To Engage or Not To Engage – That is the Question

Reprinted from:
Published 12/07

What do you do when a client relationship simply won’t work? Ed Poll outlines the legal and ethical way to end an engagement with a problem client.

It is a fundamental business and professional necessity that lawyers have a signed engagement letter for a new client, stating each party's responsibilities for making the engagement a success. You will have an easier time meeting your client's expectations and collecting your fee if you incorporate all essentials in the engagement letter. Make sure clients understand that they're entering a two-way relationship. The lawyer agrees to perform to the best of his or her ability in accord with professional standards, and the client agrees to communicate and cooperate fully – which includes paying the bill.

Terms of Engagement

At minimum, the following points should be covered in the engagement letter, with both lawyer and client stipulating and agreeing to the facts stated.

  • Who the lawyer is representing
  • The scope of the representation – what the lawyer will and will not do
  • The fee to be charged and how it will be calculated
  • When the fee is to be paid
  • The consequences of non-payment, including the lawyer's right to withdraw
  • Budgeting and staffing
  • Frequency and method of communications from lawyer to client
  • The client's responsibilities, including payment in accord with the agreement
  • Dispute resolution procedures if either party to the engagement has a dispute with the other
  • Resolution of conflicts of interest or other ethical issues.
  • This entire process aims to obtain as much information as possible about the goals and expectations of the client. The information covers parties, issues, anticipated strategies and desired outcomes. Understanding the client's objectives and setting forth how to meet them is essential to defining the future success of the engagement.

Problem Clients

Going through this process of detailing and negotiating to prepare the engagement letter should enable you to avoid a client with unrealistic expectations or demands and who believes that your estimates, whether of time or outcome or costs, are guarantees instead of informed estimates. Discussing engagement terms will frequently uncover the client who will in the future express irritation with delay, who will chronically complain about everything, who will demand constant or instant attention, or who expects unrealistic or abnormal hand-holding. Clients who want to start now and pay later, or nit-pick over the fee, may well have a subsequent fee dispute or claim.

In large firms, when such a troubled relationship develops, the overall cost of a bad client relationship to each partner is minimal. Lawyers in small firms or in sole practice see an immediate reduction of take-home pay. For that reason, the solo or small firm lawyer often is tempted to continue in a worrisome relationship, with the misguided hope that things will improve and that a fee will materialize. However, if clients don't recognize the benefits or accept the realities of what can be done, they will become dissatisfied and no amount of effort will retain them or get them to pay.

Terms of Non-Engagement

That's when it's best to send a non-engagement letter, taking a firm and businesslike approach that most clients will respect. A clear non-engagement letter, telling the client you are breaking off the relationship before it goes further, is practical and smart. There is no set template for what a non-engagement letter should contain, because the reasons for sending it will vary. But a prudent approach would be for the lawyer to state that he or she:

  • Has reviewed the matter and working relationship with the client
  • Has concluded that it is not possible to continue representation
  • Recommends immediately contacting another lawyer for assistance (with suggested referral to the local bar association)
  • Is not expressing an opinion about the merits of the matter as originally discussed.
  • If at the time of sending the non-engagement letter there has been no actual legal work performed, it would be best not to charge for the time expended to that point – particularly if you do not express an opinion about the merits. But if you have racked up billable time before you conclude that going further is not possible, the non-engagement letter should clearly tell the client that you are cutting ties. Also, tell the client the fees incurred to date will be billed and are to be paid by the client in accord with the parties original agreement.

Ending Representation

Lawyers cannot ethically cease representation when the client will be prejudiced – for example, by withdrawing within 60 days of a court date. In the ABA's Code of Professional Conduct, Rule 1.16 ("Declining or Terminating Representation") allows lawyers to withdraw if "the client fails substantially to fulfill an obligation to the lawyer regarding the lawyer's services and has been given reasonable warning that the lawyer will withdraw unless the obligation is fulfilled." If you try to withdraw without adequate communication on and careful records of the client's billing and payment performance, the result may be a State bar disciplinary action requiring you to fulfill your ethical obligations toward the client.

Consistent with the Rules of Professional Conduct, state in this type of non-engagement letter that you will stop work and that the client must pay for work done to date. Should things come to a collection situation, it is important to do whatever is necessary to resolve the conflict. If, after all other efforts to collect have been exhausted, the client is merely interested in a fee discount, give it to get rid of the matter—and the client.

"Firing" a Client

Lawyers must communicate with clients at their level of understanding. If clients don't recognize the benefits of what their lawyer has done, they will become dissatisfied and no amount of effort will retain them. "Firing" a client should not be done lightly, but firms grow based on their clients –- so lawyers must focus on clients who have growth potential. Satisfying a client is the minimum threshold of a legal services relationship. If the lawyer does not accomplish this, the relationship is going nowhere. That's when an open and honest non-engagement letter is the best option.

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