Tuesday, April 28, 2015

Engagement Letters: Firsthand Industry Perspectives


We've had a very engaging week on engagement letters so far. It's a topic that's resonating with the community, so it's fitting to continue the discussion. The Willis industry risk report we noted previously also includes commentary on engagement letters from several industry experts:

Glenda West, Willis Head of UK PI Claims: "Partners should at the very least check the engagement letter on every matter. The task should not be delegated solely to an associate or a member of the risk team given its importance. When there is a professional indemnity claim, the first thing insurers will look at is the scope of the retainer – what the firm was instructed to do and sometimes more importantly what the firm was not instructed to do."

David Halliwell, Director of Knowledge, Risk and Legal Services at Pinsent Masons: "Client engagement risks are very high up the agenda for us, so a lot of our work involves making sure that client identification and conflict checks are always undertaken and that appropriate engagement terms are in place. If you get that right at the outset then you save yourself potential time, effort and trouble down the line, because you’ve absolutely clarified what you will be doing, what you won’t be doing, who you will be doing it for, when you need to get it done by, what you are going to get paid and how. This is so important that we recently centralised the responsibility for conducting money laundering checks to the risk team and removed it from the operational team."

Chris Perrin, Executive Partner & General Counsel at Clifford Chance: "A risk that has really risen up the agenda is the terms of engagement certain large buyers of legal services seek to impose on law firms. We are increasingly seeing provisions in these that are unacceptable to us, such as being responsible for third parties we instruct on behalf of the client or providing an indemnity in respect of any error (as opposed to being liable for the usual measure of damage). Here at Clifford Chance the rule is that these sorts of terms of engagement must be reviewed by me or my team so that we can get consistency in what the firm will sign up to."

(For those that may have missed it, the recorded demo of automating engagement letter management is online here.)

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