GPSolo Magazine - April/May 2004
Excerpts from a Sample Engagement Letter
Thank you for selecting [name of law firm] to represent each of you in the formation of [name] corporation (the Incorporation). Our firm’s policy at the outset of an engagement with new clients is to outline not only the nature of the engagement but also the basis on which the firm will provide legal services and bill for them.
Nature of Engagement
As we discussed, the firm’s client will be each of you in your capacity as organizers of Corporation until Corporation is formed. Subsequent to Corporation’s formation, the firm’s client will be solely Corporation and we will no longer represent any of you in your individual capacities. The scope of our engagement will be limited to assisting you in the formation of Corporation. We will counsel you as organizers of Corporation on the legal aspects of forming this new business entity and the relationship that the new entity will then have with its organizers and members. We will also prepare the documentation necessary for creating Corporation.
Prior to the formation of Corporation, we will take direction regarding the Incorporation from [name of individual client], who we understand has been unanimously appointed by all of you to provide directions to us. You should know that the interests of Corporation may not be identical to the interests of each of you as Corporation’s [shareholders/officers/directors]. In addition, you may individually have differing or conflicting interests with one another regarding the manner in which Corporation is formed. For example, the structuring of the Incorporation may provide tax benefits to some but not all of you.
Ideally, each of you would be represented by separate counsel in the Incorporation, but we recognize that there are considerations of cost as well as strategic advantages for each of you in being jointly represented by us. [Law firm] is willing to undertake such multiple representation during the formation of Corporation so long as the following terms and conditions are understood and agreed to by each of you:
[Names of Client 1, Client 2, and Client 3] acknowledge and agree that communications between [law firm] and any or all of you concerning the Incorporation will be treated by us as confidential and not disclosed to anyone other than the [three] of you without your consent or as otherwise provided by law. [Names of Client 1, Client 2, and Client 3] further acknowledge and agree that whatever communications or information [law firm] receives from any one or more of you concerning the Incorporation will be shared with each of you, as we deem appropriate. In particular, if we receive material information about any one of you from one of the others that we believe Clients 1, 2, or 3 should have in order to make decisions regarding the Incorporation, we will give you that information.
For more sample letters, see:
Jay G. Foonberg, How to Start and Build a Law Practice (Millennium 4th ed.), ABA Section of Law Practice Management, 1999.
Thomas E. Kane, Letters for Lawyers: Essential Communications for Clients, Prospects, and Others (2d ed.), ABA General Practice, Solo and Small Firm Division (2004).
American College of Trust and Estate Counsel, www.actec.org.
Milwaukee Bar Association, Professionalism Committee Standard Letter Forms, www.milwbar.org.