Take a Letter

 

Well, more fool you.  Like any client, you should read a letter of engagement very carefully.  They don’t do it for fun, but from a combination of what is professionally required of them, and what they have been taught by bitter experience is prudent for their own protection.  What’s more, you should be doing the same.

 

 

Maybe it ought to be.  The truth is, that there’s a great deal you need to tell a client at the start of a matter (whether it’s a new client or not).  The first thing you need to consider is how you want to present it.  Do you want to put it all into a letter, or do you want to put some standard information, such as the terms of business, into a pre-printed leaflet.  The choice is yours, just so long as all the requisite information is given.  Of course, if you do put part of it in leaflet form, you need to be able to prove later that it was actually sent.

 

 

That’s OK, but when did you last update it?  Have you, for instance, adjusted it to cope with the new money laundering laws?  You can make a positive use of the letter of engagement in that sphere, for instance by letting clients know you’re obliged to do identity checks; indicating whether you’re prepared to accept cash (and if so up to what limit); and stating how far in advance of completion of any transaction you require to receive cleared funds.

 

 

Then I hope you’ve read the Solicitors Costs Information and Client Care Code carefully.  It’s pretty complex, and trying to draft a ‘one-size-fits-all’ letter which covers all the worktypes which the firm does is a difficult exercise.  You may find you would be better off with a number of different drafts, with a core of your own terms of business added to the relevant Rule 15 information for that case.  For instance, I don’t see how you could sensibly have the same letter for a conveyancing client where you are operating to a costs estimate, and for a litigation client where you are having to explain the ins and outs of such issues as public funding, CFAs, or legal expenses insurance.

 

 

Oh no you can’t.  The Code specifically states that the information given must be updated at appropriate stages throughout the matter.

 

 

Yes it does.  For a start, failure to comply is an indication of inadequate professional service, so if the client makes a complaint to the OSS, they can award compensation for that.  What’s more, the Courts have increasingly taken the view that, because Rule 15 and the Code are rules made under delegated powers under the Solicitors Act, they themselves have the force of law.  An illustration is what happens if you run up costs in excess of an estimate given to the client.  It has been held that, even if such costs are otherwise perfectly justified, and even if some costs in excess of the estimate have been charged by way of interim bill and actually paid, the estimate may still be the limit you can recover.   So you might face not only being unable to recover all you want to, but also being forced to repay the excess of what the client has paid you over the initial estimate.  So, even if you get the letter right in the first place, you have to monitor the progress of the case continually, so you should make sure all the warning ‘flags’ that your software offers in respect of costs limits are religiously observed.

 

 

For a start, you should be identifying very carefully who your client is, and maybe is not.  For instance, if you are dealing with an individual for whom you have previously acted on personal matters, and he then instructs you on a commercial matter on behalf of his company, is your retainer simply from the company, or is there a co-extensive retainer from him personally, with a consequent duty of care to him as well?  If you don’t define to whom you are accepting obligations and expressly exclude all others, then that leaves a Court free to consider whether it may infer a duty to others as well.

 

 

It also gives you the chance to define what the relationship may be between you, the client, and any other party who is going to be involved.  For example, if your client wants to buy a property in Spain, and you are going to instruct a Spanish lawyer on his behalf, are you going to accept liability for the negligence of the Spanish lawyer or not?

 

 

I grant you, that can be a problem.  It really is much better, however, to get things clear at the start if you possibly can.  What it does mean is that you have to think very carefully, for those letters which are standard for certain worktypes, about what the limits of your responsibility are.  Let me give you an instance.  One firm was buying a very large house for a client whom they knew to be a chef.  They had no specific reason to think he wanted it for anything other than a residence.  Nonetheless, when it later transpired that he wanted it as a restaurant, and couldn’t get planning permission for that, the Court took the view that their knowledge of his occupation was enough to put them on notice and that they should have warned him that, as they knew to be the case, houses in that area were regarded as impossible to get change of use on.  If they had stated, in their standard letter for residential conveyancing, that in the absence of specific instructions they were not to be taken as advising on any aspect of planning other than the legality of residential use, then they would have been safe.

 

 

It can be.  If you think that something might constitute a risk to the client at any stage, you are obliged to warn him, even if that is outside your normal sphere.  One recent example was where a firm allocated a matter to a corporate lawyer, to deal with the exercise of a break clause option.  He failed to warn the client of a risk that failure to make a prior payment rendered the option unenforceable.  The client hadn’t asked for advice on that, but the Court held that a property lawyer would have spotted the problem and warned the client, so the firm was liable.  If they’d excluded anything other than the core issue in their letter of engagement, they’d presumably have been safe.

 

 

In certain instances, yes you can.  Unless it is a contentious business agreement, then you can do so provided that you don’t offend against the general law by imposing unfair contract terms.  In other words, you are much more likely to be able to attract that protection if you have drawn the term specifically to the attention of a client, and if that client is sophisticated enough to understand the implications.  In practical terms, that may mean it is more likely to be successful in commercial than private cases.

 

 

One which you may need to be aware of is the Consumer Protection (Distance Selling) Regulations 2000.  Where those apply (for instance where you have received instructions over the internet) the client may have the benefit of a 7-day cooling off period, during which he can withdraw instructions.  If you do any work in that period, and he tries to withdraw instructions, then you can only charge if he has consented.  So you may want to specify that signing and returning the letter will constitute consent.  You also have to specify that the work is likely to take more than 30 days to complete.

 

 

One thing you need to consider is the obligations of confidentiality.  We all know the fundamental importance of the rules on this front, but there are some modern exceptions which may come into play, and you should warn the client that those may happen, and give him the chance to indicate if he is unhappy with that.  Two instances spring to mind.  One is that an auditor for the purposes of quality control (LSC Quality Mark, Lexcel or Investors in People) may want to look at the client’s file.  The client should be warned about that, and asked if he objects.  Similarly, a lot of communications these days may be regarded as less certainly confidential than old-fashioned post.  So if you are going to want to use e-mail or fax to communicate with the client, or with others on the client’s behalf, then again that should be drawn to the client’s attention and he should be given the opportunity to veto the idea.

 

 

I’m not sure that’s right these days, as so many other institutions that people deal with habitually do just that.  Anyway, you don’t actually have to do so.  All that the Code requires is that the client is told who to contact in the event of any problem with the service provided.  You don’t have to use the word ‘complaint’, and you don’t have to issue a copy of your complaints procedure at that stage.  You only have to do that on request.  And before you ask, yes you do have to have a written procedure, and yes, you do have to handle any subsequent complaints in accordance with that procedure.

 

 

Well, I don’t pretend that I’ve covered everything that should go into the letter.  All firms will want to think what particular problems they have, and every piece of work will require consideration of what the letter of engagement should cover, and in particular whether any standard version is adequate.  And then, to complete the circle, they should routinely require the client to sign and return a copy of the engagement letter – just as, I’m sure, your accountants are requiring you to do.  That way, when you put that on file, there can be no later dispute as to whether the client got the letter.  Assuming, that is, you can find the file….