Disengagement Letters Verses Letters of Closure - Two Sides of the Same Coin

Client relationships can end for any one of a number of reasons, to include a matter has been resolved, the client no longer wishes to proceed, or there are irreconcilable differences between you and your client. Regardless of the reason, it is crucial that you formally document the conclusion of the attorney-client relationship with either a letter of closure or a disengagement letter depending upon the circumstances.

What is a Letter of Closure?

A letter of closure, best written in the form of a thank you letter, serves as formal notification and documentation that your legal representation has ended because the agreed upon objectives of your representation have been achieved. The primary purpose of this letter is to ensure the client understands that their matter is resolved, and that no further legal work will be performed unless agreed upon in a new engagement.

 Key Elements of a Letter of Closure:

1. An Acknowledgement of Matter Completion: Clearly state that the matter has been resolved and all legal services agreed upon have been provided.
2. A Summary of the Outcome: Briefly outline of the legal services rendered, important results, and any relevant outcomes.
3. Final Instructions: If applicable, outline any post-representation steps the client will need to take, such as renewing a legal filing or maintaining compliance with a legal agreement.
4. The Return of Documents and Final Billing: Inform the client of the return of any original documents and clarify any outstanding billing matters.
5. A Record Retention Statement: Set forth your firm’s document retention policy.
6. A Thank You: Include a personal note thanking the client for any assistance provided, in placing their trust in you, and consider inviting the client to hire your firm again should another legal concern ever arise.

What is a Disengagement Letter?

A disengagement letter, on the other hand, is used when you must terminate representation in compliance with Model Rule 1.16 Declining or Terminating Representation before a client’s matter is resolved. This can happen for various reasons, to include the development of a conflict of interest, nonpayment by the client, irreconcilable differences, the client’s failure to cooperate, or you can no longer competently or diligently represent the client. Unlike a letter of closure, a disengagement letter serves as formal notification and documentation that you are unilaterally ending the attorney-client relationship and withdrawing from representation.

Key Elements of a Disengagement Letter:

1. A Statement of Termination: A clear declaration that the attorney-client relationship is ending.
2. The Reason for Disengagement (If Appropriate): While not always necessary, providing a reason can be beneficial, particularly if there are ethical or financial reasons for withdrawal.
3. Next Steps and Status of the Matter: Stress the importance of any upcoming deadlines, identify any actions required to prevent prejudice to the client, provide an update on the current status of their matter, and recommend they seek other counsel.
4. Transfer of Records and Refund of Fees: Explain the process of transferring files and records to the client or their new attorney and provide information regarding any potential refund of unearned fees.
5. Final Billing Details: If there are outstanding fees, include billing information and a deadline for payment.

Best Practices When Drafting These Letters

Particularly with disengagement letters, always write with a professional tone, even if the termination is due to difficult circumstances.

Once you have terminated your representation, do not stay engaged or reengage with the past client. Doing so can unintentionally reestablish an attorney-client relationship as well as delay the start of the running of the malpractice statute of limitations clock.

Always keep a copy of the letter with your copy of the client’s file because these letters serve to document that a prior current client is now a past client. Such documentation may prove useful for conflict resolution purposes on a going forward basis.

Finally, one side note. Remember that your obligation to maintain client confidences continues beyond the termination of the attorney-client relationship regardless of how the attorney-client relationship was ended.

Conclusion

 When sent timely, both letters of closure and disengagement letters serve essential roles in managing your attorney-client relationships. While a letter of closure signifies the natural conclusion of representation, a disengagement letter is necessary when you must withdraw prematurely. Understanding and using these letters appropriately helps you follow through with your ethical obligations, more effectively manage client expectations, and mitigate your malpractice exposure.