Drafting Ethical, Effective Engagement Letters that Reduce Firm Liability and Improve Client Relationships

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1 Drafting Ethical, Effective Engagement Letters that Reduce Firm Liability and Improve Client Relationships FEATURED FACULTY: J. Randolph Evans, Partner, McKenna Long & Aldridge LLP Shari L. Klevens, Partner, McKenna Long & Aldridge LLP

2 Speaker Info J. Randolph Evans, Partner, McKenna Long & Aldridge LLP Randy Evans is the chair of the Financial Institutions practice. He handles high profile, complex litigation matters in state and federal courts throughout the United States for some of the largest companies in the world. In addition, Mr. Evans served as outside counsel to the Speakers of the 104th- 109th Congresses of the United States. He represents former Speakers of the United States House of Representatives, Dennis Hastert and Newt Gingrich, as well as J.C. Watts, former Representative to the United States House of Representatives from Oklahoma. He also represents several current Members and former Members of Congress, as well as elected officials in Georgia. Mr. Evans is a frequent lecturer and author on the subjects of professional liability and ethics, government ethics and politics. Among numerous articles and publications published, Randy is the co-author of four books, The Practical Guide to Legal Malpractice Prevention (Eighth Ed. 2000), The Practical Guide to Purchasing Legal Malpractice Insurance (Third Ed. 1999), Georgia General Liability Insurance (1st Ed. 2010), and Georgia Legal Malpractice Law (1st Ed. 2011). His fifth book was released in November 2012 titled Climate Change Insurance. Mr. Evans negotiates speaking, broadcast and literary contracts, including three New York Times bestsellers for political clients. He also advises clients on corporate governance issues. Mr. Evans has been named in Best Lawyers in America in the practice areas of Commercial Litigation and Legal Malpractice Law. Atlanta Magazine has recognized him as a Georgia Super Lawyer in the area of Business Litigation. JAMES Magazine has recognized Randy as one of Georgia's Most Influential People. He has also been named as one of Washington DC & Baltimore's Top Rated Lawyers.

3 Shari L. Klevens, Partner, McKenna Long & Aldridge LLP Shari Klevens has successfully litigated complex, commercial cases in state and federal courts across the country involving a wide range of matters, including business tort disputes, conspiracy, fraud and RICO cases, breach of contract actions, insurance coverage issues, legal malpractice and professional liability, intellectual property infringement, trade secrets cases, and appeals. She is a lawyer to whom clients turn when they need an aggressive but practical approach to difficult matters, and her clients rely on her to create and implement a successful strategy, whether they are bringing, defending, or avoiding litigation. Shari and several of her colleagues were named the Daily Report s Insurance Litigation Department of the Year for Shari represents lawyers and law firms in the defense of legal malpractice claims and advises and counsels lawyers concerning allegations of malpractice, ethical violations, and breaches of duty. In addition, Shari is the Practice Group Leader for the firm s Law Firm Defense and Counseling Practice and is a frequent writer and lecturer on issues related to legal malpractice and ethics. Shari co-authored the book, Georgia Legal Malpractice Law, which addresses the intricacies and nuances of Georgia Legal Malpractice law and issues that confront the new millennium lawyer. In the intellectual property arena, Shari regularly counsels clients in the development, licensing, and protection of intellectual property, and on unfair competition, the Lanham Act, and trademark and copyright infringement on the Internet. Shari also routinely assists clients in the registration of trademarks and copyrights and other issues regarding the protection of intellectual property rights. Shari is highly committed to pro bono and public service. Shari has represented clients in a variety of pro bono matters, including domestic and housing issues. In 2008, Shari received McKenna Long & Aldridge s annual Pro Bono and Community Service Award. Additionally, Shari was featured on the cover of Arlington Magazine s November/December 2012 issue for her extraordinary commitment to charitable causes and was profiled in the article entitled "Why We Give, Inside the Hearts and Minds of Local Altruists." In addition, in Spring 2013, Shari received an Outstanding Leader Award from the Girl Scout Council for the Nation s Capital. At McKenna Long & Aldridge, Shari is Chair of the firm's DC Women s Steering Committee, former Chair of the DC Pro Bono Committee, and has served on the firm s recruitment and diversity committees. She is a graduate of the George Washington University Law School, where she was a member of the George Washington International Law Review and was a Dean's Fellow for the legal research and writing program.

4 **Certificates of attendance and CEUs, when available, must be requested through the online evaluation.** Evaluation for Live Event: We d like to hear what you thought about the audio conference. Please take a moment to fill in the survey located here: Requests for continuing education credits and certificates of attendance must be submitted within 10 days of the live event. Evaluation for CD Recording: Please use the following link to submit your evaluation of the recorded event: Please note: All links are case sensitive CLE: C4CM provides audio conference attendees with CLE credit processing services. To expedite C4CM processing your CLE request, please complete and submit the evaluation form available from C4CM at the conclusion of the audio conference. It will be necessary to enter the following information: name of each attorney requesting CLEs with full contact information, including address, bar number, and the state in which the attorney wants credits. Each attorney requesting credits must submit an evaluation. Please be advised C4CM audio conferences are subject to approval from each CLE issuing organization and approval is not guaranteed (state bar associations in Delaware, Indiana, Kansas, Ohio, and Pennsylvania do not grant CLE credits for audio conferences). The approval process takes approximately 6-8 weeks for most organizations but can take as long as 3-4 months. You will be notified via with the final status of your CLE application. Any person applying for CLE credits must attend the audio conference from start to finish (attendance will be taken for compliance reasons). Requests for CLE credits must be received no later than two weeks following the conclusion of the audio conference or live conference. CLE credits are not available for CD recordings. If you have any questions regarding CLE credits, contact Jill Adler at x 21 or

5 Ethical, Effective Engagement Letters J. Randolph Evans, Esq. Shari L. Klevens, Esq. mckennalong.com Introduction Legal malpractice claim prevention can be divided into four procedural categories: (1) Pre-file Opening; (2) File Opening; (3) Representation of the Client; and (4) File Closing. Attorneys typically give pre-file opening the least amount of attention. 1

6 Introduction Proper pre-file opening is within an attorney s control. Most auditors check whether each file contains an executed letter or contract. It is a very reliable measure of whether the firm has an effective system in place that reduces malpractice risk. An executed letter or contract should be in place before a new file is opened. Purpose Confirm a mutual understanding. Define: Identity of the client(s); What the attorney has agreed to do; and What the fee will be. 2

7 How should it be formatted? Format is less important than the existence of an engagement letter. Possibilities: Formal letter; Informal letter; or Formal contract. What should it include? Identity of the specific client. Scope of the representation. Amount of the fee. Whether a retainer required. Payment of expenses incurred. Procedure for attorney withdrawal. Resolution of any conflict issues. Disclosures of in-house attorney-client privilege. Non-assignability language. 3

8 Client Identity Do you represent a single client or multiple clients? Is the client a person or corporation? Does the client have multiple capacities? Is the client a corporation? Use a disclaimer: This firm does not represent any person or entity that has not been specifically identified as a client. No duties have been undertaken nor assumed for any person or entity that has not been specifically identified as a client. Scope of Representation Confirm exactly what you have been hired to do: Limited representation, or General representation. Undefined representations are considered general representations. General representations are risky. General representations are unlimited in time and scope. 4

9 Duration of Representation Define the duration of the representation. Include a time limitation: Resolution by settlement or judgment; Closing of real estate venture; Execution of will; or Defined period of inactivity. Always execute a file closing letter. Amount of Fees State exactly what the fee is: Contingent; Hourly; Flat; Retainer; or Combination. If retained by an insurer, state who is paying. Delineate how the fee will be billed and paid. 5

10 Amount of Fees Retainer: State whether a retainer is required; State whether the retainer is refundable; and Define the application of the retainer. Contingency: Define the parameters of the contingency fee; and Confirm disclosure of necessary facts. Avoid Future Fee Disputes How to avoid fee disputes: Use clear language; Define tasks and services; Address whether the attorney is entitled to a right vested in the client; and Clearly define the type of fee and billing/payment procedures. If the fee agreement is modified: Put it in writing; and Advise the client to seek independent counsel. Include a mediation/arbitration clause. 6

11 Expenses Define what constitutes an expense: Telephone calls; Filing fees; Copying charges; and/or Other items. Withdrawal Why might an attorney withdraw? A conflict may arise. A client may refuse to pay. A client may refuse to follow directions. Identify the process for withdrawal. Include the name and address for communicating withdrawal. Define the process for withdrawing. 7

12 Conflicts Prior to the engagement letter/contract: Identify any conflicts of interest. Determine whether the conflict may be waived. Fully advise the client of the conflict. In the engagement letter/contract: Confirm that the client was fully advised. Confirm that the client has consented to waive any conflicts. Delineate the waiver of any conflicts. Intra-Law Firm Communications Whether the attorney-client privilege protects an attorney s communications with in-house counsel is an emerging issue. Until there is a consensus, include protective language. Confirm that the firm may consult with its own internal counsel regarding issues involving the firm s obligations. 8

13 Non-Assignability Language The terms of the fee agreement are not the end of the evaluation. Malpractice claims are fact intensive. Legal Malpractice claims are different than other causes of action. Most states do not allow the assignment of malpractice claims. New York, Pennsylvania and Massachusetts do allow. The issue is unclear in D.C., Mississippi and Georgia. If the law in your state is not clear, confirm the nonassignability of a malpractice claim. Should you use an Engagement or Retainer Letter? Traditionally, engagement letters and/or fee contracts provided many advantages and no meaningful disadvantages. Newell Recycling of Atlanta, Inc. v. Jordan Jones and Goulding, Inc. Written agreements = 6-year statute of limitations (O.C.G.A ) Retainer letter = 4-year statute of limitations (O.C.G.A ) Safer course: Letter that confirms the existence of an attorney-client relationship without documenting a written contract for professional services. 9

14 The Letter or Contract is Executed. What next? Complete a Standard Intake Form that includes: Name(s) of client(s). Name(s) of interested parties. Subject matter of representation. Address(es) of client(s). Telephone number(s) of client(s). Fee arrangement. Insurance information. Docket entry dates. Confirmation conflicts of interest evaluated. The Letter or Contract is Executed. What next? Draft a File Opening Memo that includes: Identity of the client; Resolution of any potential conflict issues; Area(s) of law involved; Type and specifics of the fee arrangement; Communication information relating to the client; Completion of the disqualifier checklist; and Deadlines that might be involved. 10

15 Open the file: The Letter or Contract is Executed. What next? Engagement letter/contract, and File Memo. Establish appropriate escrow accounts. Maintain appropriate bookkeeping records: Retainers; Fees; and Other monies. Questions? 11

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