It appears that in New York, “retainer agreement” and “letter of engagement” are designed to accomplish the same purpose: (1) cover scope of legal services or the nature of representation, and (2) provide details for the payment or billing structure. The reason for the use of two labels meaning the same thing appears to stem from the convergence of two sets of rules aimed at regulating the attorney conduct, The Rules of Professional Conduct (22 NYCRR 1200) and Letter of Engagement Rules (22 NYCRR 1215). New York Rules of Professional Conduct, adopted in part from ABA’s Model Rules of Professional Conduct, use the term “retainer.” See Rule 1.5(d)(4) (“nonrefundable retainer fee”); see also Rule 1.5(d)(5)(ii)-(iii) (“written retainer agreement). While 22 NYCRR 1215 uses term “letter of engagement.” Additionally, the “retainer agreement” term is introduced in the Procedure For Attorneys In Domestic Relations Matters, which outlines the content that should appear in the document. 22 NYCRR 14003. Term “retainer agreement” is also mentioned under subdivision (c) of Written Letter of Engagement rule. 22 NYCRR 1215(c).
Thus, outside of domestic relations matters, a “letter of engagement” or “retainer agreement” should be provided to the client unless the following applies under 22 NYCRR 1215.2:
- representation of a client where the fee to be charged is expected to be less than $3,000;
- representation where the attorney is admitted to practice in another jurisdiction and maintains no office in the State of New York, or where no material portion of the services are to be rendered in New York.
Required contents of the letter of engagement or retainer agreement include:
- explanation of the scope of the legal services to be provided;
- explanation of attorney’s fees to be charged, expenses and billing practices; and
- where applicable, shall provide that the client may have a right to arbitrate fee disputes under Part 137 of this Title.
To further compliance with the Written Letter of Engagement Rules, bar associations issued various reports and opinions. New York City Bar Association made a list of the recommended clauses in its “Report on Engagement Letters.” New York State Bar Association published non-matrimonial and domestic relations sample engagement letters on its website.
The sample of the agreement I particularly favor for its explicit language and for various caveats one may encounter in the practice of law is reproduced below. The agreement represents combination of clauses as suggested by the New York State Bar Association, New York State Unified Court System, and Martin L. Feinberg of the New York County Lawyer’s Association. The agreement goes beyond compliance with bare-bones requirements and incorporates anxiety reduction clauses and thorough explanatory statements.
LETTER OF ENGAGEMENT
THIS AGREEMENT is entered into as of this ______ day of ______ , 20____, in _______, New York, between of _________________________ (“Client”) and _______________________ (“Counsel”).
I. SCOPE OF ENGAGEMENT
A. Matter Involved
The Client has engaged the Counsel to undertake the legal representation of the Client in a matter (“Matter”) involving
B. Counsel Functions
By the terms of this Agreement, the Counsel will perform the following legal services relative to the Matter:
1. Investigate the facts; research the applicable law; prepare and file such papers as are appropriate with _________.
2. The Counsel will not perform legal services other than those specified above without consulting with the client, and both the Client and Counsel agree in writing that Counsel should perform the additional legal services.
C. Client Functions
The Client agrees to perform the following functions:
1. To cooperate fully with the Counsel and to provide all information known by or available to the Client that may aid the Counsel in representing the Client in this Matter.
2. To pay the Counsel for the performance of such legal services, and to pay for all expenses incurred in connection therewith, as specified in Paragraph II below.
3. If the Counsel is representing multiple Clients jointly in this Matter, it is each Client’s responsibility to advise the Counsel if any information concerning the Matter is confidential and is to be withheld from the other Clients. Otherwise, all relevant communications received from any Client in this Matter will be fully disclosed to the others. If such situation arises, the Counsel will advise the other Clients that a confidence exists (without divulging it) and will determine if any of the other Clients has any objections to the Counsel receiving, retaining, and withholding from them such information. The Counsel retains the right to withdraw from representing any one or more of the Clients involved if in the sole discretion of such Counsel a conflict of interest arises by reason of such confidences that mandates such withdrawal.
D. Authorization and Decision-Making
The Client authorizes and directs the Counsel to take all actions that the Counsel deems advisable on the Client’s behalf in this Matter, except that the following specific decisions must be made by the Client: decision to institute negotiations to settle the Matter; decision to accept settlement terms; ______________. The Counsel agrees to notify the Client promptly of all significant developments and to consult with the Client in advance as to any significant decisions attendant to those developments.
II. FEES AND EXPENSES
A. Method of Determining Legal Fees
The Client and the Counsel agree that the following method is to be used for determining the proper amount of legal fees:
1. [ ] There will be no fee for the initial consultations held before the signing of this agreement.
2. [ ] On contingency, the fee will be charged in accordance with the following percent or scaled percentages _____. The stated percentage or percentages will be applied to the net sum recovered after the deduction of expenses. The net sum will be total amounts recovered, including punitive damages, attorney’s fees, interest, and the fair market value of any property recovered, whether by settlement, judgment, or award, less other fees, charges, and expenses paid by the Client or advanced by the Counsel in connection with providing legal representation to the Client in this Matter.
The Client further agrees to pay for the first ____ hours of the Counsel’s services at a rate of $______ per hour for a total of $________. Such hourly payments actually made will offset an equal amount due pursuant to immediately preceding paragraph above if a recovery is made.
The Client agrees that the Counsel may deduct from the proceeds of any recovery the applicable fee as agreed upon, along with all other fees, charges, and expenses as described in Paragraph II.B. herein for which the Client is responsible and that remain unpaid at the time the recovery proceeds are received.
The Client understands that the Counsel can be retained and paid solely on an hourly basis in this Matter, but the Client expressly declines to do so and has instead selected the modified contingency arrangement described above.
3. [ ] On the basis of our time charges as follows:
$ _______per hour for the services of [name];
$ _______per hour for the services of [name];
4. [ ] A flat fee of $_______ for all services within the scope of our representation as set forth above.
5. [ ] The Client hereby authorizes the Counsel to investigate fully the facts and the law relative to the Matter. Upon the conclusion of such investigation, the Counsel shall have the discretionary right to determine that it is not practical for Counsel to pursue the Matter, and upon notification to the Client of such determination, the Counsel shall be entitled to withdraw from any further representation of the Client pursuant to this Agreement. In such event, no legal fees shall be payable to the Counsel, but the Client agrees to promptly pay the Counsel for all other fees, charges, and expenses incurred pursuant to Paragraph II.B. hereof prior to the date of such withdrawal.
B. Other Fees, Charges, and Expenses
1. The Client authorizes the Counsel to retain and agrees to pay the fees or charges of every other person or entity hired by Counsel to perform necessary services related to the Matter. Such other persons and entities may include, but are not limited to, court reporters, appraisers, real estate agents, escrow agents, accountants, investigators, expert witnesses, trust officers, stock brokers, title examiners, surveyors, and other attorneys, hired for ancillary matters in other localities; provided, however, that the Counsel agrees to obtain the Client’s prior approval before incurring other fees or charges in excess of $200.00. The Client authorizes the Counsel, in its discretion, to direct such other persons and companies to render statements for services rendered and expenses advanced either directly to the Client or to the Counsel, in which latter event the Client agrees to promptly reimburse the Counsel for the full amount of such statements.
2. The Client acknowledges that the Counsel may incur various expenses in providing services to the Client. The Client agrees to reimburse the Counsel for all out-of-pocket expenses paid by the Counsel, or, if the Client is billed directly for these expenses, to make prompt, direct payments to the originators of the bills. Such expenses include, but are not limited to, charges for serving and filing papers, courier or messenger services, recording and certifying documents, depositions, transcripts, investigations, witnesses, long-distance telephone calls, title insurance premiums, copying of materials, electronic computer research, clerical assistance, travel expenses, postage, and notarial attestations; provided, however, that the Counsel agrees to obtain the Client’s prior approval before incurring an expense that exceeds $200.00.
C. Retainer Arrangement
The Client agrees to pay to the Counsel upon the return of a signed copy of this Agreement an initial retainer of $ _______ as an advance against the Counsel’s fees for services rendered and anticipated other fees, charges, and expenses as described in Paragraph II.B. herein (“Retainer”). This payment is to be deposited in the Counsel’s trust account for future withdrawals. A minimum balance of $_____ shall be maintained in trust until final billing. The Counsel shall submit bills periodically to the Client as provided in Paragraph II.D. for services rendered by the Counsel and for other fees, charges, and expenses incurred. If the sum held as a retainer is sufficient to pay the bill submitted or a portion thereof, the Client authorizes the Counsel to withdraw the amount necessary to pay the bill. When the retainer is reduced below the minimum balance, the Client agrees to re-establish the minimum balance of the retainer. Any unearned balance remaining in the retainer account at the termination of the Counsel’s representation will be refunded to the Client.
D. Schedule of Billing and Payments
The Client and the Counsel agree to the following schedule of billing and payments for fees and expenses:
1. Legal fees determined by the method described in this Agreement will be billed monthly and upon completion, and each such billing shall show the unearned balance, if any, of the Retainer, however such billing need not be made monthly for amounts totaling less than $200.00.
2. Other fees, charges and expenses paid by the Counsel for the Client in this Matter will be billed monthly to the Client together with the billings for legal fees, however such billing need not be made monthly for amounts totaling less than $200.00.
3. The Client agrees to pay in full the amount of each bill within 20 days of the billing date.
E. Information Provided in Statements
The Counsel agrees to include in the statements sent to the Client a description of the services of the Counsel for which the Client is being charged and specific identification of all other fees, charges, and expenses for which the Counsel seeks reimbursement.
III. GENERAL MATTERS
A. Information to be Made Available to the Client
The Counsel agrees to assert a diligent effort to assure that the Client is informed at all times as to the status of the Matter and as to the courses of action that are being followed, or are being recommended, by the Counsel. The Counsel agrees to make reasonably available to the Client for reading in the Counsel’s office all written materials sent or received by the Counsel pertaining to the Matter. Copies of such materials will be provided at the Client’s request and at the Client’s expense.
The Counsel has assumed in accepting this engagement that he is permitted to communicate with you in person or by telephone, first-class mail, fax or e-mail. The Counsel will use his best efforts to ensure that all of such communications are properly addressed and that confidential information is treated as such but will not employ encryption or other special security devices to protect confidential communications. If you require special exceptions to the Counsel’s general communications policy, now or in the future, please notify the Counsel promptly.
C. Conflicting Engagement
The Counsel agrees not to accept, without prior approval from the Client, any engagement known by the Counsel to be in direct conflict with the interests of the Client in this Matter. If, in the course of representing multiple clients, the Counsel determines in its sole discretion that a conflict of interest exists, the Counsel will notify all affected clients of such conflict and may withdraw from representing any one or more of the multiple clients to the extent such a withdrawal would be permitted or required by applicable provisions of the State of New York Code of Professional Responsibility.
D. Effort and Outcome
The Counsel agrees to use best efforts in representing the Client in this Matter; however, the Client acknowledges that the Counsel has given no assurances regarding the outcome of this Matter.
E. Commencement of Representation
Representation of the Client by the Counsel in this Matter will not commence until the Counsel receives a copy of the Agreement signed by the Client and any retainer payable at the outset of this representation is in fact paid by the Client.
F. Retention of Files
The Counsel agrees to assert a diligent effort, subject to casualties beyond the control of the Counsel, to retain and maintain all major and significant components of the files of the Counsel relative to this Matter for a period of seven years following the conclusion of this Matter, and during such time to afford the Client reasonable access to such files.
G. Complete Integration, Binding Upon All Parties
This Agreement contains the entire agreement between the Client and the Counsel regarding this Matter and the fees, charges, and expenses to be paid relative thereto. This Agreement shall not be modified except by written agreement signed by the Client and the Counsel. The Agreement shall be binding upon the Client and the Counsel and their respective heirs, executors, legal representatives, and successors. The Client acknowledges that the Client has read and understands this Agreement and understands that this Agreement is a legal, binding contract.
H. Statement of Client Rights
Client acknowledges receipt of the Statement of Client Rights attached to this agreement.
If a dispute arises between us relating to my fees, you may have the right to arbitrate the dispute pursuant to Part 137 of the Rules of the Chief Administrator of the Courts, a copy of which will be provided to you upon request.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date and year first above written.
Statement of Client’s Rights (22 NYCRR §1210.1)
- You are entitled to be treated with courtesy and consideration at all times by your lawyer and the other lawyers and personnel in your lawyer’s office.
- You are entitled to an attorney capable of handling your legal matter competently and diligently, in accordance with the highest standards of the profession. If you are not satisfied with how your matter is being handled, you have the right to withdraw from the attorney-client relationship at any time (court approval may be required in some matters and your attorney may have a claim against you for the value of services rendered to you up to the point of discharge).
- You are entitled to your lawyer’s independent professional judgment and undivided loyalty uncompromised by conflicts of interest.
- You are entitled to be charged a reasonable fee and to have your lawyer explain at the outset how the fee will be computed and the manner and frequency of billing. You are entitled to request and receive a written itemized bill from your attorney at reasonable intervals. You may refuse to enter into any fee arrangement that you find unsatisfactory. In the event of a fee dispute, you may have the right to seek arbitration; your attorney will provide you with the necessary information regarding arbitration in the event of a fee dispute, or upon your request.
- You are entitled to have your questions and concerns addressed in a prompt manner and to have your telephone calls returned promptly.
- You are entitled to be kept informed as to the status of your matter and to request and receive copies of papers. You are entitled to sufficient information to allow you to participate meaningfully in the development of your matter.
- You are entitled to have your legitimate objectives respected by your attorney, including whether or not to settle your matter (court approval of a settlement is required in some matters).
- You have the right to privacy in your dealings with your lawyer and to have your secrets and confidences preserved to the extent permitted by law.
- You are entitled to have your attorney conduct himself or herself ethically in accordance with the Code of Professional Responsibility.
- You may not be refused representation on the basis of race, creed, color, religion, sex, sexual orientation, age, national origin or disability.