Your law firm's engagement agreement is your absolute first and best line of defense. Keep in mind that only clients can sue you for legal malpractice (with extreme exceptions) and clients are by far your primary source of risk of attorney ethics complaints.
This month, pull out your template engagement agreement and make it better, for you, your firm, AND your clients.
- Clear Language: Use plain language to ensure clients understand the terms, responsibilities, and legal implications - consider an intro/cover letter.
- Define Scope of Services: Clearly define what services will be provided to avoid scope creep and ensure client expectations are managed. Drill down as precisely as you can and seek to at least double the size of the scope paragraph.
- Fee Structure: Outline all fee structures clearly, including hourly rates, flat fees, and contingency fees, to avoid disputes over billing.
- Fee Security: Explain where funds are maintained, if an IOLA or other trust account is used, and what happens with interest on the funds. Let the client know if the account(s) are FDIC insured or not.
- Expense Reimbursement: Specify which expenses are billable to the client, how they are calculated, and when they are billed.
- Payment Terms: Detail payment obligations, including due dates, interest on late payments, and forms of acceptable payment.
- Term and Termination: Clearly state how long the agreement is valid and the terms under which either party can terminate the agreement, and how.
- Confidentiality Clauses: Protect client confidentiality and clarify the firm’s duty regarding sensitive information - drop a sentence to warn clients against forwarding any attorney-client communications to third parties.
- Conflict of Interest Policy: Describe how potential conflicts of interest are handled to maintain trust and compliance with ethical standards. Consider advanced waivers, Upjohn disclaimers (if representing various corporate entities or employees), and spousal disclaimers.
- Dispute Resolution: Include terms for resolving disputes, such as mediation or arbitration, which can save time and costs over court trials. Include any jurisdictional options and consider confidentiality.
- Data Security: Address how client data is protected, particularly with increasing concerns over data breaches and privacy. Consider notifying clients if AI, cloud tech, or any specific technology is used.
- Client Responsibilities: Outline what is expected of clients, such as timely provision of information and cooperation. Explain courtesy requirements and provide a copy of your Core Values or Mission Statement.
- Updates and Modifications: Describe how the agreement can be updated or modified, explaining the need for written consent from both parties. Consider setting a periodic review (annual, quarterly, etc.) with the client.
- Electronic Communication Consent: Include consent for using electronic means for communications and document transmissions and other technologies.
- Withdrawal of Services: Specify conditions under which the firm may or must withdraw services, such as nonpayment or noncooperation by the client.
- Multi-jurisdictional Practice Considerations: Ensure compliance with laws in all jurisdictions where the firm operates, especially when engaging with clients across different states or countries.
- Random - pull and review 3-5 random engagement agreements from the last year.
- Success - review 3-5 engagement agreements from the last year where the matter was successful.
- Problems - review 3-5 engagement agreements from the last year where there were problems.
- Complaints - review all engagement agreements from the last year where the client complained or threatened a claim or ethics grievance.
Take those 9-15 (plus 'complaints') engagement agreements and look for any missing key elements, see whether any differed from your standard template, and draw out portions that worked and didn't work to update your current template.
Reinforce your first line of defense, create a better engagement agreement template today.
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