoming deadlines, and advise them as to how you will store their file(s).
A disengagement letter may also double as a risk prevention measure, as it records the termination date of the representation. This may provide a statute of limitations defense in a future malpractice action.
Writing Letters of Engagement: Final Thoughts
The preparation of engagement letters may be a routine practice, but you should still give it your full attention. A well-drafted letter can help establish a clear and transparent relationship with the client, increase the likelihood of prompt and regular payments, and reduce the possibility of malpractice claims.
Contributions by Scott R. Schaffer of Wilson Elser Moskowitz Edelman & Dicker, LLP.
This article is provided for general informational purposes only and is not intended to provide individualized advice.