Wisconsin Lawyer: Ethics: New Rules Detail Required Info in Client Engagement Letters:

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    Ethics: New Rules Detail Required Info in Client Engagement Letters

    The new Rules of Professional Conduct, effective July 1, 2007, require lawyers to advise new clients in writing of the basis or rate of the fee and costs to be charged and the scope of representation. Lawyers also might consider including additional information to enhance the attorney/client relationship.

    Dean R. Dietrich

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    Wisconsin LawyerWisconsin Lawyer
    Vol. 80, No. 4, April 2007

    Question

    I heard that lawyers are now required to send a letter every time they begin representing a new client. What do we have to put in the letter?

    Answer

    You are correct that the new Rules of Professional Conduct, effective July 1, 2007, provide that when a lawyer is beginning representation of a new client, the lawyer must advise the client in writing of certain things. Under SCR 20:1.5(b), lawyers are required to notify the new client of the basis or rate of the fee that the client will be charged for legal services as well as the basis or rate for expenses that the lawyer will charge for reimbursement by the client. The lawyer also is required to notify the client of the "scope of representation" that will be provided.

    Dean 
DietrichDean R. Dietrich, Marquette 1977, of Ruder Ware, Wausau, is chair of the State Bar Professional Ethics Committee.

    The language of SCR 20:1.5(b) is as follows:

    (b)(1) The scope of the representation and the basis or rate of the fee and expenses for which the client will be responsible shall be communicated to the client in writing, before or within a reasonable time after commencing the representation, except when the lawyer will charge a regularly represented client on the same basis or rate as in the past. If it is reasonably foreseeable that the total cost of representation to the client, including attorney's fees, will be $1000 or less, the communication may be oral or in writing. Any changes in the basis or rate of the fee or expenses shall also be communicated in writing to the client.

    (2) If the total cost of representation to the client, including attorney's fees, is more than $1000, the purpose and effect of any retainer or advance fee that is paid to the lawyer shall be communicated in writing.

    (3) A lawyer shall promptly respond to a client's request for information concerning fees and expenses.

    As you can see from this language, written notice is not required every time you begin representing a client on a new matter but rather is required when you are initiating the representation of a new client. Lawyers also are required under this new rule to advise the client of any increase in the basis or rate of fees or costs that will be charged to the client. There is an exception from the written notice requirement when the cost of representation is not likely to exceed $1000 for the entire representation.

    While SCR 20:1.5(b) only concerns the requirement of a written notice of the basis or rate of the fee and costs to be charged, several other matters also may be included in the engagement letter sent to a new client. Lawyers may want to consider including information about:

    • how the lawyer will communicate with the client and the documents that will be sent to the client on a routine basis;
    • the lawyer's billing procedures and standards;
    • the lawyer's expectation for payment of bills for legal services rendered;
    • the lawyer's procedure for handling an advance fee payment or flat fee;
    • whether the lawyer's fees will increase on an annual basis;
    • whether the lawyer will charge interest on billed fees that the client does not pay timely;
    • whether the lawyer will communicate by email with a client and the lawyer's timeline for responding to the client's email messages;
    • whether the lawyer will communicate with the client by cell phone and the circumstances under which a cell phone will be used;
    • the lawyer's file retention and file destruction policy and how it applies to the files maintained on the client's behalf;
    • the circumstances under which the lawyer will use other lawyers or support staff in the law firm or retain other professionals to assist the lawyer in providing representation;
    • privacy policies followed by the lawyer and the client confidentiality requirements;
    • whether the lawyer operates as a limited liability entity and what that means to the client; and
    • circumstances under which the lawyer may withdraw from or terminate the representation.

    The Supreme Court Rules do not require that the client sign and return the letter of engagement sent by the lawyer. It is recognized, however, that this is a best practice and most lawyers will include a signature line to enable the client to acknowledge receipt of the letter and indicate agreement to the contents of the letter and the various elements of the representation.

    Because of the ongoing nature of many client relationships, it is difficult to decide how best to describe the nature and scope of the representation being provided to the client. In many cases, the lawyer is retained to represent an individual or an organization in a specific legal matter and the description of the services to be provided can be very focused. In such cases, the lawyer may be required to send a new letter if the lawyer is subsequently retained to represent the individual or organization on a different type of legal matter. When the lawyer is retained for general representation, it is beneficial for the attorney-client relationship that the general nature and the specific nature of the representation be described in the engagement letter. This letter may include a general description of the representation and a specific reference to the legal matters that the lawyer has been initially engaged to handle on behalf of the client.

    Lawyers should recognize that the initial letter sent to the client after consultation about representation is an important communication about the lawyer and the lawyer's services. This initial letter should be considered for its marketing value as well as to comply with the Rules of Professional Conduct. The State Bar's Law Office Management Assistance Program will conduct a seminar at the State Bar Annual Convention on Friday, May 11, 2007, focusing on the use of engagement letters as marketing tools. Lawyers interested in learning about such techniques should make sure to attend this CLE program.




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