Memorializing the different aspects of an attorney-client relationship can be a substantial risk management tool for lawyers. In addition to letters of engagement, which determine the scope of representation (and are otherwise required under Part 1215 to Title 22 of the Official Compilations of Codes, Rules and Regulations of the State of New York under most circumstances), risk can be further minimized by documenting the decision not to form an attorney-client relationship, or by confirming in writing that the services for which you were retained have concluded, thereby ending the attorney-client relationship. This article will discuss how to avoid potential liability through the use of non-engagement and disengagement letters.

Non-Engagement Letters

Lawyers frequently meet with prospective clients, and often times and for varying reasons, no attorney-client relationship ensues. Surprisingly, many legal malpractice claims are brought by those prospective clients, asserting that the lawyer failed to take certain actions on their behalf. While it is true that a plaintiff’s subjective belief alone is insufficient to prove the existence of an attorney-client relationship[1], Courts have traditionally held that the lack of a written retainer, in of itself, is not dispositive of the issue of whether an attorney-client relationship existed.[2] Of course, the best defense to a legal malpractice claim is that there was never an attorney-client relationship to begin with. Therefore, one of the most important, yet underutilized pieces of a well-maintained risk management tool box is a simple non-engagement letter. Some may ask: "Why should I waste the time and letterhead on a case I have declined to take on, for an individual who will not pay me for it?" However, non-engagement letters do not have to be long or laborious to be effective. They should simply memorialize that no attorney-client relationship was every created; and the savvy practitioner will recognize the true value in sending a non-engagement letter after declining a case.

Non-engagement letters should identify the matter being declined and clearly state that you and/or your firm will not be representing the prospective client in that matter. An effective non-engagement letter can also refer the prospective client to other counsel or the local bar association (to be helpful and to further emphasize that no attorney-client relationship exists) and should include pertinent dates and deadlines, such as the statute of limitations for that matter being declined. An important caveat to note is the difference between communicating pertinent deadlines and advising on specific deadlines. Attorneys can be sued for giving incorrect information in these types of letters. Finally, non-engagement letters should ideally be sent by verifiable means (Certified Mail, return receipt requested; or email with receipt acknowledged) so the prospective client cannot later contest delivery.

Disengagement Letters

Another valuable method of minimizing potential risk is through written confirmation of the conclusion of the attorney-client relationship. Pursuant to CPLR 214[6], legal malpractice claims are subject to a three-year statute of limitations. In the event of a legal malpractice action, effective use of a disengagement letter may provide the court with a clear “cut off” point as to when the attorney-client relationship concluded, and when the statute of limitations begins to run. Disengagement letters should be used when a transaction or litigation matter has concluded naturally (i.e., when the transaction is completed, or when the litigation has come to a “natural” end), or when the client retains successor counsel to take over the handling of an ongoing matter.

In this first instance, when an attorney-client relationship concludes naturally at the end of a transaction or litigation, it may appear intuitive that the attorney-client relationship is over and there is no further need to “document the file.” On the contrary, documenting a finite “end date” of the attorney-client relationship is still critically important. Often a statute of limitations defense to a legal malpractice action provides a “close call” for the courts, and hinges upon a matter of days. Clients who sue at the “last moment” may try to extend the accrual of a statute of limitations by arguing that despite the completion of a transaction or the settlement of a litigation, the attorney continued to advise the client (perhaps in subsequent telephone calls). In this case, effective use of a disengagement letter may be considered persuasive documentary evidence by the court, when confronted with determining the precise end date of the attorney-client relationship.

The disengagement letter should explicitly state that the representation in the particular matter has ended and that the law firm plans to close its file. The letter should again be sent via verifiable means to confirm delivery to the client.

Disengagement letters need not only be used as a risk management measure, but can also serve as a marketing tool. For example, if a lawyer represents a client in connection with the sale of a home, the lawyer may write the client to confirm that the transaction has closed and the lawyer intends to close her file. The lawyer may also wish to point out that her firm handles trust and estate matters and personal injury matters, and that the firm would welcome the opportunity to work with the client again in the future.  

Next, and in the latter instance where a lawyer is substituted for replacement counsel before the litigation or transaction has concluded, use of a disengagement letter is equally important. In practice, determining when the original lawyer ceased providing legal services while a client matter is ongoing is often a difficult task for a court to determine without clear documentation in the file.

In the case of Farage[3], the Appellate Division, Second Department cited the proposition that “[a]n affirmative discharge of an attorney by the client” is immediate. By contrast, from the standpoint of adverse parties, counsel’s authority as an attorney of record in a civil action continues unabated until the withdrawal, substitution, or discharge is formalized in a manner provided by CPLR 321.”[4] For this reason, the Second Department found the attorney-client relationship effectively ended prior to the filing of a Consent to Change Attorney with the court, when the client conveyed to her lawyer that he was discharged. The lesson to be drawn from Farage is that a lawyer discharged by a client prior to the conclusion of a matter, particularly one in litigation, should be mindful to document the conclusion of the attorney-client relationship immediately, even before a Consent to Change Attorney is filed with the court. This ensures that the earliest possible accrual date of legal malpractice action is preserved.

Conclusion

If the decision not to represent a client or the end of the law firm’s representation of a client on a particular matter is not made clear, then the law firm remains a potential target if problems subsequently arise in connection with that case or transaction, and the law firm’s exposure to a potential legal malpractice claim may unnecessarily be extended.

The key to maintaining an effective risk management program is to incorporate basic techniques, such as writing a non-engagement letter or disengagement letter, into your everyday practice. Documenting the attorney-client relationship at each stage is an extremely simple yet very powerful tool in not only reducing the risk of a legal malpractice claim, but also in strengthening your defense should a claim be made against you.

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* This article was prepared by Andrew R. Jones, Esq. and David Furman of the New York City-based law firm of Furman Kornfeld & Brennan LLP.  Andrew and David work as part of a team of 15 lawyers devoted to the defense of attorneys and other professionals in malpractice and disciplinary matters, as well as advising insurers in professional liability matters, including insurance coverage and litigation.  For more information about the above topic or the authors, please visit: www.fkblaw.com.

We trust that the above article was useful and thought provoking; however, please note that it is intended a general guide only, not a complete analysis of the issues addressed, and readers should always seek specific legal guidance on particular matters.

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[1] Topor v. Enbar, 15 Misc. 3d 1139(A), 841 N.Y.S.2d 824 (N.Y. Sup. Ct 2007), see also Weadick v. Herlihy, 16 A.D.3d 223, 224, 729 N.Y.S.2d. 25 (1st Dept. 2005).

[2] See Haythe & Curley v. Harkins, 214 A.D.2d 361, 625 N.Y.S.2d 154 (1^st Dept. 1995), Rann v Lerner, 160 AD2d 922, 554 NYS2d 649 (2^nd Dept. 1990).

[3] Farage v. Ehrenberg, 2014 N.Y. App. Div. LEXIS 7926, 2014 NY Slip Op 07977 (2d Dept. 2014).

[4] Id., at 9, 10.