Best Practices May Make Perfect
Rules of Thumb for the Attorney-Client Relationship
By Scott R. Schaffer and Andrene V. Fairweather, Wilson Elser LLP
This article provides pointers on best practices for the attorney-client relationship, from solicitation to conclusion of the engagement and beyond. Soliciting a new client can be hard work. Referrals are ideal but some attorneys also have to actively advertise their services. Advertising should accurately represent the attorney’s expertise and success record. Once a client decides to retain the attorney’s services, it is imperative that the attorney set the tone for the relationship by clearly outlining its terms in written form. The attorney should then properly manage the engagement and its file, and effectively communicate with the client throughout.
A formal engagement letter should be drafted and signed by the attorney and the client. The engagement letter is an opportunity to precisely identify the client, the scope of the legal representation, the methods of communication, and the billing structure.
While it may seem like stating the obvious, an engagement letter should clearly identify the client. If it is an organization, the organization’s owners, principals, directors, officers and managers also may be clients. Further to this point, it is important to consider unintended parties to which an attorney may owe a legal duty, such as the beneficiary of the legal services, if not solely the “client.”
It also is important to articulate the scope of the legal representation, whether it is for consultation, document preparation, transactional work or actual litigation; if for litigation, and the litigation proceeds to judgment, whether the engagement extends to handling a potential appeal. If the client requests that the attorney provide legal services that are outside the scope of the engagement letter, a separate engagement letter should be prepared to address those additional services.
In addition, it is a good idea for engagement letters to outline the preferred methods and frequency in which the attorney and the client shall communicate with each other. Depending upon the nature and scope of the assignment, communication by phone, text, e-mail, correspondence report, or in-person meeting may be preferred. The nature and scope of the assignment, as well as any corporate guidelines, communication may be daily, weekly, monthly, quarterly, semi-annually, or on an as needed or phase of assignment basis. Whatever the method or frequency of communication, this can be spelled out in the engagement letter to ensure that this aspect of a client’s expectations are met by the attorney.
It also is important to clarify whether the billing structure for the engagement is predicated on a flat rate, a contingency fee or an hourly rate.
- If a flat rate or contingency fee, the engagement letter should specify whether costs and expenses, including that of outside vendors and experts, are included in the flat rate or contingency fee.
- For a contingency fee arrangement, the engagement letter should specify whether the client is responsible to pay the attorney for costs and expenses incurred in the event the representation does not result in a monetary recovery for the client.
- In an hourly rate arrangement, the client should be provided with a projection of the legal fees and costs anticipated through each phase of the engagement. Bills for hourly rate arrangements should be provided to clients on a regular basis, such as monthly or quarterly, and the time entries should satisfactorily articulate the task that was performed to substantiate the amount of time spent on the task.
Attorneys can face both ethical and civil liability for failing to issue bills regularly or with sufficient detail. In this regard, in an actual lawyer’s professional liability claim, the attorney failed to provide its client with an invoice for more than a year, and the vast majority of the time entries simply stated “Emails” as the description for the work performed. This lackadaisical approach to billing resulted in the attorney being suspended from the practice of law for six months and placed on probation for eighteen months.
With respect to potential clients with whom the attorney had an initial consultation but was not retained, even though the attorney-client relationship is not moving forward, a formal non-engagement letter that maintains the confidentiality of the matters discussed may be in order.
After the engagement letter is executed, a case management system should be initiated. There are various practice management software options that can keep track of relevant deadlines, billing and attorney-client trust accounting. These activities also can be done manually, assuming that appropriate safeguard measures are in place to provide oversight with respect to any potential errors or omissions.
A significant number of legal malpractice claims involve a missed statute of limitations or missed deadlines for discovery that result in an unfavorable ruling. In an actual claim, an attorney admitted in two neighboring states applied the statute of limitations for the incorrect state, so the deadline to file an action was incorrectly calendared. As such, the client had no recourse but to pursue a claim of legal malpractice against the attorney.
An attorney also should be mindful of the applicability of statutory pre-litigation requirements, such as having to provide a notice of claim to a municipality or other governmental entity within a certain period from the time of an incident involving alleged negligence on the part of the entity.
Thorough record keeping is important. A file should be established for each client that is readily accessible to the client at any time. Based on the Rule of Professional Conduct 1.15 and 1.16(d), a client is entitled to access to its entire file, with limited exceptions, such as those documents that might violate a duty of non-disclosure owed to another party. However, depending upon the state in which the attorney is practicing, the attorney should note whether the burden is on the client to pay for the reasonable cost of copying the file, although it is not uncommon for the attorney to bear that cost as a courtesy to a continuing client relationship. The file must include relevant documents for the legal representation, such as medical records, police reports and underlying contracts, and a memorialization of all communications, including those that are telephonic. The file also must document the attorney’s recommendations, the client’s decisions, and agreements with clients and adversaries throughout the course of the legal representation. Even after the conclusion of the representation, the attorney’s file should be maintained for a reasonable period of time consistent with state bar recommendations, and the client should be advised of the attorney’s file retention policies in writing.
The American Bar Association Model Rules of Professional Conduct recommends that an attorney keep a client “reasonably informed” about the status of a matter and “reasonably consult” with a client about its objectives. Therefore, a reasonable standard applies to the attorney’s obligation to communicate with clients. For example, attorneys are familiar with the course of litigation but have to keep in mind that a client may not be similarly informed. Therefore, it is important for the attorney to explain the various phases and rigors of litigation in order to manage the client’s expectations.
Some attorneys have extremely busy litigation practices, but that is not an excuse for failing to notify a client about substantive activity, such as depositions, a ruling on a dispositive motion, trial scheduling and preparation, and, potentially, appellate options. There may be a time when a client makes an inquiry for which the attorney does not have an immediate answer and may have to conduct research and analysis. In this situation, best practices require that the attorney, at a minimum, acknowledge receipt of the inquiry within 24 hours and advise the client that a substantive response shall be provided in a timely manner. If an attorney is away from the office on other business or on vacation for an extended period of time, out-of-office email messages and phone messages indicating that the attorney is away and the anticipated date of return should be in place to provide the client with an indication when it will receive a response to its inquiry and, if possible, identify an alternative or emergency contact.
Given the rise in social engineering fraud claims in which a culprit intercepts email communications for illegal purposes, including to fraudulently obtain funds via wire transfers, attorneys should be careful about transmitting via email the client’s personal and financial information, and consider using encrypted email for such sensitive information as may be warranted.
Conclusion of the Representation
The attorney-client relationship may conclude naturally at the end of litigation or upon reaching a settlement, or the closing of a transaction, but at times the relationship may terminate prematurely. A client may terminate the attorney-client relationship for various reasons, including that the objectives of the engagement have not as yet been met or that the client’s circumstances have changed and the attorney’s representation is no longer desired or necessary. A client also may decide to retain new counsel in place of the attorney initially engaged.
In addition, there are various reasons why an attorney may decide to withdraw from representing a client, such as a difference of opinion as to strategy or the client’s failure to pay legal fees. An attorney should properly withdraw from the representation by obtaining the client’s consent to do so or, if necessary, seeking court approval.
Whether the attorney-client relationship is terminated by the client or the attorney, the attorney should provide a termination letter to the client offering to provide a copy of the file, at the client’s expense if consistent with state Bar guidelines, and to facilitate the transfer of the file to a new attorney.
Letters following successful conclusion of an assignment should also be used by the attorney to summarize the outcome, review any issues going forward, and to communicate the attorney’s file retention policies. The assignment concluding letter also presents the attorney with an opportunity to make sure the client knows the attorney is available for other engagements in the future.
Following certain “best practices” to properly manage the engagement and effectively communicate with the client throughout, such as those described herein, can reduce the risk of a legal malpractice claim. A checklist of these recommendations in each file would serve as a reminder of how to properly establish, maintain and conclude the attorney-client relationship.