Attorney Malpractice insurers find that the use of non-engagement /disengagement letters reduce legal malpractice insurance claims. Insurers have defended and paid on claims where the client alleges that the law firm was still representing them when the law firm thought they were no longer providing representation or where the prospective client claims that the law firm was representing them in a matter, when the firm thought they were not.
To minimize risk law firms 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 engagement. It is highly advisable to send such letters via certified mail or e-mail with return receipt requested. This evidence helps prevent allegations of attorney-client representation where none existed.
When a matter or transaction has concluded, send a letter or e-mail to the client advising that the attorney-client relationship has terminated. Disengagement letters are best delivered via certified mail or e-mail return receipt requested. Sending a disengagement letter is an effective loss prevention tool. 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 continuous representation.
The use of non-engagement letters and disengagement letters help mitigate situations where a bad outcome by the (prospective) client, gets turned into a bad outcome for the law firm. Remember that if there is room for reasonable doubt as to whether or not there was an attorney-client relationship the law firm will seldom win. It is best to be clear and concise whether representation existed and when it ended then to leave any doubt. The best proof is documentation of the non-engagement & disengagement letters being sent.
There is no guarantee that a firm will not get sued even using non-engagement/disengagement letters, but generally the outcome for the firm will be better. This saves the firm attorney malpractice insurance premiums by minimizing the insurer’s defense costs and malpractice indemnity payments.
As every state and jurisdiction has different standards and content requirements for engagement, non-engagement, and disengagement letters, it is best to check with your state or local bar for sample letters and requirements.