What Is A Disengagement Letter And Why It’s So Important

What is a disengagement letter?

Why is an attorney disengagement letter important to be sent?

When should you send a disengagement letter or what should be included in it?

In this article, we will answer all your questions about a disengagement letter.

We will understand its purpose, the reasons why an attorney may withdraw from a case and what to include in the letter.

Are you ready?

Let’s get started…

What is a disengagement letter

A disengagement letter, withdrawal letter or a termination letter is a letter confirming the termination of a matter.

A lawyer or a law firm can send a disengagement letter to a client for several reasons such as:

  1. Non-payment of fees
  2. Inactivity of the client
  3. Client’s request for termination
  4. Difficulty in working with the client
  5. Disagreement with client 

The purpose of the disengagement letter is to advise the client that the attorney is no longer going to pursue the matter.

The attorney will generally describe the final services to be rendered and make it clear following that the mandate will be terminated.

Whenever a law firm or attorney terminates a mandate for whatever reason, it is best practice to send a disengagement letter to the client to avoid any misunderstanding or miscommunication.

Common reasons why a disengagement letter is sent

There are common scenarios when a lawyer or a client may decide to terminate the attorney’s mandate. 

Whenever that decision is reached, the lawyer should send his or her client a disengagement letter to confirm the termination of the mandate and tie up all the loose ends.

Termination for non-payment of fees

One important reason an attorney may decide to stop representing a client is the inability to get paid for the services rendered.

Depending on the size of the law firm, the non-payment of fees can be detrimental to the overall operation of the firm particularly if the defaulting client is an important client of the firm.

The last thing a lawyer may want to do is to terminate a mandate for non-payment of fees.

However, if the firm is spending time and money working on a case without payment, then the firm can quickly burn operating cash flow.

Disengagement for client inactivity 

The disengagement for client inactivity can also be another reason a law firm may terminate a file.

There is no point in keeping a file open if the client is inactive or has no intention of pursuing a matter with the firm.

In such cases, after the passing of a certain time, it may be advisable to send a letter to the client to advise them of the inactivity.

If the client does not respond to any of the letters or clearly advises that they will not pursue the matter, then the disengagement for client inactivity will take care of the matter!

Client’s election to terminate

The client has the right to retain the counsel of his or her choice and terminate the counsel’s mandate at any time.

A client has no obligation to work with a lawyer if they do not intend to do so.

Having said that, if a client decides to terminate an attorney’s mandate, the attorney should make sure a disengagement letter is sent to clarify the specific point in time that the termination will take effect.

Whenever a lawyer’s mandate is terminated, it’s important to document the termination process in case the client may have the wrong impression that the lawyer was handling certain legal tasks while the lawyer had ceased rendering services.

Difficulty working with a client

In some cases, a lawyer will have to make a difficult decision to terminate a mandate because the client is difficult to work with.

Representing a client is already a challenging task.

Often, lawyers are under pressure to perform and to render their services within strict timelines.

As a result, it is crucial that the client collaborates with the attorney in such a way as to allow the legal services to be rendered at the right time.

If there is a constant difficulty in working with the client or there is a lack of collaboration on the part of the client, it makes the attorney’s job that much more difficult.

In many jurisdictions, failure to respect deadlines or failing to handle certain legal tasks can result in a professional claim against the lawyer.

To prevent any personal exposure or reputational risk, if the lawyers are unable to do their job properly due to the lack of collaboration of the client, they will prefer to terminate the mandate.

It may be a difficult decision on the spot, but it can avoid a lot of headaches in the future.

Disagreements with the client

A lawyer can send a disengagement letter to a client as they have an irreconcilable difference of opinion or disagree on the manner the legal case should proceed.

The lawyer is a legal professional who understands the law and knows how to handle a legal matter.

As a legal professional, the lawyer has the latitude to decide as to the best way to achieve the client’s objectives.

If the attorney and the client do not agree on the important decisions relating to the file, the attorney may decide to terminate the mandate.

The lawyer does not have an obligation to perform legal services in a manner demanded or ordered by the client if the attorney is convinced otherwise.

It may be prudent to terminate the mandate than to provide legal services while unconvinced of its effectiveness.  

Other reasons why an attorney may withdraw from a case

There are many reasons justifying why an attorney will decide to cease representing a client.

Here are some examples:

  1. Conflict of interest discovered during the mandate
  2. An appointment of the lawyer to the bench
  3. Deterioration of mental health impacting competence
  4. Accident or temporary disability 
  5. Difficulting obtaining information from the client
  6. Changes to the client’s operations 
  7. Client acting illegally
  8. Client acting unethically
  9. Changes to the law firm such as merger or divestiture 
  10. Disrespectful clients
  11. Accusation of malpractice is filed against the attorney 

Of course, there may be many more reasons why an attorney may withdraw from a client’s case.

Purpose of a client disengagement letter

The disengagement letter serves primarily two objectives:

  1. Clearly informing the client of the attorney’s decision to withdraw from a case
  2. Prevent potential professional liability claims against the attorney

Let’s look at each of these two points.

Duty to inform the client

The first objective is to inform the client of the attorney’s decision to withdraw from the case.

At all times, the attorney has a duty to advise and inform the client of their rights and obligations.

This duty applies to the matter handled by the attorney but also to the attorney’s relationship with the client.

The attorney disengagement letter should be used as a means to concretely inform the client how the termination process will be handled.

This way the client will have a proper understanding of what must be done going forward, how much time they have and if there are some emergencies or pressing matters to handle quickly with regards to their case.

Prevent professional liability claims

The termination of engagement letter can certainly prevent a lot of headaches for the lawyer in the future.

Lawyers are constantly exposed to professional liability claims.

If a lawyer terminates an engagement abruptly and leaves the client hanging, that’s a good recipe for disaster.

By sending an attorney-client disengagement letter, a lawyer can clearly outline:

  1. The decision to terminate the mandate
  2. Why that decision was made
  3. When the termination will take effect
  4. What has been done so far, what are the important things that need to be done
  5. Make a clear statement that the client must find another attorney to prevent their rights or recourse from being affected

This way, nothing is left for chance.

If a client does not comply with what was requested and files a professional liability claim against the lawyer, then the client will be the only one to blame.

What to include in a disengagement letter

When a lawyer sends an attorney disengagement letter to a client, he or she must cover all the important aspects surrounding the termination.

At a minimum, the letter of disengagement should include the following:

  1. Confirm why the mandate is being terminated
  2. Confirmation of how much is payable or owed
  3. Confirmation of any retainer or advance fee reimbursement
  4. The conditions that the attorney may discuss the matter with any successor attorney
  5. Outline of any final tasks to be handled by the attorney
  6. Outline of all important deadlines that need to be respected
  7. Outline of any activities that need to be completed
  8. Any conditions based on which the attorney may continue representing the client
  9. A statement that the client’s action may be affected by the statute of limitation

The objective is to ensure the termination process will not result in prejudice to the client.

When sending a withdrawal letter, the lawyer must continue protecting the interests of the client.

Disengagement letter vs closure letter

A disengagement letter is not the same thing as a closure letter.

While a closure letter is generally sent upon completion of the mandate, the disengagement letter is sent while the mandate is ongoing.

A closure letter is a fairly simple and straightforward document.

It states that the mandate is completed, provides any final billing details or account for any reimbursements that need to be made to the client, indicates that the attorney will be closing the file and invites the client to reach out for any future needs.

A disengagement letter will tell the client that the attorney no longer wishes to pursue the client representation.

This letter will be detailed as to the termination logistics so the client understands what to do next.

Takeaways

A client disengagement letter is a letter issued by an attorney to a client informing the client the attorney is intending to withdraw from their case.

An attorney withdrawal letter is generally sent when the lawyer’s mandate is still ongoing.

For this reason, it’s crucial for the attorney to document the mandate termination process to ensure the client’s interests are protected and to prevent any professional liability claims.

The attorney disengagement letter should include:

  1. Why the lawyer is terminating the matter
  2. Confirmation of any outstanding fees
  3. The handling of any pre-paid fees or retainers
  4. Any important deadlines to consider
  5. Any final tasks accomplished by the lawyer
  6. A statement the client should immediately find another counsel
  7. Any statute of limitation notices

It’s likely that if a lawyer’s mandate is terminated either based on the client’s initiative or the attorney’s initiative, there may be disagreements, misunderstandings or disputes.

To prevent potential risk, it’s in the best interest of the client and the attorney that the termination process is handled with care.

We hope you enjoyed this article on the attorney disengagement letter.

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