Ethical Challenges of Engagement Agreements and Fees Melissa Chavin, London, England Robert E. Juceam, New York City, NY Ruby Powers, Houston, TX Helen Sklar, Los Angeles, California

Introduction: Overview of Engagement Letters Purpose: minimize disputes by managing expectations Consider when drafting: state rules of professional conduct, contract law Sometimes not required, examples from New York and Illinois Includes scope of representation, fees and their basis, billing practices, etc. Letter should be updated throughout the engagement

Warnings Ambiguities will be construed against the lawyer in a dispute (adhesion contract) Not the time to advertise one’s services as “the best” by promising “the best services” The agreement can be modified orally; consents of client can be withdrawn without language to the contrary that it can be modified only in writing

Description of the Scope of Services to Be Rendered: Goldie Locks Issue Not too broad: don’t go beyond client and lawyer expectations of scope Not too narrow: A too narrow scope will be viewed as unreasonable without the client’s informed consent. See e.g., ABA Model Rule (“MR”) 1.2(c).

Engagement Letters Also Cover Client identification and third party payor (non-client) identification Informed consent to conflicts/ related waivers Right of client to select arbitration for disputes (when mandated by jurisdiction) Confidentiality compromised in multi-party representation Termination of Services

Engagement Letters Also Cover (cont’d.) Certification of truth from clients; promise of client to be cooperative Process of consideration and signing of the engagement letter No Guarantee Clause – re case success Data Protection

Special Issues: a Client the Lawyer Never Meets Lawyer should consider obtaining client’s written confirmation that: Referring lawyer or agent is duly authorized to instruct lawyer in matters affecting scope of engagement Communications to referring lawyer conclusively deemed communications to the ultimate client

Core Provisions of Strong Engagement Agreement Use rules of professional conduct of the state you’re practicing in guide to writing The ABA Model Rules of Professional Examine closely the “Client Lawyer Relationship” section

Scope of Representation Not a detailed scope of representation, but a brief summary of the undertaking in writing Satisfy MR 1.4(b): explain a matter to the extent reasonably necessary to permit the client to make informed decisions regarding the representation Scope of representation may be limited, if the limitation is reasonable and the client gives informed consent, see MR 1.2(c)

“Not Included” List Avoids future disputes about what the estimate or flat fee covered Opportunity to market future services Could list related services that the lawyer may not be qualified to provide, for example because their practice is limited to federal law while they are out of state lawyers for the locality

Informed Consent to Dual Representation Communicate the risks of dual representation to get informed consent Give actual examples of conflicts that could arise in a given matter, and Actual potential outcomes

Waiver of Future Conflicts/ Controversial MR Rule 1.7(b): dual representation permitted when both clients’ interests are matched If a new conflict arises, a lawyer can continue to represent both clients if: The lawyer reasonably believes she can continue dual representation Representation doesn’t involve assertion of claim by one client against the other Each affected client gives renewed informed consent in writing

Effectively Setting & Communicating Fees Survey data shows dissatisfaction with lawyers’ communication What does poor communication look like? Why should lawyers worry about poor communication?

The Duty To Communicate Where does the duty to communicate come from? What information is a lawyer required to communicate, and what is she not required to communicate? The California Rule vs. the Model Rule What information should we communicate? How should we communicate?

Communication Regarding Legal Fees Understand the legal problem before quoting fee When research/investigation is required, structure the engagement accordingly Well-crafted intake sheet decreases risk of an oversight

Fee Schedule Effective use of a fee schedule Departures from the fee schedule Responding to requests for discounts Demonstrate respect Respond with clarity Avoid misunderstanding and misinterpretation

Intake Sheets, Thorough Interviews, Flat Fee Agreements Effective use of an intake sheet The perilous world of flat fees The perilous world of hourly fees When may a flat fee agreement be modified? Peripheral Duties Affirmative obligations to advise client of issues with nexus to engagement Lawyer must alert client to reasonably apparent legal problems

Reviewing the Fee Agreement Why it is important to communicate with the client regarding the fee agreement before the work begins Which provisions are most important to discuss?

Explaining Exclusions Client signing initials in box ≠ evidence of effective communication Example: What explanation should accompany the exclusion of an appeal? An appeal will require the payment of a separate legal fee Filing of the notice of appeal is subject to a deadline Exclusions are as important as inclusions (maybe more)

When and How to Disengage a Client Start with a strong, clear engagement letter informing client of services Take proper measures at the time of hire Include a provision allowing attorney or client to end representation if expectations not met

Disengaging a Client (cont’d.) Example: Jane Doe has the right to terminate this engagement at any time. Conversely, the law firm of Attorney XYZ reserves the right to withdraw from the engagement, subject to any ethics rules.

Ending the Attorney-Client Relationship Disengagement letter recommended Continuation of legal services for matters not covered in engagement letter Model Rules of Professional Conduct Rule 1.16(d) Disengagement letter especially helpful for immigration attorneys

Elements of a Disengagement Letter Identify the subject matter of the letter Notify the client of the case status and potential deadlines State the status of fees collected and pending Advise clients to maintain copies of documents

Conclusion Engagement agreements should outline scope of attorney’s representation Description of services helps manage client expectations Exclusions (services not offered) should be listed Clear communication in engagement letter and fee discussion is pivotal to healthy attorney-client relationship

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