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There are a number of ethical issues that lawyers must consider in drafting engagement agreements, according to the speakers at a recent webinar hosted by the American Bar Association.

A good agreement will:

• Define the subject and the scope of the legal representation;

• Memorialize the lawyer-client relationship; and

• Guide the client in how he or she views the lawyer and the advice the lawyer provides.

In addition, noted panelist George R. Clark, a solo practitioner in Washington, D.C., many states require that engagement agreements be in writing.

A good agreement will address the following:

• Who is – and isn’t – the client

“Every time you talk with someone, ask yourself: what relationship is forming?” advised Clark.

Even if you don’t think you have agreed to represent someone or given out legal advice, the person you are speaking to might disagree and believe that they are your client.

It’s the reasonable perspective of the client, not the attorney, that matters, said Diane L. Karpman of Karpman & Associates in Beverly Hills, Calif.

Lawyers representing a business need to make it clear that the company’s shareholders or officers are not their clients, said Donald D. Campbell, a partner at Collins, Einhorn, Farrell & Ulanoff in Southfield, Mich.

Potential attorney/client relationship confusion can also occur when a third party pays the legal bill (such as when an adult pays for a minor child’s representation) and when spouses are involved.

“You need to make it crystal clear who is being represented and who you are not going to represent, and put that in a memorialized letter,” Campbell suggested.

• Who is the lawyer?

Just as important as defining who is the client is delineating who will be providing the legal services.

Clark gave the example of a client who goes to a well-known personal injury firm expecting that the famous PI lawyer will handle his or her case. But when an associate does all the work and things don’t turn out as the client expected, there can be a problem. Language such as “We anticipate that [Partner] and [Associate] will be handling this matter. We will be assisted by [Add Name],” will help.

“Be careful with client expectations,” Clark cautioned. Defining who the lawyers will be “guards against a situation where something goes south.”

• What is the scope of our relationship?

Limiting the scope of your representation is acceptable under certain circumstances (see ABA Model Rule 1.2(c) for guidance), Clark said, but the sophistication of the client must be taken into account – a general counsel will understand that you have agreed only to perform trial and not appellate work, but an individual may not.

• How do we communicate?

Outlining the methods of communication between the client and the lawyer is essential, Karpman said.

Lawyers have a duty under the Model Rules to communicate with their clients. The engagement letter should spell out such things as whether or not e-mail is acceptable and set up a back-up or alternate contact, she said.

In addition, the agreement should discuss what to do if communications break down between the attorney and client.

• What are the client’s responsibilities?

The agreement should set forth the client’s responsibilities, such as maintaining contact with the lawyer and providing necessary documents and records, Clark said. And, perhaps most importantly, paying the bill.

• What is the billing arrangement?

The agreement should specify hourly billing rates and warn clients about additional fees such as travel costs, said Campbell.

If a retainer is used, be very specific about what it can be used for and what type of retainer it is – a security retainer taken by the lawyer to be used towards fees, or an advance payment retainer for future costs.

Non-refundable retainers may be unethical in many jurisdictions, Campbell noted. Karpman also suggested including a provision in the agreement stating that rates can increase.

• What about ADR?

It may be ethically appropriate to including a provision regarding alternative dispute resolution in certain situations, such as fee disputes, Clark said. But providing for binding arbitration of malpractice claims is probably unacceptable.

Questions or comments can be directed to the writer at: correy.stephenson@lawyersusaonline.com

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