Most lawyers understand the importance of engagement letters. Sometimes they’re even required by our ethics rules or our law firms.
But fewer lawyers understand the power of a simple letter or email to a client saying our representation is over—the disengagement letter.
We bring you a reminder today of the positive effects of good lawyer hygiene in clearly communicating to a client the end of a representation. It comes thanks to a Colorado federal decision denying a motion to disqualify, Dream Finders Homes v. Weyerhaeuser NR Co., 2019 Colo. Dist. LEXIS 2121 (May 22, 2019).
Ending a Long Relationship
In 2001, Plum Creek Timber retained a large, national law firm, Holland & Knight LLP, to work on real estate matters. Over the next 14 years, the firm worked on about 20 matters for the client. Those concluded in 2015.
In 2015, Plum Creek merged with Weyerhaeuser, which then engaged the law firm on a Florida utilities matter. That engagement ended on June 14, 2017. Two days later, a careful firm lawyer emailed Weyerhaeuser:
Enclosed is [the relevant order in utility matter]. The order states that it ‘shall serve as the water and wastewater certificates’ for the two utilities, and thus should be kept for record purposes.
This should bring the matter to a close. It has been our pleasure to represent Weyerhaeuser. Please let us know if we can be of further assistance.
The lawyer’s Weyerhaeuser contact responded by email, “[i]t is nice to bring this to a close.”
A Dream Client
Fast forward about a month.
Weyerhaeuser revealed an “off-gassing” issue with fire-resistant joists it produced. They allegedly emitted dangerous levels of formaldehyde. Another client of the firm, Dream Finders Homes, had purchased some of these joists. They asked the firm to advise on legal options.
In running a conflict check, the firm found its prior—and very recently concluded—Weyerhaeuser work. The firm concluded that, under Rule of Professional Conduct 1.9(a) concerning former clients, it was free to represent Dream Finders adverse to its former client Weyerhaeuser because Dream Finders’ joists issue was not “substantially related” to any of the firm’s former Weyerhaeuser work. The firm took on the Dream Finders matter, and sued Weyerhaeuser in December 2017.
No Thanks to Renewed Work
Interestingly, a few months after this suit was filed, Weyerhaeuser asked the firm lawyer who handled its last matter (and the author of the email above) for additional assistance on the old Florida utility matter. The firm’s conflict procedure worked, the firm caught the issue and declined the new (or resumed) representation.
An Unhappy Former Client
Back in the Dream Finders lawsuit, however, Weyerhaeuser was unhappy with the firm’s involvement and moved to disqualify it. The district court’s ruling on that motion offers a potent reminder of the power of a disengagement letter.
Former or Current Client?
Most importantly, the district court quickly determined that Weyerhaeuser must be treated as a former client of the firm, not a current client. After all, the firm’s very clear email (quoted above) established that the firm’s representation was at an end. The firm’s clear written disengagement allowed the court to reach this decision quickly and definitively.
That email was also consistent with other facts. For example, there was no evidence that the firm continued its work on the matter despite the email and no email back from the client saying, “Wait, wait, we have more questions!” In support of its motion to disqualify, Weyerhaeuser offered no proof that contradicted that the representation ended with that email.
Why That Matters
Simple: the different legal standard for conflicts with former and current clients. The former-client standard allows a lawyer to be adverse to a former client in matters not substantially related to the lawyer’s former work (ABA Model Rule 1.9(a)). The current-client standard prohibits a lawyer from being adverse to a current client in any matter, related or unrelated to any work for the current client (ABA Model Rule 1.7(a)(1)).
If Weyerhaeuser had still been a current client when the firm took on the Dream Finders representation, by doing so the firm would have violated the ethics rules and would likely have later been disqualified.
No Messy Facts
As a practical matter, if the firm had not sent a disengagement email here, the district court would have been required to take on a detailed factual analysis to determine whether Weyerhaeuser was then a current or former client.
The court would have looked at all kinds of facts surrounding the matter to decide whether, in the few weeks between the utility order attached to the email and the firm’s taking on the Dream Finders matter adverse to Weyerhaeuser, the attorney-client relationship with Weyerhaeuser had continued. A client in Weyerhaeuser’s position often then offers affidavit proof that they had continued to believe—quite reasonably, they might say—that the firm still represented them. That type of proof can be hard to overcome.
Solid Proof
The fact-based legal standard governing this decision often looks to whether either the client or the lawyer took any steps inconsistent with the continuation of the attorney-client relationship. Close calls often go to the client. That’s why a good, clear disengagement letter is the gold standard here: How could any client reasonably believe the firm was still representing them if that client had received a written communication from the firm saying, “It’s over”?
Human Systems Also Matter
Good human systems also help enormously.
Recall that the firm’s conflicts system caught the new Dream Finders matter when Weyerhaeuser called back for a new (or renewed) engagement. The district court noted that the lawyer Weyerhaeuser contacted had his wits about him and offered Weyerhaeuser no legal advice before the conflicts reports came back and the firm declined the matter. (We all need good partners like him.)
One More Special Power
Savvy lawyers know that a good disengagement has another superpower: Just like a carefully drawn provision in an engagement letter describing the scope of representation, a disengagement letter should limit in time the lawyer’s obligations to the client. That means that a client later alleging malpractice based on some continuing obligation to the client can be met with a forceful dispositive motion in the malpractice case.
Give Thanks
Lawyers can easily understand the benefits of a clear disengagement letter—sometimes also called a “file-closing letter.” Why aren’t they more common? The most common excuse—or more charitably, reason—given is that lawyers don’t want to offend the client in some way, and “disengagement letter” sounds so harsh.
My advice: Write from a place of gratitude. This lawyer wrote, “It has been our pleasure to represent Weyerhaeuser. Please let us know if we can be of further assistance.” Perhaps the disengagement letter could be as simple as, “Thank you for the opportunity to represent you in this matter. We look forward to having another opportunity to work with you.”
Do you have to write, “This matter is now over, and we are no longer your lawyers”? Or “Please consider yourself disengaged. This attorney-client relationship is terminated”? Of course not.
Time It Right
Identifying the end of a matter is sometimes hard.
Are you worried you might send a disengagement letter too early? Here, the lawyer sent the client what looked like the final act in the representation—an order. Note that the lawyer allowed for the possibility of some unforeseen next act: “This should bring the matter to a close.” Did this “should” caveat keep the letter from being effective? It did not.
Can you send an effective disengagement letter before you send your final bill? Yes, you can.
System Solutions Can Help
Given these difficulties, there may also be systems solutions.
After all, clearly closing a file and communicating that to the client does more than help protect against continued, unintended obligations to former clients. Most lawyers and law firms understand that running conflicts on all new matters is made much harder if firm lawyers don’t promptly close concluded files.
Consider getting in the habit of or setting a policy that, when the final bill is sent (or paid), a form disengagement letter is sent.
Knowing that won’t always work, also think about a policy that identifies all open matters in your office that have had no activity in, say, four or six months, and then asks the lawyer responsible for these matters to close them—and send a form disengagement letter. Some firms take a firmer stand, having the firm close all inactive files, after notice to the lawyers involved, unless the responsible lawyer justifies keeping the file open to the managing partner or a practice group leader.
Or maybe, just maybe, we should all start calling disengagement letters “thank-you letters.”