The situation is urgent. A potential client has just been sued in a professional-liability matter and has reached out to your firm for immediate representation. You clear conflicts, briefly discuss strategy, and mount an aggressive defense. Everything is going so well.
Then you send the first bill, using your firm’s standard rates, but it is much higher than the client expected, as is the fact that you’ve staffed the matter with two partners and four associates. And then your motion to dismiss is denied, and the client angrily asks why you wasted time and money filing a “worthless motion.”
It is, of course, impossible to completely avoid all potential problems that can arise when representing clients in complex litigation. But a thoughtful and forward-looking engagement letter is one strong tool to engage with clients in meaningful and productive discussions at the outset of a case. Here are some practical tips for effectively using engagement letters:
- Set out the scope and limitations of the representation. This is the moment to clearly identify what services are being provided. Is there only one matter being covered, or is this likely to spawn multiple lawsuits? Are there multiple parties, and will there be a joint-defense agreement? Are there potential counterclaims, and what discovery is necessary to support those? Does the matter include potential appellate work? The engagement letter is a great place to set out reasonable expectations, and limitations, during the life of the matter.
- Changes to scope. The engagement letter should also make clear that this representation can potentially change based on developments in the case, and how such scope changes will be addressed and approved by the client.
- Identify staffing and rates. To avoid the above problems, the engagement letter should specifically identify the personnel (attorneys and staff) and their current hourly rates. If your firm has annual rate increases, disclose that, and be prepared to discuss it. The letter also presents an opportunity to identify different phases in litigation (e.g. early motion practice, discovery, dispositive motions, experts, trial, appeal) and to propose alternative fee arrangements for different phases.
- Disclose conflicts. Become very familiar with the rules relating to actual or potential conflicts, including ABA Model Rules 1.7 and 1.8, along with the specific rules in your jurisdiction. The engagement letter should expressly identify all conceivable conflicts and advise the client to obtain additional counsel to consider all conflicts. To proceed, you will want to obtain the client’s knowing consent and written waiver.
- Discuss communication defaults and other options. Clients frequently complain that the only unsolicited communication they receive from their attorneys is a monthly invoice. That’s wrong. The engagement letter is the initial opportunity to identify your firm’s default communication methods as well as seeking out other options—does the client prefer phone calls, memoranda, or emails? On what schedule? Should your firm set up an extranet? How will data collected and shared?
- Who is the client? Finally, you are being engaged to represent the client, not anyone else, and this should be clear in the engagement letter. This is particularly important when representing an organization, as interests of various individuals within the organization may not always match up with the interests of your client.
An engagement letter is a powerful tool for identifying key issues that will likely arise in a matter. The letter presents the first opportunity to engage meaningfully with your client, at the very outset of litigation, and to jointly consider likely developments throughout the lifecycle of the case.
Joshua Maggard is with Quarles & Brady, LLP in Milwaukee, Wisconsin.