Terms of Engagement are a formal means of defining expectations in an attorney-client relationship.
When hiring an attorney you will nearly always be asked to review and sign Terms of Engagement. This article will explain key obligations of both the attorney and client.
Scope of Services: Naturally, not all attorneys are competent, or desire, to handle all types of legal matters. Some attorneys specialize in litigation, some in transactional matters. Areas of law in which an attorney may wish to focus his or her practice include family law, bankruptcy, trusts and estates, criminal law, environmental law and intellectual property, just to name a few. An attorney Terms of Engagement may limit the engagement and the attorney's services to one of these areas of law in which the attorney has developed experience, and may also indicate that the attorney does not agree to represent you in litigation without consideration of the circumstances and execution by you of a separate litigation agreement. If all or a portion of the legal work you require lies outside the attorney's practice area, the attorney may provide references to other attorneys that may be better able to assist you.
Retainer or Advanced Fee: It is not unusual for an attorney to require a payment of a retainer or of an advanced fee, particularly for new clients or those without ongoing legal work with the attorney. Although the terms are sometimes used interchangeably, retainers and advances (advanced fees) differ. A retainer is a fee paid to an attorney at the outset of representation simply to retain the attorney's services, therefore, it might not be applied to any ensuing invoices for legal work. An advance, on the other hand, is also paid at the outset of representation but is held in trust and applied to invoices as-earned. Many states now prohibit attorneys from taking a true retainer and if there is any question as to whether fees paid up front to your attorney will be applied to invoices, be sure to resolve this question right away. The Terms of Engagement should address retainers and/or advances in a manner that is clear to you.
Legal Fees and Billing Practices: A section of the Terms of Engagement should clearly indicate the attorney's hourly billing rate and give some description of the firm's billing practices, e.g. on a monthly basis with 30 day payment terms. It should also describe the types of services for which you will be billed, including services provided by other firm staff, such as paralegals.
Costs and Expenses: Attorneys incur various costs and expenses in the course of performing legal services on a client's behalf. These may include fees fixed by law or assessed by public agencies (such as the U.S. Patent and Trademark Office), long distance telephone charges, messenger and other delivery fees, postage, photocopying and other reproduction costs, travel costs, charges by outside service providers including patent drawing service providers, database access providers, patent searchers, associated foreign patent and trademark firms, expert witnesses, consultants and the like. Naturally, clients are required to reimburse the attorney for such expenses.
Trust Account: An attorney who receives funds that presently belong to a client (i.e. unearned retainers or advances) must deposit such funds in a trust account that is maintained separate from the firm's assets (such as an operating account). In most situations, such funds are deposited in an IOLTA account. IOLTA accounts are appropriate to use (and typically mandated by state court rules) when the funds are expected to be earned by the attorney in a relatively short amount of time and, therefore, will not remain in the account long enough to earn significant interest. Any interest earned in an IOLTA account is paid by the bank maintaining the account to a state-sponsored IOLTA program.
Disclaimer of Guarantee and Estimates: It is not unusual for an attorney to provide a client with an opinion as to the likelihood of success of a given course of action and/or to provide cost estimates. It should be appreciated, however, an attorney cannot provide a guarantee of a certain outcome and that actual expenses may vary from estimates. The Terms of Engagement usually contain disclaimers to this effect.
Assigned Attorneys: Typically, a law firm will assign a principal attorney to a client to handle potentially all requested legal work but at least to act as a primary contact and to oversee the client's matters and billing. Terms of Engagement may also require clients to consent to the involvement of other firm attorneys, and even outside counsel, for time management reasons or if a particular matter appears to involve legal issues outside of the principal attorney's or firm's expertise.
Document Retention: All firms should have a document retention policy and this should be described in the Terms of Engagement. Some states mandate a length of time for document retention but often allow for this to be modified with client consent, i.e. through client execution of the Terms of Engagement.
Electronic File Storage: Many firms are moving away from paper files to electronic files. Even if some paper documents are maintained, often the bulk of communications (such as emails), filing receipts, scanned documents or those created electronically (such as PDF documents), etc. are only stored electronically. More and more firms are also utilizing cloud storage for convenience of access and also security against loss due to physical failure or destruction of on site storage devices. Electronic storage does present some possibility, even if slight, of unauthorized access (e.g. hacking) by third parties, however, and the Terms of Engagement often require that the client acknowledge and accept such risks.
Forms of Communication: Similar to Electronic File Storage provisions, the Terms of Engagement may require that the client consent to communications with the attorney via electronic means such as e-mail, faxes, video conferencing, and electronic file sharing over the Internet (e.g. Google Docs, Google Drive, DropBox, etc.). Any concerns that the client may have regarding electronic file storage or forms of communication should be addressed with the attorney before executing the Terms of Engagement.
Conflicts of Interest: Rules of professional conduct prevent an attorney from engaging in representations which might result in a conflict of interest. In certain cases, an attorney or firm may be precluded from representing a prospective client in a matter if such representation would make the attorney or firm adverse to another client. In some cases, clients may waive potential conflicts and an attorney may ask for such a waiver if the attorney deems it appropriate and believes that doing so will not hinder his or her ability to fairly and adequately represent each party. The Terms of Engagement may also indicate that representation of a particular client will not create, nor be considered to be, a representation of related entities such as related companies, shareholders, officers or directors of a corporation that is a client, nor family members of individual clients and the like.
Attorney Duty of Confidentiality: Per state ethics rules, and likely the rules of other entities that may govern attorney behavior and duties (e.g. the U.S. Patent and Trademark Office), an attorney has a duty to keep client information--including, perhaps, the identity of the client--confidential. The Terms of Engagement should acknowledge this duty but should also provide for disclosure of information with permission of the client and of the client identity if this is a matter of public record. The Terms of Engagement may also require consent to identify a client in firm promotional materials.
Client Duties: The Terms of Engagement should not purport to create any obligation on the client to maintain employment of the attorney or firm. However, it is reasonable and expected to require the client to keep the attorney well-informed of any new information or developments in a matter in which the attorney is representing the client; to keep the attorney advised of any changes in the client's name, address, telephone number, email address or the like; to abide by the Terms of Engagement; and to pay attorney bills/invoices fully and on time.
Termination: The Terms of Engagement should include a Termination provision acknowledging that a client may typically fire an attorney or firm at any time and seek representation elsewhere. This does not, however, relieve the client from the duty to pay for services already render or costs advanced. The Terms of Engagement will likely require that a client terminate attorney engagement in writing.
When presented with a Terms of Engagement agreement, a prospective client should review the Terms carefully and fully and ask any questions that arise. Should the prospective client disagree with or object to any of the provisions, this must be addressed and resolved before executing the agreement.
Please Read This Important Notice: While this article can provide a useful general guide and explanation of Attorney Terms of Engagement, no portion of the article can override or modify the actual language and meaning of a Terms of Engagement agreement as-presented to a client for execution, whether by BRADLEY IP, LLC or any other firm.