Saturday, June 7, 2014

The Rules of Unwritten Engagement

In his scathing antiwar classic The War Prayer, Mark Twain employs the literary device of a messenger sent from God, who has been commissioned to put into the words the unspoken part of a prayer for victory in battle.

So, too, when a lawyer undertakes to provide legal services without a written engagement letter, s/he impliedly agrees to the following terms:

The Rules of Unwritten Engagement

(Never Written, Never Executed)
                   The Client (“you”), whose address is likely to change frequently throughout the course of representation without notice to us (we shall, nevertheless, remain at all times fully accountable for communicating with you and all consequences of non-communication[1]), retain the law firm of Shudda Puddit & Righting ULP,[2]  1225 Seventeenth Street, 55th Floor, Denver, Colorado 80202-5529 (the “firm,” “us,” “our,” or “we”), to perform legal services as follows:

               1.   Scope of Services.  We shall provide all legal services you have requested of us, may request of us in the future, claim to have requested, thought about requesting, or should have requested, whether or not you actually request such services and regardless of whether we could have conceivably known or remotely anticipated your need for such services.  Our work for you will be unlimited in scope,[3] as will our liability for neglecting any such work or any deadlines, laches, or statutes of limitation associated therewith.  After we complete the work, we assume full and continuing responsibility to advise you on all matters affecting the work we have performed or shouldhave performed for you, forever.


               2.   Standard of Care.  We shall fully and faithfully devote our best efforts and the entire resources of our firm to each and all of your matters, no matter how trivial, frivolous or vexatious, forsaking all our other clients and any semblance of a normal life.

               3.   Represented Parties.  As used in these Rules of Unwritten Engagement, “you” means not only you, the person who actually contacted us to perform legal services, but each and every entity with which you are associated; all of such entities’ principals, officers, directors and employees; your heirs, legatees, pretermitted children and relations; your immediate and extended families; each of your past, current and future spouses and/or significant others; and each person you may ever mention to us in passing, including, without limitation, all members of your fantasy football league.  The Scope of Services and Standard of Care above shall apply to all such representations, which shall be undertaken simultaneously without regard to our ongoing responsibilities to, or prior representation of, other clients, or conflicts of interest, real or imagined.

               4.   Compensation.  If this is a contingent fee matter, please accept our representation gratis,[4] but without any diminution in our standard of care or zeal for your cause.  Our generosity shall equally extend to any matter accepted on a hybrid contingency fee basis.[5]  Further, we couldn’t possibly think of accepting one thin dime for any matter for which you have orally agreed to compensate us at our normal hourly rates.[6]  Additionally, not that it matters to you, no change in our hourly rates shall be applicable to you.[7]  Ever.

               5.    Contingency Fee Matters.  With regard to matters accepted by us on a contingent fee basis, even in the unlikely event we may later reduce our agreement to writing in accordance with Colo. R. Civ. P. Chapter 23.3. (hereinafter “Ch. 23.3”) and its approved forms[8] incorporated therein, we shall not be entitled to any compensation whatsoever should we withdraw from representation of you prior to completion of a successful settlement or judgment,[9] either in contract or quantum meruit.[10]

               6.    Costs & Expenses.  Many costs associated with our representation of you are billed at our actual cost, such as long distance phone calls, third-party charges (e.g., court reporters or expert witnesses), travel, postage, delivery, and filing fees.  You may be required to pay these costs.  Other expenses, including photocopying and faxing, are billed at the charges we pay plus an overhead component to cover equipment costs, subscriber fees and similar costs.  You, however, shall never be required to pay more than our actual demonstrable cost for any expense incurred on your behalf.[11]

               7.   Retainer.  Any retainer paid by you, whether denoted “non-refundable,” a “general retainer,” an “engagement fee retainer,” a “flat fee,” or the like shall be fully refundable at any time upon demand until earned, regardless of our oral agreement to the contrary.[12]

               8.   Payment.  Invoices are payable on receipt, but shall bear no interest[13] at any rate if not paid, since you have not agreed in writing to make any payment of interest, and all terms of these Rules of Unwritten Engagement will be construed most strongly against us.

               9.   Arbitration.  All disputes shall be tried only before a jury of your lawyer-hating peers, since we foolishly have not agreed in writing to arbitrate such disputes in a forum friendlier to us.  Even if we reduce an arbitration agreement to writing, it will almost certainly be construed most strongly against us to preclude arbitration of malpractice claims.[14]

               10.   Retention of File.  You may have your original documents as soon as a particular matter is concluded and you have paid all our fees and costs.  If you do not request your documents, the firm will store for no less than ten years[15] at no charge to you and shall destroy or otherwise dispose of them only at our grave peril.[16]

AGREED TO this            day of                                , 201    .
                                                                                    Tax ID No.                                                     

[1]     See Colo. RPC 1.4 (Communication)

[2]     A Colorado Unlimited Liability Partnership.

[3]     See Colo. RPC 1.2 (Scope of Representation and Allocation of Authority Between Client and Lawyer).  See also District of Columbia Bar LegalEthics Committee, Op. 343 (Feb. 2008) (holding that restrictions on the scope of the representation may be sufficient to avoid a later conflict of interest under Model Rule 1.9 if the restrictions ensure that there is no substantial risk that confidential factual information will leak from one matter to the other ).

 [4]   Colo. R. Civ. P. Chapter 23.3, Rules 4(b) (“Each contingent fee agreement shall be in writing in duplicate”) & 6 (“No contingent fee agreement shall be enforceable by the involved attorney unless there has been substantial compliance with all of the provisions of this Chapter 23.3.”).

[5]    Colo. R. Civ. P. Chapter 23.3, Rule 1 (“Contingent fee agreement” includes any agreement where compensation is to be based “in whole or in part upon the successful accomplishment or disposition of the subject matter of the agreement” (Emphasis added)).

[6]    Colo. RPC 1.5(b) provides:

When the lawyer has not regularly represented the client, the basis or rate of the
fee and expenses shall be communicated to the client, in writing, before or within a
reasonable time after commencing the representation. Except as provided in a
written fee agreement, any material changes to the basis or rate of the fee or
expenses are subject to the provisions of Rule 1.8(a). 

While, in appropriate cases, equity — not to mention the Colorado Supreme Court’s decisions construing Chapter 23.3 — would demand that an attorney failing to comply with Rule 1.5(b) not be deprived all compensation, it remains to be seen whether attorneys neglecting Rule 1.5(b)’s lenient requirement to state the basis or rate of the fee in writing before or within a reasonable time after commencing representation may be permitted to recover fees on a quantum meruit basis.  The failure to comply with Rule 1.5(b), however, is a basis for professional discipline.  See, e.g., People v Menter, 121 P.3d 376, 379-80 (Colo.O.P.D.J. 2005)

[7]    See Comment [2], Colo. RPC 1.5.  The writing requirement of Rule 1.5 applies not only to new clients, but “when there has been a change from [a] previous understanding” regarding fees.

[8]    The Ch. 23 forms, effective July 1, 2001, remedy the defects found in the agreements discussed in Elliott v. Joyce, 889 P.2d 43 (Colo. 1994) and Dudding v. Norton Frickey &Associates, 11 P.3d 441 (Colo. 2000).  See n.9 & 10, infra.

[9]    See Elliott v. Joyce, 889 P.2d 43 (Colo. 1994) (no recovery allowed, even in quantum meruit, where attorney voluntarily withdrew without objection by his client when written agreement did not provide for recovery upon that contingency, even though agreement expressly provided for conversion to an hourly fee if client withdrew from representation).

[10]    In recent years, the Colorado Supreme Court has substantially liberalized the ability of attorneys to recover in quantum meruit in instances of unwritten contingency fee agreements.   Compare Dudding v. Norton Frickey &Associates, 11 P.3d 441 (Colo. 2000)  (attorney may recover in quantum meruit even if contingent fee agreement does not substantially comply with Ch. 23.3; however, agreement must disclose to client the possibility of obtaining an equitable recovery if the contractual remedy fails) and Fasing v. LaFond, 944 P.2d 608 (Colo. App. 1997) (no recovery permitted under promissory estoppel theory where contingency agreement was not in writing) with Beeson v. Industrial Claim Appeals Office of the State of Colorado, 942 P.2d 1314, 1316 (Colo. App. 1997) (Elliot v. Joyce does not compel disgorgement of a fee fully earned for legal services completed pursuant to oral contingency fee agreement; retention of fee may be supported by theory of quantum meruit) and Mullens v. Hansel-Henderson, 65 P.3d 992 (Colo. 2002) (approving of Beeson in instances where services have been completed and a benefit has been conferred upon and accepted by the client).

[11]    See ABA Formal Op. 93-379 (December 6, 1993) (“[I]n the absence of disclosure to the contrary, it would be improper if the lawyer assessed a surcharge on these disbursements over and above the amount actually incurred . . . .”).  Cf. Colo. Bar Ass’n Ethics CommitteeFormal Op. 105, n.12 (May 22, 1999) (citing, but not expressly adopting, ABA Op. 93-379 in connection with charges assessed to clients for the use of temporary lawyers).

[12]    See In the Matter of Larry D. Sather, 3 P.3d 403 (Colo. 2000).  See also Colo. RPC 1.5(f), (implementing holding of Sather).

[13]    Attorneys may recover reasonable interest on unpaid fees provided the client has agreed in writing.  However, attorneys attempting to enforce interest payment provisions are well advised to send regular invoices to clients sought to be charged.  See Peoplev. Mascarenas, 103 P.3d 339, 348 (Colo.O.P.D.J. 2003) (where fee agreement provided for interest to accrue from the “conclusion of the case,” attorney violated Colo. RPC 1.5(a) by charging interest, compounded monthly, on amounts incurred prior to conclusion which were not billed to client for three or more months).

[14]    See Flemmer v. Holme, Roberts & Owen, L.L.C., et. al., No. 96 CV 1101, slip op., (Colo. Dist. Ct., 20th Judicial District, Dec. 23, 1996) (arbitration clause construed narrowly to be limited to fee disputes, not malpractice claims).  See also Dudding v. Norton Frickey, supra (contingent fee agreement not in substantial compliance with Ch. 23.3, therefore arbitration clause held void).  But see McGuire, Cornwell & Blakey v.Grider, 765 F. Supp. 1048 (D. Colo. 1991) (reaching opposite result, where scope of arbitration clause was more expansive, and client was found to be a sophisticated businessman).

[15]    See Colo. RPC 1.16A(b) “At any time following the expiration of a period of ten years following the termination of the representation in a matter, a lawyer may destroy a client's files respecting the matter without notice to the client, provided there are no pending or threatened legal proceedings known to the lawyer that relate to the matter and the lawyer has not agreed to the contrary.”

[16]    See Colo. RPC 1.16(d) (requiring an attorney to “surrrender[] papers” upon termination of representation); Colo. RPC 1.15(a) requires that property of clients be preserved “for a period of seven years after termination of the representation.”  See also Colo. RPC 1.15(j) (imposing a similar seven-year requirement for retention of financial records).