To Engage or Disengage Is Often the Question

Published July 6, 2010

It is a fundamental business and professional necessity that law firms have a signed engagement letter for a new client, stating each party’s responsibilities for making the engagement a success. As we have often said, your firm will have an easier time meeting client expectations and collecting fees if you incorporate these into the engagement letter. The process aims to set forth the goals and expectations of the client and how they define the success of the engagement.

However, even a detailed engagement letter is not a guarantee against future problems. In large firms, when such a troubled relationship develops, the overall cost of a bad client relationship to each partner is minimal. Small firms see an immediate reduction of income, and for that reason often are tempted to accept or continue a worrisome relationship, with the misguided hope that things will improve and that a fee will materialize. Such hope is rarely justified.

That’s when it’s best to send either a non-engagement or dis-engagement letter, dependent on the time of decision, taking a firm and businesslike approach. A clear letter telling the client that your firm is breaking off the relationship before it goes further is practical and smart. There is no set template for what a non-engagement or dis-engagement letter should contain because the reasons for sending it will vary. But a prudent approach would be to state that the firm:

  • Has reviewed the matter and working relationship with the client
  • Has concluded that it is not possible to continue representation
  • Recommends immediately contacting another lawyer for assistance (with suggested referral to the local bar association)
  • Warns of any statutory limitations or benchmarks the recipient needs to know about to protect his/her interest/claim
  • Is not expressing an opinion in a non-engagement letter about the merits of the matter as originally discussed

If, at the time of sending a non-engagement letter, there has been no actual legal work performed, it would be best not to charge for the time expended to that point. But if billable time is recorded before the firm concludes that going further is not wise, the dis-engagement letter should clearly inform the client that work is being stopped with adequate notice (for example, 60 days) and state, consistent with ABA’s Rule of Professional Conduct 1.16 (“Declining or Terminating Representation”), that the client must pay for work done to date. “Firing” a client should not be done lightly, but if the client does not comply with the engagement agreement, both parties will be better served by a separation.

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Audience type: Administrators, Associates, Large Law Firms, Small Law Firms, Sole Practitioners