Ask the Underwriter: Why does AIM ask me about engagement letters in my application?

"Why does AIM ask me about engagement letters in my application? Most of my clients are long-standing clients.  Why do I even need to worry about them?”

I'm glad you asked.  Whether you call them engagement letters, retainer agreements, employment contracts, or fee agreements – this is a tremendously important tool in your overall risk management strategy for your practice.  These documents define the attorney-client relationship, and starting the relationship off with one of these documents is a wise move regardless of the type or value of the matter you are asked to handle.

At a minimum, your engagement letter should identify who is and isn’t the client, the scope of legal services you will be rendering, and your fees, expenses, and billing format.  Having this document in place at the outset of the representation will help protect both you and your client.  It makes the relationship clear to the client, memorializes what legal services you have agreed to provide, and what and how you are to be paid for those services.  By clearly explaining your fees and billing format in writing, you will reduce the likelihood of a fee dispute.  But if one does arise, you have it in writing where you clearly explained to the client what you were to charge for the services for which they hired you, as well as how they were to pay you. 

As for your long-standing clients, it is particularly important to use engagement letters for each new matter for them.  They may assume you are handling all their legal matters, but perhaps that is not what you agreed to do for them.  By utilizing an engagement letter for each new matter, memorializing and clearly defining the limited services you agreed to provide, you can reduce the risk of a legal malpractice claim coming from this client.  And if a claim is made, you won’t find yourself in a ‘he said, she said’ argument that almost always goes in favor of the client.  Rather, you have solid ground from which to defend yourself because of that engagement letter. 

If you are not currently using engagement letters in your practice, my question to you is, "Why not?"  If you need assistance drafting one, we at AIM are happy to provide you with sample letters to serve as a guide.