Risk Management From Client Engagement to Disengagement

by Duane Crone | March 13th, 2018 | No Comments »

The Engagement Letter means mutual understanding (Not Mutually Assured Destruction!)

Protecting yourself should never be an afterthought. After all, before you put the car in gear, you fasten your seat belt…every time. It’s automatic, right? And you’d never park on a hill without setting the brake! We take small steps every day to ensure our overall safety – the same should be true in your professional life.

You probably have a standard “fee agreement” type form you utilize so there isn’t any confusion over the costs associated with your services. That’s an important step, and one everyone seems to take – after all, we all like to get paid. But do you also have a standard engagement letter so there isn’t any confusion over the scope of work associated with your services? Sound like overkill? It’s really not. Most misunderstandings could be easily avoided with clear communication from the outset.

When it doubt, WRITE IT OUT.

Your best defense against the kinds of misunderstandings that lead to malpractice claims is to have a signed engagement letter in your file. That letter should specifically define what it is you’ve been hired to do. Specificity is the key ingredient. You can rely on the agreed upon, limited scope of your engagement as your defense against allegations you failed to do something. We realize not all engagements can be carefully contained in a proscribed box, but the tighter the box you construct at the beginning of an engagement, the less room there is for mistakes. If and when a matter gets more involved, it’s always possible to redraft your engagement letter. It’s not written in stone! You can always redefine the limits your services and thereby limit your malpractice exposure.

A special note for Limited Practice Solos:

Limited practice solos should pay particular attention to this step. If you are structuring a practice to provide limited engagement or unbundled legal services (at a compromised fee), be especially careful to obtain the client’s written agreement as to what those services entail (and by inference, what they do NOT entail). You’d be amazed at the gap that can exist between expectations and reality. An engagement letter makes for an easy bridge!

We discuss these issues daily with smaller firm attorneys and repeatedly encounter a resistance to obtaining robust “engagement” agreements. Too many people seem to think a small firm practice would somehow get weighed down with formal engagement contracts. Engagement agreements are the purview of larger law firms, they insist. We remain adamant that no matter how small the firm or how limited the engagement, a signed “engagement” letter is your best defense for the majority of misunderstandings that might lead to claim. Even small firms can have big misunderstandings.

Not everything that ends has to end badly:

The same holds true for “disengagement letters”. If engagement letters are gold, disengagement letters are silver. Much grief could be avoided if lawyers would take one last, critical step and document the date and time representation ceased. Without a disengagement letter, your obligation to the client remains open ended and subject to after the fact second guessing. A disengagement letter can and should be polite but firm, severing the attorney/client relationship cleanly. It’s just like setting that parking brake before you walk away.

Even if you only get to bring out a disengagement letter once during your career to document when your relationship with the client ended, I guarantee it will be worth its weight…in silver.

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