Legal Operations

Is It Time To Upgrade Your Engagement Letters?

Wouldn’t legal services as a whole and the client relationship in particular benefit from more expansive, specific, individualized engagement letters?

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Mike Quartararo

It seems like engagement letters might be another of the canned forms that law firms and corporate general counsel have accepted as a formality, like templates for interrogatories or document requests.

I’m a huge proponent of efficiency and I’m in favor of using templates as a starting point. But having as the foundation of an agreement to provide professional legal services — usually at hundreds of dollars per hour — an engagement letter that is largely a boilerplate form letter seems off to me. Wouldn’t legal services as a whole and the client relationship in particular benefit from more expansive, specific, individualized engagement letters?

Here’s a challenge to GCs and corporate legal operations people: Dig out the engagement letters your organization has signed with outside counsel in the last few years. Go back as far as you like. Lay them out on a table (or across your computer monitor) and see if they aren’t just the same recycled letter with changed dates and increased billing rates.

This issue comes to mind because as I build a consulting practice at eDPM Advisory Services and I pitch to and secure work from clients, it has become necessary to develop similar engagement agreements. And whether it’s that initial proposal, the engagement letter, or a statement of work, it is important to take the time to individualize the document to the specific circumstances of the engagement. It seems to me that beyond the opening paragraph, not much about these engagement documents should be recycled because each client is different, each client has different needs, and each will likely require unique services.

So, how is it that legal engagement letters became such a perfunctory process? Well, at least in New York, it’s because 20 years ago the court system asked lawyers to begin using them to outline the scope of their legal services, the fees to be charged, and the right to arbitration of any disputes. To be sure, anyone who hires a lawyer wants to know at least these three things. But is that enough?

If I were a corporate attorney charged with engaging outside counsel, engagement letters that I sign would include a lot more. And I’m sure that some of these things are discussed between client and counsel, but in today’s market, it just makes sense for engagement letters to contain some of these things. Here’s my list of what should be included in an engagement letter:

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• Scope of Services – The specific case, matter, investigation or transaction, the posture of the matter at the time of engagement, and the anticipated legal work to be performed (e.g., answer a complaint, motion practice, discovery, trial).
• Non-Disclosure – The attorney-client privilege certainly protects communication between the client and attorney, but in our information-driven world, scenarios exist in which neither the privilege nor the work-product doctrine protect confidential information.
• Conflicts – This seems like a no-brainer. Most law firms do this anyway, so why is there not a statement that no potential conflicts exist included in the letter?
• Fee Agreement – Engagement letters typically tell the client the attorneys’ hourly rate. In a legal business that today uses alternative fee agreements, incentive arrangements, and litigation financing, there’s a lot more involved than just billable hours and the details of the fee arrangement that should be laid out in writing, including the use of appropriate ABA codes, adherence to corporate billing guidelines, use of electronic billing and payment systems, and any other fee-related arrangements.
• Project Planning – How project management or legal matter management will be incorporated into the engagement. In the very least, how the matter will be scoped, planned, and executed, including budgeting, resources, milestones, and a timeline.
• Technology – What technologies will be brought to bear on the matter and how these tools will make management of the matter more efficient.
• Client Relations – Having touch-points in the course of the engagement — proactively established communications — can only benefit the attorney-client relationship, improve communication, and give greater transparency into how the matter is managed.
• Project Closure – At the conclusion of a matter, it should be required that the attorney and the client sit down and have a conversation about what went right and what could be improved on a matter.

I suppose that some may view this as the sort of minimal underpinnings of a legal project management structure. I simply say there’s nothing wrong with that. The legal business could benefit from these requirements in an engagement letter (and I’m sure others could think of more). In the end, since the engagement letter is really the foundation of the attorney-client relationship, shouldn’t these things be included?

Mike Quartararo is the managing director of eDPM Advisory Services, a consulting firm providing e-discovery, project management and legal technology advisory and training services to the legal industry. He is also the author of the 2016 book Project Management in Electronic Discovery. Mike has many years of experience delivering e-discovery, project management and legal technology solutions to law firms and Fortune 500 corporations across the globe and is widely considered an expert on project management, e-discovery and legal matter management. You can reach him via email at mquartararo@edpmadvisory.com. Follow him on twitter @edpmadvisory.

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