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Lawyers Should Use a Proper Engagement Letter

A proper engagement letter documents the understanding between you and your client as to exactly what you are hired to do. This should strengthen the relationship and ultimately be good for future business from this client.

Secondly, a proper engagement letter is critical in helping to provide the lawyer with a strong defense should the association turn into a professional liability claim.

A proper engagement letter should include a minimum of the following:

  1. a clear description of the scope of the representation and legal services to be performed by the attorney or firm.
  2. the identity of all parties for whom the insured agreed to perform such legal work.
  3. the fee arrangement for such legal services and; 
  4. a description of the lawyer or firm’s file retention and destruction policy.

The agreement should be signed by all parties mentioned in the engagement letter prior to the lawyer’s commencement of representation, but in no event more than thirty days after commencement of such representation.

The CNA Lawyer’s Professional Liability Program feels so strongly about the importance of these signed agreements that they will waive 50% of an insured’s deductible up to $25,000 if a signed, proper engagement letter was used for the matter/claim in controversy.

High Exposure Areas of Practice 2016-17

For ages the ABA Committee on Professional Liability has tracked professional liability claims by areas of practice. Going back at least twenty years the consistent leader has always been plaintiff personal injury. 

However in their most recent study, will, estates and trusts (WEPT) has become the new leader, closely followed by business transactions. Such dramatic increases in claim activity in both of these areas I believe is due to the complexities involved in each. For example, in the WEPT arena, there are so many more heirs (or expecting heirs) from prior marriages or relationships, coupled with volatile rates of return on the many investment arenas available to trustees and executors. Further, and I risk this comment as being made with possible too broad of a stroke of the brush but it seems the latest generation of heirs has a greater sense of expectations than their parents ever had.  This same “complexity” issue can be seen in business transactions. Deals are not structured as simple as they used to be and in light of people always conscious of saving few dollars, this area of practice is ripe with potential conflict issues. One of the parties has an attorney that can simply document the deal, right? Unfortunately that is often a recipe for disaster. 

These are still both lucrative areas of law to practice in. Just be careful and always use an engagement letter!

By Dan McKenna, JD, RPLU
Lawyers Professional Liability Program Manager

Posted 7:25 AM

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