Before You Sign the Engagement Letter

When a company hires a law firm, the engagement letter usually arrives as a formality. A few pages, a signature line, and a request to sign so the work can start.

I've been on both sides of that letter. It's the one moment when you have the most leverage you'll ever have with your law firm, and most clients spend about two minutes on it.

Most of the terms in it can be negotiated. It's worth an hour.

Know who the client is.

The letter should say exactly who the firm represents: the company, a subsidiary, you personally, or some combination. If you assume you're covered and you're not, you'll find out at the worst possible time.

Pin down the scope.

A vague scope invites surprise bills. Describe the matter specifically, and say what is not included. If the work grows, the letter should require the firm to tell you before it bills for the new work.

Ask who will actually do the work.

Rates mean little without staffing. Ask which lawyers will work on the matter, at what rates, and what each one will do. Ask for notice before anyone new is added.

The rate on the letter matters less than how many people bill against it.

Settle the rate questions now.

When do rates go up, and by how much notice? Are there discounts, caps or alternative fees for a predictable piece of the work? Firms raise rates every year. Agree on how that applies to your matter before it starts.

Ask for a budget.

A good firm can estimate a matter by phase, even if the estimate changes. Ask for one, and ask to be told when the work is on track to exceed it.

Read the billing terms.

How time is recorded, how detailed the invoices will be, what expenses are charged and whether they're marked up. Ask about travel time, research charges and document review. These add up quietly.

Look at the retainer.

If the firm wants money up front, find out whether it's applied to the final bills or held to the end, and how unused funds come back to you.

Check the conflict language.

Some letters ask you to waive future conflicts in advance. Understand what you're agreeing to before you sign it away.

Know how it ends.

You should be able to end the relationship at any time. Check what happens to your files, and how fee disputes are resolved. Some letters require arbitration of fee disputes. Some states also give clients specific rights in fee disputes.

Where Lexmatch fits.

Negotiating with your own law firm is awkward when you need them on your side tomorrow. Through Lexmatch Elite, one of our attorneys reviews the engagement terms, the staffing and the fee with you, and raises the hard questions so you don't have to.

This article is general information, not legal advice. Fee rules and client rights vary by state.