All About Lawyer-Client Agreements: 8 Important Takeaways And Practical Advice

What Is a Lawyer-Client Agreement?

When a person retains a lawyer, the expectations and obligations of both parties are set out in an agreement between the lawyer and the client. This document is referred to as a lawyer-client agreement. The agreement is evidence of the contract between the lawyer and the legal services’ client. Although the agreement is not required by law it is an important document which serves several purposes. For example, the agreement identifies and establishes the lawyer-client relationship. It can serve as a useful point of reference for the lawyer in clarifying the scope of the services to be provided and also for confirming in writing to the client the fee arrangements and anticipated terms of payment. Many clients consider the lawyer-client agreement to be an integral part of the work being done for them and their lawyers. For example, important personal or business information is often exchanged between the lawyer and the client over the course of an agreement period. In these cases, the lawyer-client agreement can encourage open dialogue and communication.
A lawyer-client agreement may be written to address one or more issues simultaneously. It can be short or lengthy . Fact specific, sophisticated agreements can be drafted by experienced and knowledgeable counsel in order to tailor the legal relationship to the client’s precise needs. For example, where service provisions are required for a number of clients, a master service agreement may provide for the arrangement among the lawyer and all clients, rather than requiring a separate agreement with each client. If a lawyer to be retained has statutes of limitations to pursue, they may be added to the lawyer-client agreement in order to preserve valuable rights on the client’s behalf. A lawyer-client agreement may also require the purchaser to continue as the client after assignment of rights. Where there are particular financial arrangements or provisions requiring confidentiality, those can all be included in a lawyer-client agreement. Regardless of the content of a lawyer-client agreement, the lawyer’s fiduciary duties do not expire once the client exits the lawyer’s office. For every lawyer-client agreement, clients should be prepared to receive important information from their lawyer to explain particular provisions in the agreement as well as the lawyer’s obligations under the law, whether those obligations are found directly in statutes or case law.

Core Components of Lawyer-Client Agreements

Any lawyer-client agreement needs to include the following essential terms:

(1) Scope of Services. The scope of services is critical to the effective representation of the client, practicing law and for protecting the attorney’s interests in the event of a subsequent malpractice claim. A concise scope of services should be constructed that states the type of services the attorney will be providing. Lawyers should note this language in the retention agreement for all clients, including those who have been regular, long-term clients. This helps the attorney with time limit issues such as statute of limitations and to avoid being held for acts by the attorney that are outside the general scope of the services of filing an action.
(2) Fees and Disbursements for Services Rendered. When engaging representation from outside counsel, an in-house counsel may get the impression that the invoices cannot be modified or were set in stone. Legal fees are one of the most uncertain cost for clients. It is critical for the attorney to calculate the costs anticipated in the initial phases of any matter, and communicate, ideally in writing, these fees to the client. If it is unclear what the total fee will be, the attorney should set a cap. Apart from actual billings for time spent, all accountable fees are assessed to the client, such as travel, lodging and meals. The attorney should send the client copies of the bills for any disbursements incurred out-of-pocket for the representation. The client should be made aware of this at the onset of the engagement. Many clients raise objections when they discover later in the representation process that the quoted hourly rate did not cover the outside fees.
(3) Confidentiality Rule. Any engagement letter should include a confidentiality clause. Under Rule 1.6, an attorney has an absolute duty to keep information about a client confidential. An exception to this rule, however, is the disclosure of information to the extent the attorney reasonably believes necessary "to establish a claim or defense on behalf of the lawyer in a controversy between the lawyer and the client." If the application of Rule 1.6 ends up undermining the attorney’s ability to defend against a malpractice claim in a court suit or arbitration, the waiver may save the day.
(4) Terms of Service. State your payment terms in the retention agreement. If the attorney’s firm has a collection department, write the language into the engagement letter so the client knows it will be pursued. Most law firms have a sliding scale from 30-, 60-, and 90-day delinquency dates. A small percentage of clients slip through the system, but it is better to err on the side of caution.

The Most Common Types of Lawyer-Client Agreements

Lawyers, particularly those in firms with more than one lawyer, tend to offer their clients three different types of agreements:
Hourly. The standard agreement. You will pay all the lawyer’s hourly fees, plus all the lawyer’s costs and overhead.
Flat Fee. A variation of the hourly fee concept. The client pays a flat fee for routine legal work that the lawyer can do on a flat fee basis. "10 wills for $5,000," for example.
Contingency. The lawyer will not get paid until a verdict is rendered or settlement reached. Then, the lawyer gets half (or so, depending on other factors) of the verdict or settlement amount.
These are general guidelines. Individual firms may depart from them. You should always ask your lawyer what their policies are before you sign an agreement.

Lawyer-Client Agreements: Negotiating Terms

For many, the lawyer-client agreement will be their first experience negotiating directly with someone on a business matter. Getting the right terms is essential to a successful and long-lasting relationship with the firm you choose to represent you. Some elements of the agreement will be fixed and others will be more open to negotiation.
A common misconception is that attorneys are not willing to modify their engagement terms. While there are some provisions that firms may feel strongly about and are not likely to change, the majority of key terms are negotiable. Don’t be afraid to ask about them.
One key term relates to the scope of the representation. You should also understand the fee structure and how it works, including what happens if the scope is exceeded and additional time is required. The agreement should also define what constitutes hourly billable time and how costs are billed. A discussion with your attorney should also cover how you will be contacted, including by whom and when. If you are trying to talk to someone 24 hours a day, seven days per week, you should make that clear before signing the agreement. Having these discussions up front will help to avoid frustration down the road.
You have invested significant time and money into establishing and growing your business. Make sure you have the right attorney in your corner who understands you, your business and your goals. It is worth doing it right the first time.

Legal and Ethical Considerations

The legal and ethical considerations involved in lawyer-client agreements vary according to jurisdiction. However, there are several general principles that are universally applicable. The primary considerations are:

Compliance with jurisdictional law. If there are specific laws or regulations in the applicable jurisdiction, as well as industry codes of conduct (for example, the Australian Solicitors’ Conduct Rules, which form part of the Law Society of New South Wales’ Legal Profession Uniform Local Rules 2015), then these must be adhered to.
Compliance with professional ethical rules. Many countries (for example, Australia, England and Canada) have adopted the rules and guidelines published by the International Bar Association, formally titled "Rules of Conduct for Lawyers 1988", which provide practical guidance on the conduct expected from lawyers. Rule 6 and accompanying commentary relating to "Fees and Expenses" states that a lawyer:
2 is entitled to charge fees based upon the following factors:
the time and labour spent; . . .
the novelty or difficulty of the issue which arises;
the skill , effort, responsibility and experience of the practitioner;
the importance of the matter to the client;
the urgency and circumstances in which the work is undertaken;
the place and circumstances in which the service or work is undertaken;
the reasonable risk of loss of the practitioner’s costs in pursuing recovery;
the quality of the service of the practitioner.
Compliance with duty of care and fiduciary obligations. Lawyers have obligations to act with the utmost good faith towards their clients, to avoid a conflict of interest, to avoid misrepresentation, to act in the best interests of the clients and (arguably) to avoid a conflict of interest. Failure to comply with these obligations may result in the lawyer being liable for breach of contract, negligence, fraud or misleading and deceptive conduct (as applicable).
Full Disclosure. In some jurisdictions, a lawyer must comply with full disclosure of costs and must not make an unsolicited offer to a client to act for them (for example, under section 174 of the Queensland Legal Profession Act).

The Implications of Breaching Lawyer-Client Agreements

In the unfortunate event that either party to the lawyer-client agreement breaches its obligations or representations under that agreement, then the aggrieved party may seek recourse in a number of ways, often before either the law society or the courts.
These may include:
(i) commencing a solicitor and client action for damages in respect of the breach of contract, negligence or misrepresentation;
(ii) making an application pursuant to the various cost assessment procedures, depending on whether the underlying action was civil or criminal, private or publicly funded (such as Legal Aid or the federal Immigration and Refugee Matter’s Procedures);
(iii) making an application to the law society, or the courts, seeking compensation pursuant the various consumer protection legislation that may apply in the province or territory where the lawyer practices;
(iv) making a complaint to the law society against the lawyer, and/or the law society’s insurer; and/or
(v) bringing in proceedings for equitable compensation or an account of profits, depending on the nature of the breach.
Generally, a lawyer who has acted contrary to a lawyer-client agreement can be liable to the extent of any damages suffered by the client as a result of the breach. Depending on the nature of the breach, that liability may extend to the value conferred upon the lawyer as a result of the breach.

Making Your Legal Relationship a Successful One

To ensure a successful legal partnership, both lawyers and clients should take proactive steps to nurture a positive and collaborative relationship throughout the duration of their lawyer-client Agreement.
Approach:
Clients should approach their lawyer with an attitude of trust and respect. Likewise, lawyers should recognize at all times that a healthy lawyer-client partnership is central to successful representation. Both parties should treat one another with courtesy and professionalism. The relationship should be open, honest, and committed to achieving the mutually agreed upon goal(s).
Communication:
Open and clear communication is essential to a good working relationship. Clients should feel free to ask questions, express concerns, and, if necessary, assert their personal preferences. Lawyers should be responsive to their client’s needs and should explain to clients their professional perspective and/or rationale for any recommendations. Both lawyers and clients should listen to one another. This is a two-way street. It is important that the lawyer-client relationship be a mutual collaboration. It is equally important that the particulars of the engagement be clear to both parties .
Resources:
Clients should understand that they are hiring a professional service and are entitled to professional treatment as such. This includes value for money, courtesy, respect, and proper attention to their work. Lawyers are obligated to treat their clients with integrity and expertise. They should avoid the temptation to look down on a client and should be respectful of the resources the client has entrusted to them.
Practical Steps:
While not exclusive, the following checklist represents some common features of living and successful agreements between lawyers and clients:
Clients should bear in mind that, at least early on in a lawyer’s career, matters may be passed among junior colleagues, depending on the circumstances at the law firm. But once it is clear who will be working on a matter, clients should not be surprised if the senior lawyer does not do all of the work. Delegating work is a standard feature at all law firms, large or small. All parties should be prepared to work together, particularly where a team approach is needed. And while all involved should expect quality work will be done, it is necessary to keep costs in mind as well.