Attorney Malpractice carriers have found that the use of non-engagement letters/disengagement letters can reduce Lawyers professional liability insurance claims. Attorney Malpractice Insurance carriers 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.
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 loss 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.
The use of non-engagement letters and non-engagement 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 whether not there was a client relationship the law firm will seldom win. It is best to be clear and concise as to if there is representation and when it ended then to leave 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 with use of 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 insurance carrier's defense costs and malpractice indemnity payments.
As every state and jurisdiction has different standards as to engagement, non-engagement letter, and disengagement letter content requirements, it is best to check with your state or local bar for sample letters.