Ride the Lightning

The 21st Century Legal Retainer Agreement

December 3, 2012

Apologies for disappearing for a while. Before Thanksgiving, I managed to contract "a virus of unknown origin" complicated by a blood infection. Not a good combination and I am glad to be out of the hospital!

Thanks to Carolyn Elefant, who was recently on the faculty with me at the Maryland Solo and Small Firm Conference, for submitting this guest post. It's a bit off my usual track, but contains some marvelous information for attorneys.

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How times have changed.

Once upon a time, lawyers and clients entered into a representation agreement based on a handshake. Today, that same agreement might result in an ethics complaint against the lawyer for failing to commit his fees to writing, or worse, a refusal by the client to pay the bill based on claims that the lawyer never did all the work he promised. Whether you call it a Retainer Agreement, Engagement Letter, Fee Agreement, Representation Agreement or something else, the contract between lawyer and client entered into at the outset of the relationship sets forth the terms of price of services to be rendered by the lawyer.

But today, Retainer Agreements must do more than simply state terms of service and price. In the 21st Century, more lawyers seek to charge flat fees for ongoing work, and must comply with applicable ethics rules. Lawyers may need to inform clients of other matters – outsourcing, data storage or acceptance of payment by credit card. At the same time, some lawyers deliver legal services entirely online or may ask a client to execute an agreement on an iPad. In these cases, short retainer agreements that get to the heart of the matter in a couple of sentences are preferable a lengthy lawyerly tome.

Today’s clients are different too. They’re accustomed to consuming information disseminated in sound-bites and 140-character streams and consequently, lack the attention span to read through a seven page retainer agreement. Clients also have access to all sorts of simple online forms, which has changed their perception of what a legal document should look like. For many clients, a lengthy retainer can be intimidating and off-putting; an added hurdle to hiring a lawyer instead of going with a DIY (do-it-yourself) product.

Below is a checklist of topics that you may want to consider addressing in your retainer agreement, along with a few sample clauses.

• See the Fee: Alternative billing is all the rage today. Does your fee agreement provide for alternative billing, like flat fees or "subscription" fees in an ethically compliant manner? For example, many flat fees must be deposited directly into an IOLTA trust account, where they must remain until work is completed. Does your Retainer Agreement establish milestones that would enable you to remove funds from the retainer account in installments so you don’t have to wait six months for a matter to conclude to receive payment?
• Electronic expectations: Many disciplinary committees require lawyers to disclose to clients the use of – and potential security risks – of electronic communication, e-billing and cloud storage. Moreover, with files digitized, many firms would prefer to hold only hard copies and not retain originals. Does your retainer agreement adequately discuss and disclose these issues to clients?
• Outing Outsourcing: Many law firms now rely on freelance lawyers, virtual assistants and vendors to carry out responsibilities once handled in house. What should your retainer agreement disclose about outsourcing work to vendors, contract attorneys and virtual assistants?
• The Long and Short of Retainers: One-page retainer agreement versus multiple pages. Which works best for you and how do you decide what to leave in and what to take out?
• iPad versus legal pad: Many lawyers are going mobile with laptops and iPads. But can a client realistically review and sign a 15 page retainer agreement on an iPad. Have you considered non-traditional ways to execute the retainer agreement, as well as trends in document automation and ways to streamline execution of the retainer agreement?

Below are some sample clauses to get you started. For more detailed information, register for the upcoming webinar December 18 here – http://21stcenturyretainerdec.eventbrite.com/ or purchase the eBook at http://www.lulu.com/shop/carolyn-elefant/the-art-science-ethics-of-the-21st-century-retainer-agreement/ebook/product-20376406.html

Disclosure of cloud use to clients (required in some jurisdictions):

To enhance the efficiency of our practice, the firm uses a variety of technology, including third party cloud based platforms, to store documents, communicate with clients and other activities. We have exercised due care in selecting vendors whose security and management practices meet or exceed applicable ethics requirements and engage in ongoing monitoring and oversight of their services. You consent to our use of these services to store your files, communicate with you and carry out other necessary tasks related to representation.

Outsourcing:

You are hiring the firm for representation and not any particular individual. The firm may assemble the team of professionals best suited to serve your needs at each stage of your matter, including professionals who may reside outside of the United States. The Firm may share with these professionals, information about your case as necessary for them to carry out their responsibilities. All non-firm personnel are subject to the Firm’s ongoing supervision and applicable ethics regulations. You expressly consent to the firm’s use of these professionals and to disclosure of information as necessary for them to serve your needs.

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Thank you for the guest post Carolyn!

E-mail:         Phone: 703-359-0700

www.senseient.com

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