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Managing

Fee Tale: This Is Not Your Father’s Engagement Agreement

By Jared Correia

Lawyers are uniquely situated to craft the parameters of the client-business relationship, though many forgo the opportunity — or, at least, leave much to interpretation and chance. Perhaps it’s just my perspective. In Massachusetts, the rules have only recently been amended to require written fee agreements in most cases; but even when an engagement agreement is in place, many rely on bare templates, or the simplest of documents, to memorialize what the attorney-client relationship means in particular cases.

There are, I suppose, any number of reasons why more lawyers don’t take full advantage of the ability to define the attorney-client relationship — probably including some of the following culprits:

  • It’s easier to use a template, or nothing at all.
  • It’s a pain to explain things to clients.
  • It means additional work to create a truly effective and integrated form, and to maintain that form with respect to changes to the practice.
  • Odds are, nothing bad will happen.

All those things are true. However, lawyers spend their entire careers worrying about worst-case scenarios. So it’s always striking when they do not apply the same analyses that they offer to clients to their own practices.

Smart Fee Agreement Upgrades

Not only from a malpractice standpoint, but also from a best practices standpoint, it makes good sense to perfect your fee agreements, and to maintain that ideal level. You’ll find that your fee agreements will not only annotate the lawyer-client relationship, but that the consciously drafted document will guide your practice management in a number of significant ways.

If you haven’t thought of adding the following types of clauses, or clause variations, to your fee agreements, perhaps now is the time to do so, before entering into another loosely defined relationship.

1. Technology Applications. Leveraging the right technology is so important to running an efficient business. In many cases, however, neither clients nor their attorneys have the appropriate depth of understanding respecting the technologies that will be used in the representation. Including a provision within the fee agreement covering the technology that the law firm uses, and the security that is applied to the technology systems, can help both sides. The client becomes aware of the tools the lawyer will use, and the lawyer is forced to gain a more-than-cursory understanding of the technology applied — since she must explain it to the client.

This is a particularly useful exercise when law firms use collaborative technology, especially cloud-based systems. In that case, including a technology use provision allows the attorney to underscore the importance of securing data (e.g., talking to the client about the necessity of creating and maintaining strong passwords when accessing documents via the firm’s protocols). If you can educate your client while also acquiring informed consent respecting the technology you’ll apply for his case, you’re effectively killing two birds with one stone, and that’s absolutely a “W” for the Bear.

I’ve written on this subject in greater detail, here, in response to the Massachusetts Bar Association’s ethics opinion covering the use of cloud-based tools, specifically Google Drive.

2. Evergreen Retainer. It’s usually imperative to acquire a retainer of some kind, since it may be the only money you’ll ever see from a client. Of course, it’s even better if you get that retainer refreshed on a regular basis, so that you’re continually receiving amounts in retainer from your ongoing clients. Introducing an evergreen retainer into your fee agreement will allow you to do this. An evergreen retainer requires the client to replenish the retainer (usually each month) to a certain minimum amount, to cover fees, costs and expenses related to the case. The law firm will bill against the retainer, and invoices will be sent to restore the retainer to the minimum, agreed-on amount. There’s a short discussion on this topic, featuring a couple of sample evergreen retainer clauses, at the American Bar Association’s listserv SoloSez.

For more on retainers, check out Carolyn Elefant’s “The Art, Science and Ethics of the 21st Century Retainer Agreement.”

3. File Disposition. Although I still get calls from lawyers with garages, basements and all manner of storage arrangements (including abandoned storefronts) chock-full of client files dating back decades, it is not true that lawyers must hold onto each piece of paper foreverBeing paperless makes it easier to hang onto your stuff if you want to (though there are costs associated with online storage as well as local). But, again: You don’t have to. Plenty of lawyers do not think of file disposition until the representation has ended; but by then, it’s often too late to start addressing the question. Depending on the type of case, it may be difficult to track down clients after the fact to solicit their wishes respecting their files. To avoid this difficulty, determine the treatment of files when you engage your clients. Put a file disposition clause in your fee agreement, and garner your clients’ informed consent to the ultimate fate of their case documents in advance. If the client does want the file back, make a note that documents should be returned at the close of representation. If the client does not want the file back, schedule a destruction date following the close of representation. That way, you won’t forget to follow through.

I’ve posted a template file disposition clause here, among other sample forms and information related to document management.

4. Scope Provision. With the rising popularity of unbundled, discrete representations, it’s important to make sure that the scope provision of your fee agreement is clear, and clearly elucidated, to the client. As with all of these suggested fee agreement inclusions, this measure can be viewed as an aid to both client and practitioner, rather than as another administrative burden. Not only is the client made aware of what the service includes, the attorney is forced to really think about what he or she will do for the client. The nightmare scenario respecting an overly broad or unclear scope provision is when the lawyer believes she is done, but the client is (reasonably) expecting further services. If you can really lock down your scope provisions, you stand a better chance of avoiding that potentially large problem.

For more on unbundling, check out Stephanie Kimbro’s book, Limited Scope Legal Services: Unbundling and the Self-Help Client, in which yours truly is featured, among others.

5. Communication Guidelines. Nearly every lawyer I talk to complains about what appears to be the single-minded devotion of clients to contact them as aggressively and as often as possible, like several hundred Ahabs chasing several hundred white whales. Sure, certain clients call a lot; but cases are also very personal to clients, far more personal than they are to lawyers — and necessarily. But the fact is that most clients who make frequent contact with lawyers do so because they have not been told otherwise. In fact, lawyers will often unintentionally encourage clients in the opposite direction by responding via texts, claiming omnipresent availability and answering the phone off-hours and on weekends.

Clients who receive direction via a fee agreement are far more likely to fall in line with what the lawyer truly wants than those left with an impression that their lawyer resembles a Cumberland Farms. Include communication guidelines in your fee agreements and explain them to your clients. Tell your clients what an emergency means. Acquire their preferred modes of contact. Establish a criterion and effectuate a pattern.

It’s About Engagement

Fee agreements are underused tools in the attorney’s arsenal. If you can update your fee agreements to address important management aspects of the modern practice, it will have a positive effect through the course of each representation and afterwards.

Fee agreements should be more about engagement than anything else. If you can draft and communicate your expectations to your clients, you can delineate the outline of an effective business process, and promote a positive experience, even given a range of positive and negative potential outcomes.

Jared Correia is the author of Twitter in One Hour for Lawyers. Follow @jaredcorreia.

Illustration ©iStockPhoto.com.

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Jared Correia Jared Correia

Jared D. Correia is CEO of Red Cave Law Firm Consulting, which offers subscription-based law firm business management consulting services for law firms, bar associations and corporations. Red Cave also works with legal vendors to develop programming and content. Jared is also COO of Gideon Software, Inc., which offers intelligent messaging and predictive analytics software built exclusively for law firms. A former practicing attorney, Jared has been providing services to lawyers and law firms for over a decade. He is a regular presenter at events and regularly contributes to legal publications, including his Attorney at Work column, Managing, his advice column for Lawyerist and his column for Above the Law focused on legal technology startups. He is host of the Legal Toolkit podcast and teaches for Concord Law School, Suffolk University Law School, Solo Practice University and Becker College. He loves James Taylor, but respects Ron Swanson.

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