Friday, March 29, 2002

New York Courts Require Lawyers to Spell Out Fees and Services in a Letter


A New York state court rule requiring that clients receive engagement letters has supporters feeling the mandate provides clarity, while detractors fear the policy just makes extra work for lawyers.

Under the new rule, the letter must explain the scope of legal services that the lawyer expects to provide and outline his or her fees, expenses and billing practices. The rule only applies to matters over $3,000, and does not apply to domestic relations or personal injury cases because those lawyers must have retainer agreements with clients.

"It was viewed as unnecessary paperwork and an unnecessary imposition on lawyers in their relationships with clients," says Steven C. Krane, president of the New York State Bar Association. "There are still a lot of questions about how it''s going to work in practice, and actually what enforcement mechanisms will be attached to it."

The law went into effect March 4. Seven other states have similar rules, says Anthony Galvao, executive assistant to New York Chief Administrative Judge Jonathan Lippman. "A lot of fee disputes are the result of poor or inadequate communications" between lawyer and client, Galvao says. "Memories get stale as to what was agreed on, because there wasn''t anything in writing. This [engagement letter] is a memorialized meeting of the minds that both parties can refer to."

While some lawyers oppose the rule, many had an engagement letter policy before the rule was implemented, says Mindy R. Zlotogura, a Spring Valley attorney who handles commercial real estate work. "It''s certainly the best way to go," she says, adding that the initial plan required that all legal matters involve an engagement letter. The legal work for a will, for instance, usually costs between $500 and $600.

"That to me seemed to be a little bit of an imposition for practitioners," Zlotogura says. "Given that you don''t need to do it unless a matter will cost more than $3,000, I don''t think it''s a problem, and it''s good for the practice."

There has been confusion about what the letter should say, Galvao says. The New York State Bar Association has posted a sample engagement letter on its Web page, and some lawyers have discussed the matter, says Michele Kahn, a commercial litigator in New York City, who is president of the Lesbian and Gay Law Association of Greater New York.

"We have a solo and small firm roundtable group, and everybody brought different engagement letter forms and exchanged ideas," she says. "That was helpful."