Learn how to properly craft an engagement letter and what to include (or avoid).

1. Your Engagement Letter is Not a
“One Size Fits All” Bucket
Posted on 05/26/2015
What a Good Engagement Letter Can Do
Engagement letters are an essential tool in the lawyer’s toolkit. Done correctly,
they set the stage for the lawyer-client relationship, provide clarity, and minimize
misunderstandings.
The best engagement letters follow a predictable formula:
◾ A specific description of the legal problems the lawyer will handle
◾ A specific description of the legal problems the lawyer will not handle
◾ Steps the lawyer has taken already on the prospective client’s behalf
◾ Steps the lawyer will take, once engaged
◾ Steps the clients must take for engagement to commence
◾ Future or ongoing client responsibilities
Combine Your Fee Agreement and Engagement Letter for Maximum
Effect
Ideally, the terms of engagement are wrapped into the lawyer’s fee agreement.
This simplifies the process – the client need only review a single document to
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2. know what the lawyer will do, how much it will cost, and what the client’s
responsibilities are.
Create Templates for Efficiency
Practitioners can streamline the engagement process fairly easily. While some
terms will vary, most of these letters contain enough boilerplate for a lawyer to
benefit from creating forms or templates. [Rewriting an engagement letter/fee
agreement for each client is a real time-waster.]
Don’t Fall Into the “One Size Fits All” Bucket
Some lawyers attempt to use their engagement letter as a one size fits all
bucket. For inspiration, they look to every case where a transaction or
engagement went awry and proceed to add disclaimers to ward off future
problems. For example, lawyers who handle matters where property valuation is
an issue may add language to the initial engagement letter forewarning the client
of the need to obtain an appraisal.
How Could this be a Bad Thing?
◾ Multiple disclaimers make for longer, more complicated engagement
letters and fee agreements.
◾ The longer and more complicated your letters are, the more likely the client
will miss the key points: what you are going to do (or not do) and what it
will cost.
◾ In the end, it could all be for naught if the goal is to avoid a potential legal
malpractice claim….
Which Approach is More Effective?
Lawyer 1 incorporates a disclaimer into his engagement letter forewarning the
client: if property value becomes an issue in this case it will be client’s
responsibility to obtain an appraisal. Without an appraisal, client assumes the
risk of under (or over) valuing said property. Lawyer 1 proceeds with
representation, relying on the disclaimer in his initial engagement letter.
Lawyer 2 limits her engagement letter to the usual points discussed at the
beginning of this post. When the value of property becomes an issue in the
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3. case, lawyer informs the client of client’s responsibility to obtain an appraisal and
the risks of failing to do so.
Keep it Contemporaneous
This is a no-brainer. Disclaimers given at the beginning of representation don’t
have the same value as disclaimers given contemporaneously. Clients need
context to make sense of your warning. At the beginning of the case, there is no
context. Even if the client nods and understands, the disclaimer in your
engagement letter will be long forgotten by the time the property issue arises.
Parting Thoughts
A well-written engagement letter and fee agreement is all about balance.
Include sufficient information about the scope of your work, division of
responsibilities, and what your services will cost, but don’t fall into the trap of
trying to disclaim or forewarn of everything that could ever go wrong. If helpful,
consider developing a client handout that addresses common issues or
questions that arise. Give specific disclaimers and warnings contemporaneously
when the client can put the information into context.
[All Rights Reserved 2015 Beverly Michaelis]
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