Practice Resources

The Business Side of Practicing Law

Finance, HR, and IT basics for lawyers and law firm managers
Law Practice Management resources provide lawyers, law firm managers and legal professionals with information on practice management trends, marketing, client development, legal technology and finance. Whether you’re a solo practitioner or a managing partner at a national law firm, you’ll find law practice management and business resources to meet your day-to-day practice needs. Checklists, best practices, publications and continuing legal education programs provide up-to-date information and practical tips to help you better manage your law practice.  From retainer agreements, information about bill collection and accounting to document management and file retention, the New York State Bar Association is helping you be a better lawyer and law firm manager.

Retainers, Engagement Letters, Disengagement Letters, Statement of Client Rights and Responsibilities

Requirement for Retainer Agreements

All four of the Appellate Divisions adopted a rule governing contingent fees in claims and actions for personal injury and wrongful death. This rule is mandatory. The rules for the respective Appellate Divisions are: First Judicial Department (22 N.Y.C.R.R. Section 603.7[e]); Second Judicial Department (22 N.Y.C.R.R. Section 691.20[e]); Third Judicial Department (22 N.Y.C.R.R. Section 806.13[c]); and Fourth Judicial Department (22 N.Y.C.R.R. Section 1022.31[c]). Lawyers should be aware that the language varies slightly among the different Judicial Departments. Please note, these changes do NOT apply to medical malpractice cases, which are NOT subject to the new rules and must be handled in accordance with NYS Judiciary Law 474-a.

New Client/Matter Intake

Any client who is unhappy with a law firm’s representation is a potential plaintiff in a subsequent legal malpractice action.  Be sure to analyze a prospective new client and the potential matter prior to engagement, in an effort to minimize the risk of a future disciplinary action, legal malpractice action or fee dispute. Pursuant to Rule of Professional Conduct 1.1(b): “A lawyer shall not handle a legal matter that the lawyer knows or should know that the lawyer is not competent to handle, without associating with a lawyer who is competent to handle it.” Be sure the prospective client’s matter will not overburden the firm’s finances, time and staff resources. You may also want to perform a state and federal docket search to determine whether the prospective client has been involved in any legal malpractice actions or fee disputes.

Conflicts Checks

Rule of Professional Conduct 1.7, Rule of Professional Conduct 1.9

Performing a conflict check prior to engagement will help prevent later claims of legal malpractice arising from an alleged conflict of interest. Get as many facts as possible regarding the potential parties to the matter to be sure that you do not have any conflicts of interest with any other parties or potential parties should a litigation matter result in third-party claims, counterclaims or cross-claims. Utilize a conflict checking software program to ensure that engagement is proper.

It is good practice to create and maintain the following file opening procedures:
* Prepare a file-opening form.
* Establish procedures so that a file/billing number cannot be assigned without first performing a conflicts check.
* Update file-opening forms when new parties are added to a matter.

Utilize conflict checking software which searches all active, inactive and closed matters for potential conflicts. Conflict checking software is only as good as the information that is inputted into the system. Be sure that all relevant client information is entered into the system, updated and adequately backed up in the event of system failure.

Engagement Letters/Part 1215 Requirement

Engagement letters confirm the scope of representation and set forth the parties’ responsibilities, billing rates/contingency agreements and expense costs. Engagement letters discuss the scope of the firm’s representation and the limits of it. A simple litigation matter can become quite complicated if a party files for bankruptcy, takes an appeal, enters receivership, becomes subject to a guardianship situation or dies. Make sure that the prospective client understands the exact scope of the firm’s representation. The retainer agreement should memorialize the bounds of the firm’s actual representation. If the law firm has no intention of pursuing appeals on behalf of its client, then it must explicitly state that appeals are not part the firm’s representation, unless a separate retainer is executed.

Title 22 Part 1215 of the Official Compilations of Codes, entitled “Written Letter of Engagement” mandates that attorneys provide their clients with engagement letters. Part 1215.1 states:
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) if the scope of services to be provided cannot be determined at the time of the commencement of representation. For purposes of this rule, where an entity (such as an insurance carrier) engages an attorney to represent a third party, the term “client” shall mean the entity that engages the attorney. 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, where applicable, shall provide that the client may have a right to arbitrate 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).

The engagement letter must: 1) explain the scope of the legal services to be provided; 2) explain the attorney’s fees to be charged, expenses and billing practices; and 3) where applicable, provide that the client may have a right to arbitrate fee disputes under Part 137 of the Judiciary Rules.

Part 1215 has exceptions.  Engagement letters are not required in the following situations: 1) where the fee to be charged is expected to be less than $3,000; 2) where the attorney’s services are of the same general kind as previously rendered to and paid for by the client; 3) when representing a client in a domestic relations matter subject to Part 1400; or 4) where the attorney is admitted to practice in another jurisdiction and maintains no office in the State of New York, or where no material portion of the services are to be rendered in New York.

Non-engagement Letters

To minimize risk a firm should send a non-engagement letter when it decides not to accept a client. A non-engagement letter should be direct, concise and in plain English, and it should explicitly inform the prospective client that the law firm will not accept retention. It is highly advisable to send such letters via certified mail, return receipt requested, such that evidence exists in the event a statute of limitations issue later arises.

Disengagement Letters

When a matter or transaction has concluded, send a letter to the client advising that the attorney-client relationship has terminated. Disengagement letters are best delivered via certified mail.  Sending a disengagement letter is an effective risk prevention tool, as it provides a concrete date for purposes of statute of limitations defenses in the event of a later legal malpractice claim. Disengagement letters may act to curtail any later tolling arguments of a continuous representation.

Additional Documents

Sample Letter of Engagement
Purchase Laminated Statement of Clients Rights and Responsibilities
CNA Lawyer’s Toolkit 3.0: A Guide to Managing the Attorney-Client Relationship

Billing

A law firm should send clients bills frequently and in accordance with the terms of engagement letters. Clients are more likely to feel that their matters are being actively managed. Articles of interest on billing are posted below.

Converting Hours Worked into Dollars Received: How to Get the Bills Out and Receivables Collected by Joel A. Rose  
Nine Essential Billing and Collection Skills for Lawyers by Joel A. Rose

Escrow Accounts and IOLA

Attorney Escrow Accounts – Your “must have” book
Attorney Escrow Accounts, Fourth Edition is a handy reference for newly admitted and seasoned attorneys. It comprehensively covers the most common situations where attorneys handle client funds and clearly discusses the legal and ethics issues encountered.

Insurance Programs for NYSBA Members

Take advantage of comprehensive, competitive insurance programs available through our exclusive insurance administrator, USI Affinity. USI Affinity offers a broad spectrum of insurance products for NYSBA members, their firms, and their employees – ranging from Individual Life, Disability, Auto & Home…to Lawyers’ Professional Liability…to group Medical & Prescription Drug, and more.

Document Management and File Retention

There are tens of thousands of boxes of closed client files sitting around in warehouses, storage buildings, spare offices and, believe it or not, probably garages. Some firms spend thousands of dollars on closed file storage. While many firms are starting to move towards paperless office environments, many attorneys are asking about what to do with their banker boxes full of closed files. “How long do I have to keep my closed files?” is one of the most frequent questions sent to the “Ask LPM” email box.

Rule 1.15(d) of the New York Rules of Professional Conduct outlines bookkeeping requirements.

Ethics Opinion 460 – 2/18/77 (12-77) – Preservation of Closed Files which describes the circumstances under which lawyers may dispose of closed files.

Ethics Opinion 623 23 – 11/07/1991 (38-90) should be reviewed when dissolving a law firm and procedures for disposing of closed files.

Ethics Opinion 641 – 02/16/1993 (40-92) discusses disposition procedures and compliance with recycling regulations. In many communities there are recycling regulations. “A lawyer who is subject to a recycling law must ensure that compliance with that law does not entail violation of the lawyer’s obligation to maintain the confidentiality of client information.”

In disposing of client files, it is important to remember the need to preserve client confidences and secrets. If you use a recycling or shredding company to dispose of paper, take extra care to ensure that disposed documents are not reviewed by third parties.  Similar steps should also be taken when donating, recycling, or disposing of firm computers. Deleting an electronic file from a hard drive does not mean that a record is destroyed in the same way that paper can be destroyed. “Scrubbing” software should be used.

File Retention Policies – Your Firm Should Have One
Your firm should have a file retention policy in place.  A file retention policy is provides a step-by-step outline of the processes and procedures on how firm files should be closed, retained and destroyed. Links to sample file retention policies and resources on document management are available at the links below:

Sample Document Retention Policy from Prolegia  
Practice Management Resource Center Sample Closed File Check List

Tell Your Clients about Your File Retention Policy – Review Your Retainer

You should tell your clients about your file retention and destruction policy when you are retained. You should include your policy in your retainer agreement or engagement letter to set expectations at the outset and clearly indicate that file destruction is anticipated a certain number of years after the representation. This keeps everyone on the same page as to what happens with the contents of the file while the matter is pending and after the file is closed. For example your retainer can include the following language: “The firm retains closed files for at least seven years after they are closed.”

You should also include a reminder that copies of all pleadings, correspondence and other documents will be provided to the client during representation. The client is free to maintain a copy of the file and keep it forever. For those firms striving to go paperless, retainers sometimes note that most original documents will be scanned and forwarded to clients as they arrive at the office, and that the firm will keep only an electronic record of that document.

What You Should Keep for More than Seven Years

You should always evaluate the statutes of limitation for legal malpractice cases; retain these files for at least as long as anyone could conceivably make a claim in connection with your work. Original wills, client files involving minors or those under a disability, select real estate files, family law matters for instance those involving matters relating to future college or school tuition and expenses should be kept for more than 7 years. Disposing of closed client files requires good judgment and common sense.

Article of Interest |  Safe-Guarding Client Information: Basic Data Security Training for Lawyers by John R. McCarron, Jr., Esq.

For more information, review the NY Rules of Professional Conduct, Ethics Opinions 460, 623 and 641.

Ethics Opinions on Document Management, File Retention, Closed Files

New York Rules of Professional Conduct
Ethics Opinion 680 – 1/10/96(57-95)
Ethics Opinion 724 -11/30/99
Ethics Opinion 623 –11/7/01(38-90)
Ethics Opinion 460 – 2/18/77 (12-77)

Disaster Planning and Emergency Preparedness

We have all witnessed in graphic detail scores of people and regions around the world devastated by unforeseen and wholly unpredictable events – natural disasters, fires, storms, floods and earthquakes, along with the specter of terror attacks or power outages. Law firm businesses cannot afford to take a “wait and see” attitude in this crucial business reality. In addition to the serious human toll of such events, the business implications are astounding and often crippling – potential loss of income and clients, malpractice liability exposure and worse. Most law firms know they need a disaster recovery plan, but don’t have one. Maybe your firm has started its emergency planning procedures, but how can you be certain it is comprehensive or that you are not overlooking important functions, contingencies and considerations? Without an effective and customized plan, your firm is at risk. An action plan and checklist incorporating the best practices in emergency planning and disaster recovery for law firms is key. Click here to start your firm’s planning and to download a sample Disaster Recovery Template created by Barry Jackson, CPA, CLM. You can use this as a loose guide and specifically tailor it for your firm. There are much more sophisticated procedures out in the marketplace. This template is simply designed to start the process.  A records disaster recovery program identifies and protects records encompassing vital files, documents (hard copy and electronic) and information necessary for a law firm to maintain business continuity in case of a disaster or emergency. Knowledge of the physical layout of your premises is critical to safe evacuation of personnel, retrieval of important documents and equipment, restoration of services, and planning to repair or rebuild. A detailed floor plan should be part of your disaster plan.

Disaster Planning and Emergency Preparedness – Best Practices for Solo Practitioners
An unforeseen crisis can be difficult to manage and can jeopardize your law practice. Planning ahead is essential to providing competent representation and preventing disciplinary problems. Most law firms know they need a disaster recovery plan, but don’t have one. Maybe your firm has started its emergency planning procedures, but how can you be certain it is comprehensive or that you are not overlooking important functions, contingencies and considerations? Without an effective and customized plan, your firm is at risk.

View an outline from the program | Disaster Planning and Emergency Preparedness for Solo and Small Firm Practitioners by Deborah Scalise, Esq.

Member Benefits and Savings Programs

Enhance the efficiency and lower the cost of your practice with special discount programs for NYSBA members. From insurance and financial services to discounted office products, your NYSBA membership gets you dramatic savings on important services every practice needs.  Save time and money with members-only programs like group health insurance from MVP, financial services from Bank of America, free legal research, discounts on CLE of more than 30%, practice management software, hardware and resources, and much more.

Human Resources and Hiring Staff

The following programs on human resource compliance and hiring staff provide insights to growing your firm and managing staff.

Human Resource Issues In The Time Of COVID-19 (2020)
The Lawyer as Employer (2020)
Lawyer As Employer: Handling Coronavirus Issues In The Workplace (2020)
The Lawyer as Employer (2019)