This article, published in the March 2, 2011, Volume 27, Number 5, edition of the ABA / BNA Lawyers’ Manual on Professional Conduct: Current Reports, is a summary of a session at Hinshaw's 2011 Legal Malpractice & Risk Management Conference, "Lawyer-Client Relationship – Panelists Explore Ins and Outs Of Well-Drafted Engagement Letters." It is posted with permission of the American Bar Association (ABA) and the Bureau of National Affairs, Inc. (BNA).

Although lawyers may think of engagement letters as boring paperwork that is potentially off-putting to clients, these documents are vital for managing client expectations, preventing complaints, and defending claims, according to a panel discussion held here Feb. 17 at the 10th Annual Legal Malpractice & Risk Management Conference.

Lawyers often see themselves as victims but ‘‘we are almost always the masters of our own fate,’’ and engagement letters are one way for lawyers to control the risk of malpractice claims, moderator Peter R. Jarvis said in launching the program on ‘‘Don’t Ignore the ‘Basics’—Engagement, Disengagement and End-of-Representation Letters.’’ Jarvis is a partner in the Portland, Ore., office of Hinshaw & Culbertson [LLP], the primary sponsor of the conference.

Panelist Bruce D. Elliot noted that drawing up a retention letter gives lawyers and clients the opportunity to have a ‘‘coming to reality’’ discussion that sets clear expectations for the representation. Getting sued is really not about substantive issues, it’s about the failure to manage expectations, said Elliot, a vice president in professional liability claims at the Travelers Cos. in St. Paul, Minn.

Engagement letters are the first thing that lawyers and courts look at in malpractice cases, panelist Lauren B. Shy noted. She is assistant general counsel of Fragomen, Del Rey, Bernsen & Loewy, a large immigration law firm in New York.

Reasons for Engagement Letters. Lawyers offer a range of reasons for not bothering with engagement letters, according to the program materials. Excuses include ‘‘I hate bureaucracy,’’ ‘‘if it ain’t broke. . .,’’ ‘‘my clients will be offended,’’ ‘‘other partners don’t do it,’’ and ‘‘it’s boring.’’

But there are plenty of reasons for making the effort, the materials make clear. Engagement letters may be required by statute or professional conduct rules; they are ‘‘Exhibit A’’ in defending subsequent civil litigation and bar complaints; they can reduce conflicts risks; and they can make the difference between summary judgment and triable issues of fact. Moreover, if Dr. House of TV fame is correct in saying ‘‘Everybody lies,’’ engagement agreements can help disprove a client’s falsehoods about the lawyer-client arrangement.

The materials also identify some positive reasons for engagement letters: they’re consistent with ethics requirements for competence, diligence, and communication; they avoid good-faith misunderstandings; they can generate additional work authorized by the client; they can address file retention and destruction; and they offer potential control of the forum for malpractice claims.

Manage Client Expectations. Every one of the panelists made the point that engagement letters, and the process of doing them, can help frame the client’s expectations.

You can say to the client, ‘‘We need to make sure we have the same expectations,’’ Jarvis suggested.

Read the full article, ABA / BNA Lawyers’ Manual on Professional Conduct: Current Reports, including the summaries on the other following 2011 Legal Malpractice & Risk Management Conference sessions:

• Checklist for Engagement Letter
• Components of End-of-Representation Letter
• Disengagement/Nonengagement Letters
• Panel Finds That Meaning of '‘Partner’ Varies According to Reason for Asking
• Nonequity Partners—Risk Management
• Panelists Review Practicality of Inserting Breach of Fiduciary Duty Counts Into Suit
• Panelists Review Recent Developments On Duty to Nonclients, Patent Malpractice
• Experts on Insurance Marketplace See Low Prices, but High Costs, Cuts in Limits

This publication has been posted by Hinshaw & Culbertson LLP to provide information on recent legal developments of interest to our readers. It is not intended to provide legal advice for a specific situation or to create an attorney-client relationship.