Even though most States don’t require a written contract, except in contingency fee cases, a written contract for every engagement, is encouraged. When it comes to value pricing, a written contract is a must. It will prevent misunderstandings, and provide malpractice and ethics protection. Here are some key elements:
Term: The contract should clearly state when it begins and when it ends.
Facts: Recite the basic facts given to you by the client. This will serve as a foundation for your relationship and prevent the client from claiming you knew something you didn't.
Law: Recite the basic laws applicable to each part of the case. This does not have to be a legal dissertation but a plain English version of the basic laws so the client will know the legal burden and probabilities of success.
Options: Recite the different options the client has and then state which option the client chose and why. For example, a person might have the options of suing for a divorce on a fault ground, doing nothing, negotiating, or pursuing mediation. If they chose not sue on fault grounds, state clearly in the contract that they have chosen not to pursue that right and why, e.g.: “Client does not wish to pursue a fault based complaint. Client does not wish to drag his spouse through the legal mud and prefers to explore a positive, constructive and less expensive resolution through mediation.”
Mission: Work hard with the client to determine their “mission.” I often ask, “If we are sitting here one year from now and we are looking back on a successful result, what would it look like?” This is crucial, because mission determines strategy. Down the road, a client may question why you didn’t do something, and you can direct them back to what they asked you to do, and that it did not include what they are now asking for.
Scope: State specifically what work and time the contract covers. For example, if the contract is for a divorce but the client does not wish to pursue custody, state specifically that the scope of the work does not include a custody battle. If the contract is to negotiate, state that the contract does not cover litigation. If the contract covers litigation, state that it only covers divorce and not other forms of litigation that can arise, such as abuse allegations, criminal assault matters, youth court matters, etc. Limit your litigation contracts to post-trial motions and state specifically that the contract does not cover appeals. The scope of the contract is probably the most important part in the protection of the attorney from performing work that he did not price.
Decision as to price: Clients should be given the opportunity to make a front-end decision on price. Attorneys should connect pricing alternatives to different strategies or to outcome possibilities the client deems most likely. The contract should state the alternatives given and why the client selected it.
Expenses: State what expenses the contract covers and what it does not cover. For example, we do not charge clients for normal in-house expenses for copying, long distance or computer research access, but we do bill the clients for filing fees, service of process, court reporter fees, etc. Make sure your contract specifically excludes expert fees, investigator fees and mediator fees.
Education: Clients are generally unaware of the different alternatives available to them from an attorney fee and pricing standpoint. To avoid claims by a client that they did not know what they were getting in to, recite in the contract that other forms of billing are available from other attorneys and describe them. State in the contract that the client has been advised to seek counsel from another attorney about their rights and alternative billing methods.
Fee Dispute Resolution: Most states have a requirement that a fee should be reasonable. Unfortunately, the view point on what is reasonable is always going to be from the past tense. A lawyer can never know if his fee is reasonable until the performance is concluded, and some bar committee judges it. Therefore, to protect the lawyer–and the client–a fee dispute method should be inserted in every contract. Attached is our Fee Dispute Resolution Policy which is incorporated into every contract.
State What is Happening to the Money: If a lawyer collects a “flat fee,” most ethics opinions call for that to be deposited in the lawyers account as opposed to the clients account. The client should be aware that the money is going to become the lawyer’s money and will be deposited in his account as “earned.” Write your contract to state clearly that the fee is deemed “earned upon receipt and will be deposited in the lawyers account, subject only to refund based upon the Code of Professional Responsibility.” See our Fee Dispute Resolution Policy.
Legal Results Cannot be Guaranteed: Write in your contracts that legal results cannot be guaranteed. As a matter of fact, if the likelihood of success in a particular case is difficult or even unlikely, write that in the contract and state why.