Tip of the Month

Tip for October 2013

Be cautious when using open-ended engagement letters

Some firms use one general engagement letter for all matters to be handled for the client. These letters use language such as: "In addition to the legal representation described in this agreement, this engagement agreement shall govern all legal services rendered by us in the future to the clients named herein and to their affiliates." Language like this tends to negate some of the protection against claims that an engagement letter can provide to a firm. For example, engagement letters normally identify the specific matter for which the firm has been engaged and the scope of the engagement so that the lawyer and client both know exactly what service the lawyer is, and is not, providing to the client. An open-ended engagement agreement may leave that question unanswered, and a client might claim that a lawyer was supposed to handle a certain matter under the terms of the initial agreement, while the lawyer did not have the same understanding about that matter. It is always better to identify the specific matter to be covered by the engagement letter and the scope of the services to be provided, so that the client cannot later claim that the lawyer should have done something the lawyer did not actually agreed to do. In addition, in states that have a continuous representation rule that extends the statute of limitations as long as the lawyer continues to represent the client, this sort of engagement letter could provide a basis for the client to argue that the lawyer's representation was on-going, even thought the lawyer believed that his services had been concluded, exposing lawyers to claims that would otherwise be barred by the statute of limitations. At the very least, even if the terms of any future representation are set out in the initial letter, the letter should also state that the firm will not undertake to represent the client in any other matter without a specific written agreement for the handling of any new matter.