To Engage Or Not To Engage – That Is The Question
by Ed Poll
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.
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:
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.© Copyright 2010 Edward Poll. All rights reserved. Reprinted with permission from Ed Poll.
Edward Poll is America’s leading coach to the legal profession; he writes and speaks extensively on law practice management issues. Ed is a Fellow of the College of Law Practice Management; and recently inducted into The Million Dollar Consultant(tm) Hall of Fame. He is also President of the National Speakers Association, Los Angeles chapter. He can be reached at www.lawbiz.com, www.lawbizblog.com and www.lawbiztips.com; (800) 837-5880.
The opinions expressed in this article do not necessarily reflect the opinion of ILW.COM.