A Non-Engagement Letter Is As Important As An Engagement Letter

non engagement letter11 A Non Engagement Letter Is As Important As An Engagement LetterIn this electronic age, lawyers can encounter potential clients in more places and in more ways than ever before. Many lawyers will speak with potential clients by telephone rather than requiring the prospective client to come in to the office for an initial consultation.

More and more often, the lawyer never meets the potential client. But even when the lawyer does meet with the prospective client in person, there is potential for miscommunication and misunderstanding.

Most lawyers know why it is important to have an engagement letter or retainer agreement that memorializes the work they will perform for a client, the fees and expenses to be charged and the firm’s billing practices. These documents clarify the attorney-client relationship and the responsibilities of each party in writing. But what about when the lawyer has not been retained? Is it clear to the client that the lawyer does not represent them?

Lawyers need to be as careful in crafting their non-engagement letters as they are in developing their retainer agreements.

When to use a non-engagement letter

Lawyers should be ready with a non-engagement letter any time they have contact with a potential client and either the lawyer or the prospective client has determined that the lawyer will not be moving forward with the representation. Lawyers should also send a non-engagement letter when a client has not responded to a lawyer’s requests to return the signed engagement agreement or pay the initial retainer. The non-engagement letter serves as a formal notice of non-representation to the client so that it is clear that the lawyer is not professionally responsible for the client’s matter.

It is important to distinguish between a non-engagement letter, in which a lawyer never actually undertakes representation of the client in a specific matter, from a disengagement or termination letter, which officially ends a representation which has been undertaken by the lawyer.

What to include in a non-engagement letter

While it may seem obvious, the non-engagement letter must clearly state that the lawyer has not been engaged by and does not represent the client in the matter. Merely stating that the lawyer is awaiting the return of a signed engagement agreement or thanking the client for meeting with the lawyer and wishing them luck is not enough.

It is advisable to notify the client in the non-engagement letter that there may be time limitations that apply to their matter, and that the client should seek legal advice from another professional if they are concerned about these time limitations. The courts have found that a failure to advise the client of the existence of potential time limitations may give rise to a malpractice claim even where the lawyer has not been retained or paid.

The best course of action is most likely not to advise the client of the specific date any such limitation may expire (in order to avoid a potential malpractice claim if you are wrong, particularly if you have not received sufficient information from the prospective client), but merely to advise that a limitation may exist and that you have not performed the necessary research or do not have the necessary information to determine the exact date.

On occasion, a lawyer will send a non-engagement letter to a prospective client that the lawyer would still like to work with, but from whom the lawyer has not received the signed engagement letter. The non-engagement letter is useful to clarify that the lawyer is not, at that time, representing the client and to remind the client that the lawyer will take no action on their matter unless and until such time as the client fully engages the lawyer by returning the engagement agreement and/or paying the lawyer’s retainer. This non-engagement letter serves as a friendly reminder that as of the writing of the letter the prospective client has not hired the lawyer to perform any work at all, but does not give the client the impression that the lawyer is not interested in representing the client in the matter if the client chooses to move forward.

At other times, such as when the lawyer determines that the client has engaged other counsel, or where the lawyer has decided to decline the representation, the non-engagement letter will serve as a final termination and a notice to the client that the lawyer will not be representing the client in this matter at all. If the lawyer is unaware whether the prospective client has obtained representation elsewhere, the non-engagement letter should recommend that the prospective client seek representation, with a recommendation to the bar’s lawyer referral service, or to another competent attorney in the area. On those occasions, the lawyer can still advise the client that if circumstances change or if the prospective client has another legal matter that falls within the lawyer’s areas of practice, the client may contact the lawyer again.

Avoiding unintended representation

One of the main reasons to send a non-engagement letter is to avoid the problem of the ‘unintended client’ and potential malpractice claims from individuals or businesses whom the lawyer never considered to be their client. Lawyers should be particularly aware of this problem with an existing or past client who comes to the lawyer with a new matter that the lawyer has decided not to take on. As a result of the existing or past relationship with the lawyer, the client may reasonably believe that the lawyer is representing them in the new matter, even if it is outside of the lawyer’s regular practice area(s).

The unintended client problem may also arise where a prospective client forwards documents or information to the lawyer for review, particularly where there is no direct contact between the lawyer and the prospective client. Any time a prospective client provides the lawyer with documents or detailed information, the lawyer must be especially clear that although the client has requested the review, the lawyer has not been retained unless a retainer agreement or engagement letter has been signed.

Finally, when a lawyer is contacted by multiple parties, confusion as to who the lawyer represents may result. For example, if a lawyer has been contacted by officers of a corporation, the lawyer must be clear about whether the lawyer represents the corporation or the individual officers. If the lawyer has been engaged by the corporation but not the individual officers, non-engagement letters to the officers in their individual capacities may be appropriate.

(photo: JcOlivera.com)

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  • http://www.friedmaniverson.com/consumer/blog/ Todd Murray

    I agree with this advice and I regularly send non-engagement letters. But how often does this scenario–the non-client mistakenly believing they have a lawyer when they do not and subsequently filing an ethics complaint or malpractice suit–really happen? Any insight here, Eric? Others?

  • http://lawyersvideostudio.com Gerry Oginski

    Allison,

    I totally agree with you. I have to tell you a funny story on this exact topic.

    Last week an elderly woman consulted with me in my office about a possible medical malpractice case. By the end of our meeting, I knew that I would not be accepting her case. I verbally told her I could not handle her matter and that she would be receiving two letters confirming that I could not accept her matter. The first letter would be sent by regular mail. The second letter, a photocopy of the first, would be sent by certified mail return receipt requested. She understood, or so I thought.

    A few days after sending out the non-engagement letter, this woman called me and began screaming at me, wanting to know why I sent two of the exact same letters. The problem, I learned, was not that I sent her two identical letters. It turns out that she was not at home to receive her certified mail at the time the postman came to her home. The mailman left a note indicating that she could pick up her certified mailing at the post office. (Why she did not choose to wait for re-delivery the next day, I do not know.)

    The woman immediately hopped on a bus to get to the post office and then, unfortunately for her, had to wait in line for an hour and a half before she retrieved my certified letter. Upon opening the certified letter, she realized it was the exact same copy that she’d already received at her home. She called to vent her frustration at having made this trip for nothing.

    I informed her that I’m obligated to notify her by regular mail and by certified mail that I cannot accept her case. This way there would clearly be no misunderstanding about how we ended our meeting. She pondered this for a moment and then decided to continue to chastise me for sending her two identical letters.

    It is precisely this type of client that these non-engagement letters are designed to protect. Put another way, these letters create a level of comfort for the attorney who has said “No thank you.”

    Thanks for a great blog post.

    Gerry

    • http://lawyerist.com/author/aaronstreet/ Aaron Street

      @Gerry,

      Am I missing something? That story doesn’t sound funny at all; it sounds like that woman had a terrible experience for no real reason.

    • Judith_IP

      I’m curious why you believe you need to send two letters? I have never heard of a good reason to do so.

  • Violet Petran

    Great article. I think that determining who your clients are and when they become your clients is an important and often overlooked aspect of the legal process but things can get messy when it is not made clear. I mentioned your article in my blog. http://legalmatch.typepad.com/businesslaw/2010/03/avoid-legal-liability-with-non-engagement-letter.html