Briefly, an attorney representing a client for a fee which is expected to be $3,000 or more must provide the client with a letter of engagement at the outset of the representation. The letter must contain the following basic terms of engagement: (1) the scope of legal services to be performed, (2) the fees to be charged, including expenses and billing practices, and (3) notice of the client's right to arbitrate fee disputes under other recently promulgated rules of the Chief Administrator of the Courts (22 NYCRR Part 137), if applicable. A retainer agreement signed by the client can be a substitute for the required letter of engagement, provided the three basic terms listed above are included. The new Rule does not apply to representations where the fee is expected to be less than $3,000.00, and there is a rather vague exception in the new Rule for an ongoing representation where the client has previously paid for services of the “same general kind”. The new Rule also does not apply to “domestic relations matters”, which have their engagement requirements set forth in Part 1400 of the Joint Rules of the Appellate Divisions.

As reported in a prior Bar Reporter, public comment was invited on a similar proposed rule before November 1, 2002. The proposed rule required letters of engagement where the fee was expected to be $1,000 or more. OCBA’s Board of Directors wrote in opposition to that proposed rule and argued against it in the NYSBA House of Delegates, which opposed making the rule a disciplinary rule in the Code of Conduct. Instead, the Rule has now been promulgated as a Joint Order of the Appellate Division. More information on this new Rule can be found on the internet at www.courts.state.ny.us/1215.html. Thomas E. Myers and Ellen S. Weinstein.  A sample Letter of Engagement, drafted by NYSBA, can be found in our forms section.

JOINT ORDER OF THE APPELLATE DIVISIONS

The Appellate Divisions of the Supreme Court, pursuant to the authority invested in them, do hereby add, effective March 4, 2002, Part 1215 to Title 22 of the Official Compilations of Codes, Rules and Regulations of the State of New York, entitled “Written Letter of Engagement,” as follows:

Part 1215 Written Letter of Engagement

§1215.1 Requirements

(a) Effective March 4, 2002, an attorney who undertakes to represent a client and enters into an arrangement for, charges or collects any fee from a client shall provide to the client a written letter of engagement before commencing the representation, or within a reasonable time thereafter (i) if otherwise impracticable or (ii) the scope of services to be provided cannot be determined at the time of the commencement of representation. “Client” shall include any person or entity that is responsible for the payment of the attorney’s fees. Where there is a significant change in the scope of services or the fee to be charged, an updated letter of engagement shall be provided to the client.

(b) The letter of engagement shall address the following matters:

(1) Explanation of the scope of the legal services to be provided;

(2) Explanation of attorney’s fees to be charged, expenses and billing practices; and

(3) Where applicable, notice of the client’s right to arbitration of fee disputes under Part 137 of the Rules of the Chief Administrator.

(c) Instead of providing the client with a written letter of engagement, an attorney may comply with the provisions of subdivision (a) by entering into a signed written retainer agreement with the client, before or within a reasonable time after commencing the representation, provided that the agreement addresses the matters set forth in subdivision (b).

§1215.2 Exceptions

This section shall not apply to (1) representation of a client where the fee to be charged is expected to be less than $3000, (2) representation where the attorney’s services are of the same general kind as previously rendered to and paid for by the client, or (3) representa-tion in domestic relations matters subject to Part 1400 of the Joint Rules of the Appellate Division (22 NYCRR).