DRAFTING TO AVOID MALPRACTICE JAMES E. BRILL · Estate Planning Engagement.doc Joint Representation...

DRAFTING TO AVOID MALPRACTICE

JAMES E. BRILL James E. Brill, P.C.

Houston

JETT L. HANNA Texas Lawyers Insurance Exchange

Austin

STEVE MCCONNICO Scott Douglass & McConnico

Austin

State Bar of Texas 19TH ANNUAL

ADVANCED DRAFTING: ESTATE PLANNING AND PROBATE COURSE

October 30-31, 2008 Austin

CHAPTER 4

JAMES E. BRILL 3636 Westheimer Houston, Texas 77027 713/626-7272 FAX 713/626-3606 email [email protected] Jimmy Brill is a 1957 University of Texas Law School graduate and a solo practitioner from Houston whose practice emphasizes probate, estate planning, and real estate. He currently serves as principal author and project director of the Texas Probate System first published by the State Bar in 1972 and updated six times since then and he previously chaired the State Bar CLE and PEER Committees. In 2007 he was the recipient of the Dan Rugeley Price Memorial Award from the Texas Bar Foundation. In 2006, the Real Estate, Probate and Trust Law Section of the State Bar of Texas presented him with its Lifetime Achievement Award as the Distinguished Texas Probate and Trust Attorney. He also received the Distinguished Service Award for 2000 from the Estate Planning, Probate and Trust Law Section of the Houston Bar Association. The State Bar honored him with its Presidents’ Award in 1978 as the outstanding lawyer in Texas, with the Gene Cavin Award For Excellence In Continuing Legal Education in 1994, and with a Presidential Citation in 2005 for chairing the State Bar Task Force On Starting Practice. The College of the State Bar presented him with its 1999 Professionalism Award and in 2000 recognized his article “Dealing With The Death Of A Solo Practitioner” as that year’s best article from a State Bar course. He chaired the Law Practice Management Section of the American Bar Association and in 2004 was honored by that Section with its Samuel S. Smith Award For Excellence In Law Practice Management. He was inducted into the first class and elected as an initial trustee of the College of Law Practice Management and served as its treasurer. For two and one-half years, Brill wrote a monthly column for solo practitioners in the ABA Journal. He received The General Practice, Solo and Small Firm Section of the American Bar Association Donald C. Rikli Lifetime Achievement Award in 2000. Starting in 1994 he served as mentor to five women lawyers in their first year as solo practitioners and continued the group’s monthly meetings for an additional four years. This group became a model for the mentor program of the State Bar. In 2004, he started a second group of five. He was an organizer and continues to lead monthly meetings of a Houston group of lawyers known as Solos Supporting Solos. This informal group has met each month since September 1994 and provides solos with an opportunity to meet fellow solo practitioners in an informal setting. Brill is listed in Best Lawyers In America, Trusts and Estates and has been designated as a Texas “Super Lawyer” by Texas Monthly in each of its compilations. Brill is a director of TLIE (Texas Lawyers Insurance Exchange).

Biography of Jett Hanna Jett Hanna is a Senior Vice President at Texas Lawyers' Insurance Exchange. His duties have included supervision of lawyers' and judges’ professional liability claims, underwriting, loss prevention, and computer operations. Mr. Hanna received his B.B.A. Summa Cum Laude in Management Science and Computers from Southern Methodist University in 1980, and his J.D. from the University of Texas School of Law in 1983. Mr. Hanna is a member of the State Bar of Texas and is a Registered Professional Liability Underwriter (RPLU). He lectures and writes on legal malpractice and insurance topics. Mr. Hanna also is an Adjunct Professor at The Unversity of Texas School of Law. Recent publications include Threats to Client Confidentiality Lurk in Email, Texas Lawyer (American Lawyer Media) February 12, 2007; Selected Legal Malpractice and Ethical Issues In the Use of Current Technology, BarTech TexasBarCLE, 2006; How Your Staff Can Help You Avoid Legal Malpractice, ABA Committee on Lawyers’ Professional Liability, Spring 2004. Susan Saab Fortney and Jett Hanna, Fortifying a Firm’s Ethical Infrastructure: Avoiding Legal Malpractice Claims Based on Conflict of Interest, 33 St. Mary’s L. J. 669 (Symposium: Legal Malpractice and Professional Responsibility 2002); Hanna, Purging with Prudence, ABA Journal (January 2001); Hanna, Moonlighting Law Professors: Identifying and Minimizing Professional Liability Risks 42 S. Tex. L. Rev. 421 (Spring 2001); Hanna, Handling the Initial Stages of a Claim, printed in The Lawyers’ Desk Guide to Preventing Legal Malpractice (ABA Standing Committee on Lawyers’ Professional Liability, 1999); and Hanna, Legal Malpractice Insurance and Limited Liability Entities: An Analysis of Malpractice Risk and Underwriting Responses, 39 S. Tex. L. Rev 641 (March 1998).

STEVE McCONNICO Scott, Douglass & McConnico, L.L.P.

600 Congress, 15th Floor Austin, Texas 78701

Phone: (512) 495-6300 Fax: (512) 474-0731

E-mail: [email protected] BIOGRAPHICAL INFORMATION

EDUCATION Baylor University (J.D. with honors 1976); Editor in Chief, Baylor Law Review, 1975-1976

PROFESSIONAL ACTIVITIES Partner, Scott, Douglass & McConnico, L.L.P., Austin, Texas Briefing Attorney for Justice Jack Pope, Texas Supreme Court, 1976-1977 Board Certified in Civil Trial and Personal Injury Sustaining Life Fellow Texas and American Bar Foundations Outstanding Young Lawyer of Austin - 1984 Chairman, Litigation Section, State Bar of Texas, 1992-1993 President, Texas Supreme Court Historical Society, 2004-2005 President, Baylor Law School Alumni Association, 2003-2004 Member: State Bar of Texas; Fellow, International Academy of Trial Lawyers; Fellow, International Society of Barristers;

Fellow, American College of Trial Lawyers; American Board of Trial Advocates (Advocate); President Austin Chapter (1993-1995); President, Tex-ABOTA (1997); Texas Supreme Court Advisory Committee (1984-1993).

Listed in Best Lawyers in America for Legal Malpractice Law, Personal Injury Litigation, and Commercial Litigation.

Listed in National Law Journal Who's Who of the Legal Malpractice Bar. Listed in Texas Monthly 100 Texas Super Lawyers.

TEACHING

Kleck lecturer, University of Texas School of Law on legal malpractice (1995-1996). Adjunct Professor, Baylor Law School Practice Court (2005).

COURTS ADMITTED TO PRACTICE U.S. Eastern District of Texas U.S. Northern District of Texas U.S. Southern District of Texas U.S. Western District of Texas U.S. Supreme Court U.S. Court of Appeals for the Fifth Circuit

Admitted to practice for specific cases in California, Florida, North Carolina, Louisiana and Nevada.

STEPHEN E. McCONNICO - Born Jacksonville, Texas, April 8, 1950; admitted to bar, 1977, Texas. Preparatory education, University of Texas (B.A., with honors, 1972); Legal education, Baylor University (J.D., with honors, 1976), Board Certified in Personal Injury and Civil Trial Law, Texas Board of Legal Specialization, 1983. Editor-in-Chief, Baylor Law Review, 1975-76. Briefing Attorney for Justice Jack Pope, Texas Supreme Court, 1976 77. Member: State Bar of Texas; Texas Supreme Court Advisory Committee, 1982-93; Chairman, Litigation Section, 1992 93; American Bar Association; American Board of Trial Advocates (President, Austin Chapter, 1993-1994; President, Tex-ABOTA 1996-97). Texas Bar Foundation; American Bar Foundation; International Society of Barristers; International Academy of Trial Lawyers; American College of Trial Lawyers. 466783

Drafting to Avoid Malpractice Chapter 4

TABLE OF CONTENTS

INDEX TO ARTICLES A SELF AUDIT FOR YOUR FIRM ETHICAL CONSIDERATIONS AND MALPRACTICE PREVENTION IN ESTATE PLANNING SUGGESTED LANGUAGE FOR ESTATE PLANNING AND PROBATE FORMS ESTATE PLANNING SERVICES EMPLOYMENT CONTRACT JOINT REPRESENTATION ADVISORY AND CONSENT MULTI-EXECUTOR CONFLICT DISCLOSURE AND CONSENT LETTER ESTATE LITIGATION AGREEMENT


This is an index to the articles and forms included in the materials for the Advanced Drafting: Estate Planning and Probate Seminar. The authors are particularly thankful for the contribution of Hal Moorman, of Moorman, Tate, Moorman, Urquhart & Haley, L.L.P, Brenham, Texas to the forms included. Articles: A Self Audit for Your Firm TLIE Self Audit.doc Ethical Considerations and Malpractice Prevention in Estate Planning, by Steve McConnico and Robyn Hargrove Ethical Considerations.pdf Suggested Language for Estate Planning and Probate Forms Suggested Language.doc Forms: The following is a list of forms included in the materials, some of which are in separate files, some within articles. In presenting these forms, we have in some cases redacted firm names, reformatted the documents and made minor modifications. Some of the engagement letters specifically reference the Texas Lawyers' Creed, while some do not. The creed calls for clients to be notified about the existence of the creed, but it is not required that the notification be in the engagement letter or agreement. Lawyer's Will Suggested Language for Lawyer's Will Suggested Language.doc, Document 3 Language for Engagement Agreements Suggested Language for Engagement Agreement Suggested Language.doc Document 1 Joint Representation Engagement Letter Ethical Considerations.doc, Appendix A Engagement in Estate Planning

Estate Planning Services Employment Contract, contributed by Hal Moorman, Estate Planning Engagement.doc Joint Representation Advisory and Consent, contributed by Hal Moorman Joint Representation Advisory and Consent.doc General Non-Representation Letter, in the TLIE Self Audit, Appendix A, based on the Legal Form Manual For Real Estate Transactions

Engagement in Probate Letter 3 from Texas Probate System Suggested Language.doc, Document 4

Multi-Executor Conflict Disclosure and Consent Letter, contributed by Hal Moorman


Multi-Executor.doc Letter 101 from Texas Probate System, Letter to Non-Client Beneficiary Suggested Language.doc, Document 5

Estate Litigation Estate Litigation Agreement, contributed by Steve McConnico Estate Litigation Agreement.doc Non-Engagement Letter Ethical Considerations.doc, Appendix B Termination Termination Letter, in the TLIE Self Audit, Appendix C Suggested Language for Termination Letter Suggested Language.doc, Document 2

A SELF AUDIT FOR YOUR FIRM

Jett Hanna, Vice President

Texas Lawyers’ Insurance Exchange Austin, Texas

[email protected] 1-800-252-9332

Advanced Drafting: Estate Planning and Probate Seminar

Texas Bar CLE October 30-31, 2008

Drafting to Avoid Malpractice - A Self Audit for Your Firm: Table of Contents Chapter 4

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A SELF AUDIT FOR YOUR FIRM..........................................................................................................................2

I. TRAINING AND MONITORING FIRM PERSONNEL.........................................................................................................2 A. All Personnel .......................................................................................................................................................2 B. All Attorneys........................................................................................................................................................2 C. Associates............................................................................................................................................................3 D. Lay Staff ..............................................................................................................................................................4

II. DOCUMENTATION .....................................................................................................................................................5 III. CLIENT RELATIONS..................................................................................................................................................6 IV. CONFLICTS OF INTEREST .........................................................................................................................................7 V. DOCKET/WORK CONTROL ........................................................................................................................................8 VI. FILE MANAGEMENT.................................................................................................................................................9 VII. BILLING AND COLLECTION ..................................................................................................................................10 VIII. TRUST ACCOUNTS...............................................................................................................................................10 IX. OFFICE SHARING ...................................................................................................................................................11 X. TIME MANAGEMENT...............................................................................................................................................12 EXPLANATORY TEXT FOR SELF AUDIT ........................................................................................................................13

APPENDIX A: SAMPLE NON-REPRESENTATION LETTER .......................................................................18

APPENDIX B: SAMPLE NON-REPRESENTATION LETTER TO BORROWER WHEN REPRESENTING LENDER....................................................................................................................................19

APPENDIX C: SAMPLE TERMINATION LETTER-NO FEE PROBLEM....................................................20

APPENDIX D: MALPRACTICE CONSIDERATIONS IN YOUR FIRM’S FILE DESTRUCTION POLICY .....................................................................................................................................................................21

APPENDIX E: HOW TO PROTECT YOURSELF IN OFFICE SHARING ARRANGEMENTS .................24

Drafting to Avoid Malpractice - A Self Audit for Your Firm Chapter 4

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A SELF AUDIT FOR YOUR FIRM © Jett Hanna and Texas Lawyers' Insurance Exchange 1993, 1995. Revision January 6, 1995. Preferred answers are in boldface type. Think about each question carefully, and write down any ideas that come to mind for improving your situation even if you check the preferred answer. For example, you may be doing something which lets you choose the preferred answer, but you may not have a system which forces you to do it every time, or you may think of other people in the office who do not do what is suggested.

I. Training And Monitoring Firm Personnel

A. All Personnel 1. Does your firm have a written policy manual which every member and employee is required to read and sign?

Yes_____ No_____ 2. Does your firm have a drug, alcohol, and mental health policy designed to encourage impaired employees and their co-workers to deal with such problems, without undue fear of punitive action?

Yes_____ No_____ 3. Are attorneys and staff with a history of drug, alcohol, or mental health problems monitored by at least one member of the firm in a non-threatening manner to assure they are following an appropriate rehabilitation program?

Yes_____ No_____ 4. Are you and members of your firm sensitive to the following signs of possible impairment of yourself or a co-worker: a) Drug abuse

Yes_____ No_____ b) Excessive alcohol consumption

Yes_____ No_____ c) Suicidal thoughts or threats

Yes_____ No_____ d) Decrease in work quality or quantity

Yes_____ No_____ e) Family, marriage or relationship problems

Yes_____ No_____ f) Deterioration of physical appearance or health

Yes_____ No_____ 5. Does your firm require all personnel to have a yearly physical?

Yes_____ No_____ 6. Does your firm require personnel to schedule vacations when a certain amount of vacation time has been built up?

Yes_____ No_____ 7. Do you have a firm policy against sexual conduct toward clients?

Yes_____ No_____ 8. Does your firm encourage stress management and a healthy balance between work and private life for all attorneys and staff?

Yes_____ No_____

B. All Attorneys 1. Does your firm confirm the status of each attorney's membership in the state bar once a year?

Yes_____ No_____ 2. Does your firm have a system for confirming that all attorneys joining the firm are licensed?

Yes_____ No_____ 3. Does your firm have a system to confirm that every attorney has paid required bar dues?

Yes_____ No_____


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4. Does your firm have procedures to confirm that when an attorney leaves the firm, retires, or dies, it is clear which remaining attorney is responsible for clients handled by the departing attorney and that any substitution of counsel or similar notice in change of counsel necessary has been completed?

Yes_____ No_____ 5. Does your firm have a system for assuring each attorney's compliance with mandatory continuing legal education requirements?

Yes_____ No_____ 6. Do you or your firm have a system for keeping up to date with: a) Changes in substantive law in areas in which you practice;

Yes_____ No_____ b) Developments in legal ethics and bar discipline;

Yes_____ No_____ c) Developments in the law of disqualification;

Yes_____ No_____ d) Developments in the law of legal malpractice?

Yes_____ No_____ 7. Does every attorney in the firm know who can advise them on ethics questions on short notice?

Yes_____ No_____

C. Associates 1. Do you have a thorough plan for the initial and ongoing training of your associates?

Yes_____ No_____ 2. Do your associates feel free to ask for your guidance, opinions, and critiques of their work?

Yes_____ No_____ 3. Do you teach your associates about the necessity for and value of integrating good risk management systems in their practices?

Yes_____ No_____ 4. Do you follow up with your associates to ensure that they have read the policy manual and have received answers to any questions they may have?

Yes_____ No_____ 5. Besides the required CLE courses taken outside of the firm, do you offer your associates in-house programs conducted by partners in the firm or others regarding such topics as legal writing, effective negotiation skills, how to prepare and file a pleading, etc.?

Yes_____ No_____ 6. Do you give your associates time to do pro bono work and to participate in community and bar activities?

Yes_____ No_____ 7. Do you give your associates fair and adequate time to complete projects for you?

Yes_____ No_____ 8. Do you let your associates accompany you to court, depositions, real estate closings, and the like so they can learn from observing you or other attorneys in the firm?

Yes_____ No_____ 9. Is your billable hour requirement for associates a fair one to them and to your clients?

Yes_____ No_____ 10. Do you teach your associates, by word and example, how to work respectfully and cooperatively with staff members?

Yes_____ No_____ 11. Does your firm have procedures which train and allow associates to discuss the following problems in confidence: a) Improper billing by partners, shareholders, or associates;

Yes_____ No_____ b) Deadlines or appointments missed by partners, shareholders, or associates;

Yes_____ No_____ c) Other problems which can alert firm management to ongoing problems which could lead to malpractice claims or ethical violations?

Yes_____ No_____


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D. Lay Staff 1. Have you or your firm made reasonable efforts to ensure that nonlawyer assistants' conduct is compatible with your professional obligations, as required under Disciplinary Rule 5.03, by: a) Requiring them to read the Texas Disciplinary Rules and discussing the Rules with them;

Yes_____ No_____ b) Informing them of the importance of confidentiality and requiring them to sign a confidentiality pledge;

Yes_____ No_____ c) Educating them how to avoid unauthorized practice of law.

Yes_____ No_____ 2. Do you take time as necessary to train your staff thoroughly at the beginning of their employment and offer them continuing education?

Yes_____ No_____ 3. Do you utilize quality control systems for checking the quality and timeliness of your assistants' work (e.g., reviewing files at random to see if proper checklists are used and files are maintained in an organized manner)?

Yes_____ No_____ 4. Have you taught your assistants the essentials of professional and courteous telephone manners and procedures?

Yes_____ No_____ 5. Do you introduce your clients to your staff and explain their important roles as members of the client's legal team?

Yes_____ No_____ 6. Would you like to work for yourself?

Yes_____ No_____ 7. Do you have regular staff meetings?

Yes_____ No_____ 8. Do you encourage staff to suggest ways to improve office procedures?

Yes_____ No_____ 9. Do you give your staff regular reviews?

Yes_____ No_____ 10. Do you personally check both the substance and form of all documents completed by staff, even mundane details such as case numbers?

Yes_____ No_____ 11. Do you praise staff members for a job well done?

Yes_____ No_____ 12. Is the criticism you give staff constructive, i.e. delivered in a manner calculated to help them improve rather than to punish them?

Yes_____ No_____ 13. Does your staff know how to contact you at all times?

Yes_____ No_____ 14. Is your staff comfortable asking you questions?

Yes_____ No_____ 15. Do you help your staff handle difficult clients?

Yes_____ No_____ 16. Are you a good role model for staff when it comes to complying with firm policies and procedures?

Yes_____ No_____ 17. Does your firm have procedures which train and allow lay staff to discuss the following problems in confidence: a. Improper billing by partners, shareholders, or associates;

Yes_____ No_____ b. Deadlines or appointments missed by partners, shareholders, or associates;

Yes_____ No_____ c. Other problems which can alert firm management to ongoing problems which could lead to malpractice claims or ethical violations?

Yes_____ No_____


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II. Documentation 1. Do you always use engagement letters or employment agreements, signed by clients, which state the financial terms of your employment, the scope of the work to be performed, and disclose any potential conflict of interest?

Yes_____ No_____ 2. Do you send non-engagement letters or otherwise confirm in writing that you are not the attorney for any person with whom you have met or consulted, but who you believe is not your client, including the following: a) persons whom you decline to accept as clients;

Yes_____ No_____ b) partners or shareholders who are unrepresented when you represent a partner, shareholder, or an entity;

Yes_____ No_____ c) unrepresented parties to a real estate closing;

Yes_____ No_____ d) relatives of clients with whom you discuss matters relating to the representation;

Yes_____ No_____ e) employees of an entity when you represent the entity;

Yes_____ No_____ f) any person who is unrepresented who could conceivably believe you are representing them.

Yes_____ No_____ 3. Do you use non-engagement letters that: a) clearly state that you have not and will not act as attorney for the person?

Yes_____ No_____ b) warn the person in a general way that any delay could prejudice their rights in the matter, without making a specific conclusion as to when the statute of limitations may run?

Yes_____ No_____ c) advise the person to seek other counsel?

Yes_____ No_____ d) give no other legal advice to the person?

Yes_____ No_____ 4. Do you send disengagement letters to clients from whose cases you are withdrawing?

Yes_____ No_____ 5. Do you send termination letters to all clients when you have completed your services, stating: a) no further services will be provided unless new arrangements are made (if the person is some one you would want as a client in the future);

Yes_____ No_____ b) any additional action which the client must carry out on their own, if applicable;

Yes_____ No_____ c) the firm may destroy the file in the future, and that if the client wants copies of file materials they should request them as soon as possible.

Yes_____ No_____ 6. Do you take notes of and/or confirm by letter all discussions with clients or anyone else you talk to about a matter?

Yes_____ No_____ 7. Do you confirm by letter or other writing the following critical matters: a) numerical figures such as loan balances;

Yes_____ No_____ b) agreements with opposing or third party counsel;

Yes_____ No_____ c) a client's decision to act contrary to your recommendations;

Yes_____ No_____ d) risks that the client faces and has accepted in connection with going forward with a course of action.

Yes_____ No_____ 8. Do you instruct your staff how to document their conversations with clients and others?

Yes_____ No_____


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III. Client Relations 1. Have you or your firm given the notice of the grievance process to clients as required by Section 81.079 of the Texas Government Code in any of the following ways: a. Making complaint brochures prepared by the State Bar available; b. Posting a sign prominently displayed describing the process; c. Including the information on a written contract for services with the client; d. Providing the information in a bill for services to the client.

Yes_____ No_____ 2. Have you and your firm informed your clients of the contents of the Texas Lawyer's Creed as required by Article II, Section 1 of the Creed, and can you prove that you have if necessary?

Yes_____ No_____ 3. Do you and your firm have policies and procedures which lead you to decline to represent the following types of clients: a. Clients with matters outside your area of expertise;

Yes_____ No_____ b. Clients with a history of changing attorneys;

Yes_____ No_____ c. Clients who have procrastinated in seeking legal advice;

Yes_____ No_____ d. Clients who are dissatisfied with your usual fee arrangements and billing procedures;

Yes_____ No_____ e. Clients with poor credit histories, if fees are to be paid hourly and billed periodically;

Yes_____ No_____ f. Clients with problems that cannot really be solved by a remedy available under the law.

Yes_____ No_____ 4. Do you regularly remind your staff of the importance of good client relations?

Yes_____ No_____ 5. Do you present clients with alternatives and allow them to choose appropriate courses of action where possible?

Yes_____ No_____ 6. Do you copy clients with your work product and correspondence?

Yes_____ No_____ 7. Do you allow the client an opportunity, where appropriate, to assist in complying with discovery requests and in investigation of the case?

Yes_____ No_____ 8. Do you or a trained member of your staff return your clients' phone calls within twenty-four hours, at the very least to see if the nature of the call is time sensitive?

Yes_____ No_____ 9. Do clients receive your undivided attention during conferences?

Yes_____ No_____ 10. Do your clients routinely have to wait for more than five minutes to meet with you when they have an appointment with you?

Yes_____ No_____ 11. Do you routinely ask clients if there is anything you can do to improve your services for them?

Yes_____ No_____ 12. Do you thank your clients for giving you the opportunity to serve them and for any referrals they may have sent your way?

Yes_____ No_____ 13. Do you call or write to your clients at least every three months, particularly when their cases are on hold for some reason?

Yes_____ No_____ 14. Do you explain to clients, when applicable, that they will be billed for telephone conferences with you?

Yes_____ No_____ 15. When you play "telephone tag" with a client or other person, do you document in the file the dates and times that you have attempted to return the call?

Yes_____ No_____


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IV. Conflicts Of Interest 1. Do you have a comprehensive conflict of interest system for discovering potential conflicts?

Yes_____ No_____ 2. Do you and your firm have procedures to prevent opening a file without obtaining basic conflict information?

Yes_____ No_____ 3. Do you check for any potential conflicts prior to receiving confidential disclosures from new clients?

Yes_____ No_____ 4. Do you share new and potential client information with all attorneys and staff on at least a weekly basis through new matter memoranda?

Yes_____ No_____ 5. Does your firm have a centralized index, accessible to all attorneys and staff, of the following parties? NOTE: The list below represents an ideal database for analyzing conflicts. You may meet the needs suggested by the list through the use of the new matter memoranda suggested in question 4. a) attorneys and staff of the firm

Yes_____ No_____ b) business interests of attorneys and staff

Yes_____ No_____ c) clients

Yes_____ No_____ d) persons declined as clients

Yes_____ No_____ e) adverse parties

Yes_____ No_____ f) co-plaintiffs or co-defendants

Yes_____ No_____ g) known allies of either clients or adverse parties

Yes_____ No_____ h) subject matter of representation

Yes_____ No_____ i) known relatives of anyone listed in the index

Yes_____ No_____ j) corporate parents or subsidiaries of entities in the index

Yes_____ No_____ k) trade names of entities in the index

Yes_____ No_____ l) directors and officers of entities in the index

Yes_____ No_____ m) partners or known shareholders of entities in the index

Yes_____ No_____ n) known employees of entities in the index

Yes_____ No_____ o) attorneys for any party in the index

Yes_____ No_____ 6. If you detect a conflict of interest, do you always either (a) decline to take the case, or (b) notify the client of the potential conflict and explain the risks and benefits of waiver of the conflict in writing?

Yes_____ No_____ 7. Does your firm have form letters for conflict disclosures and waivers that seem to occur on a frequent basis?

Yes_____ No_____ 8. Does your firm have a mandatory review procedure for all cases proposed for acceptance in which a potential conflict of interest is detected?

Yes_____ No_____


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9. Do you or any one in your firm engage in any of the following practices: a. act as both an attorney and an officer or director for the same corporation?

Yes_____ No_____ b. have a financial interest in a client matter?

Yes_____ No_____ c. participate in a business transaction along with a client?

Yes_____ No_____ d. accept stock in lieu of fees?

Yes_____ No_____ e. represent adverse parties in "friendly" suits or any other kinds of suits?

Yes_____ No_____ f. represent multiple parties attempting to recover funds from a fixed recovery pool such as a single bankrupt, an insurance company in receivership, or a single insurance policy?

Yes_____ No_____ 10. Do you always confirm who you represent in writing, and inform non-clients who might believe they are your client that you do not represent them in writing ?

Yes_____ No_____

V. Docket/Work Control 1. Do you feel that your present docket/work control system is reliable and efficient?

Yes_____ No_____ 2. Is the plan for your docket /work control system in writing?

Yes_____ No_____ 3. Has your firm appointed an employee to oversee, supervise and ensure the use of your docket/work control system?

Yes_____ No_____ 4. Do you have a centralized docket/work control system that is used by the entire firm?

Yes_____ No_____ 5. Is there a system in place for screening incoming mail for new deadlines by someone in addition to the responsible attorney?

Yes_____ No_____ 6. Does your docket/work control system assign a review date to every open file in the office, even if the matter is temporarily dormant?

Yes_____ No_____ 7. Do you and your assistants keep personal calendars in addition to the centralized calendar?

Yes_____ No_____ 8. Are deadlines distributed on a routine (daily or weekly) basis?

Yes_____ No_____ 9. Do you factor in the leadtimes necessary for completion of tasks?

Yes_____ No_____ 10. Do you automatically set multiple reminder dates prior to the final date that items become due?

Yes_____ No_____ 11. Are all attorneys and staff trained and refreshed about the docket control system on a regular basis?

Yes_____ No_____ 12. Do you have a reliable follow up system in place to confirm the actual completion of docketed deadlines?

Yes_____ No_____ 13. Does your docket/work control system include: a) statute of limitations?

Yes_____ No_____ b) all court appearances?

Yes_____ No_____ c) client and other appointments?

Yes_____ No_____ d) all administrative systems and deadlines?

Yes_____ No_____


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e) real estate closing deadlines? Yes_____ No_____

f) all litigation deadlines? Yes_____ No_____

g) all self-imposed, discretionary deadlines (i.e., promises made to others, promises made to you and work deadlines you have set for yourself)?

Yes_____ No_____ h) at least one docket date for every open file within your firm so that temporarily inactive files will be reviewed at least every 3 months?

Yes_____ No_____

VI. File Management 1. Are your files organized in a logical manner that someone else in the office understands?

Yes_____ No_____ 2. Have you designated one staff member to supervise a centralized filing system?

Yes_____ No_____ 3. Do you have a file-opening procedure that includes the following elements: a) controls to prevent billing or work until the procedure is followed;

Yes_____ No_____ b) a file-opening memorandum which contains all information necessary to set up the file and to follow all procedures;

Yes_____ No_____ c) analysis of potential conflicts of interest;

Yes_____ No_____ d) credit checks of clients;

Yes_____ No_____ e) verification that fee agreements or employment letters have been executed by the client;

Yes_____ No_____ f) assignment of the file to an attorney

Yes_____ No_____ 4. Does your firm have a file checkout procedure so that the location of the file is known at all times?

Yes_____ No_____ 5. Do you review every open file and contact the client at least every three months?

Yes_____ No_____ 6. Do you use a form to indicate when documents are removed from a file and who took them?

Yes_____ No_____ 7. Do you have a file closing form that indicates which attorney reviewed the file prior to closing, what file contents were returned to the client, that a termination letter was sent to the client, and a safe date for destruction of the file?

Yes_____ No_____ 8. Do you have a system in place for reviewing applicable closed files when new law could affect a closed matter, particularly if the client is someone you represent on a continuing basis?

Yes_____ No_____ 9. Do you have a firm policy regarding regular destruction of files which balances the economics of file storage with the need to preserve evidence in the event of a claim or client need?

Yes_____ No_____ 10. Have you written and implemented adequate fire prevention and disaster policies for your firm?

Yes_____ No_____ 11. Do you return all original, valuable or unique documents and items to clients as soon as possible?

Yes_____ No_____ 12. Do you keep all original, valuable or unique documents and items in fireproof cabinets or a safe?

Yes_____ No_____ 13. Are back ups of all docket/work control deadlines and all computer generated work stored in a fireproof safe or at a firm approved, off-site location? Yes_____ No_____


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14. Are negatives and original photographs stored in separate locations? Yes_____ No_____

VII. Billing And Collection 1. At the beginning of representation, do you explain your fee and billing procedures to clients verbally and in writing?

Yes_____ No_____ 2. Do you explain to your clients, verbally and in writing, the differences between your professional fees and out of pocket expenditures?

Yes_____ No_____ 3. Are daily entries made by staff members into your centralized time records?

Yes_____ No_____ 4. Do you send your clients monthly bills?

Yes_____ No_____ 5. Do your bills outline the details of the work that was performed for the client?

Yes_____ No_____ 6. If fee or expense variations from your employment agreement are necessary, do you promptly notify your clients and request their authorization regarding those changes?

Yes_____ No_____ 7. If clients do not pay their bills due on time, do you have a reasonable in-house collections procedure to follow (e.g. call the client, send a second notice, etc.?)

Yes_____ No_____ 8. Do you explain to all clients that you would appreciate their promptly informing you of any concerns or complaints they may have regarding your fee, billing procedures or related issues?

Yes_____ No_____ 9. Do you and your firm have a policy against suing clients for unpaid fees?

Yes_____ No_____ 10. If you or your firm does sue for fees, do you: a. Sue only if there was a written fee agreement;

Yes_____ No_____ b. Sue only after reviewing the economy of pursuing the fees in light of lost billable time and expenses necessary to pursue the case;

Yes_____ No_____ c. Sue only if a favorable result was obtained by the client;

Yes_____ No_____ d. Have a disinterested attorney outside your firm review the fee case;

Yes_____ No_____ e. Have a firm policy against asserting attorney's liens;

Yes_____ No_____ f. Consider any other factors which may form the basis of a counterclaim by the client.

Yes_____ No_____ 11. Do your fees fairly embody the value of legal services received by your clients?

Yes_____ No_____

VIII. Trust Accounts 1. Do you retain records of trust accounts for at least 5 years after final disposition of the underlying matter, as required by Disciplinary Rule 1.14(a) and Article 11, Section 38 of the State Bar Rules?

Yes_____ No_____ 2. Do you retain funds paid jointly to the attorney and the client and which are in dispute in a trust account, as required by Disciplinary Rule 1.14, even if you think the client is wrong about the manner in which they want the funds disbursed?

Yes_____ No_____ 3. Do you obtain client consent to disbursements to you or your firm from the trust account?

Yes_____ No_____


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4. Do you at all times maintain fiduciary funds separate from firm monies? Yes_____ No_____

5. Do you reconcile your trust account at least monthly? Yes_____ No_____

6. Do you provide clients with written accountings when disbursing their funds or, if no disbursements, at least annually?

Yes_____ No_____ 7. Have you properly and thoroughly trained your staff regarding the handling, recordkeeping and accounting of trust funds?

Yes_____ No_____ 8. Do your records always indicate what funds are being disbursed, when and from which client?

Yes_____ No_____ 9. Do you closely supervise any assistants who work with trust monies?

Yes_____ No_____ 10. Do you maintain an IOLTA trust account in accordance with the State Bar Rules for client funds that are nominal in amount or are reasonably anticipated to be held for a short period of time?

Yes_____ No_____ 11. Does your firm have a system for confirming compliance of every attorney in the firm with annual reporting requirements of IOLTA status?

Yes_____ No_____

IX. Office Sharing 1. Is there anything about your office sharing relationship with other attorneys that could reasonably lead a client to believe that a partnership exists?

Yes_____ No_____ 2. Do you explain to each client that you are not a partner with the attorneys with whom you are sharing space?

Yes_____ No_____ 3. Do you have a written agreement regarding the terms of your office sharing relationship with the attorneys involved?

Yes_____ No_____ 4. Does your office sharing agreement specifically prohibit any of the parties from representing that there is a partnership?

Yes_____ No_____ 5. Do you ever share fees or work on a case with another attorney sharing space with you without documenting how the fees are to be split and without specifying that this situation is an exception to the normal terms of your office sharing agreement?

Yes_____ No_____ 6. Does each attorney have his or her separate letterhead?

Yes_____ No_____ 7. Do all signs clearly indicate that the attorneys sharing space are separate firms?

Yes_____ No_____ 8. If one receptionist takes calls for all the attorneys who are office sharing, has he or she been properly trained in how to answer the telephone without inferring a partnership and how to answer clients' questions regarding who employs him or her?

Yes_____ No_____ 9. Have precautions been taken to guard client confidentialities from other attorneys who are not your partners and their staff?

Yes_____ No_____ 10. Do your office sharing mates carry the same amount of professional liability insurance you do?

Yes_____ No_____


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X. Time Management 1. Do you make a to-do list of all pending projects?

Yes_____ No_____ 2. Do you update and prioritize your to-do lists at the end of each day for the day ahead?

Yes_____ No_____ 3. Do you set aside specific blocks of time to meet with clients, return phone calls, conduct research and work uninterrupted?

Yes_____ No_____ 4. Do you delegate work whenever possible?

Yes_____ No_____ 5. Do you use simple and easy to understand forms that are indexed for ease in locating when needed?

Yes_____ No_____ 6. Have you chosen equipment for your practice that, excluding the initial training time, handles your case load in the most efficient manner?

Yes_____ No_____ 7. Do you use checklists, both standardized and customized, in all areas of the law in which you practice?

Yes_____ No_____ 8. Do you prioritize the work assigned to assistants making it clear what deadlines are pertinent to each task?

Yes_____ No_____ 9. Do your assistants know where to leave urgent materials within your office for your review?

Yes_____ No_____ 10. Are you realistic when setting deadlines in terms of how much time to allow for the completion of specific projects?

Yes_____ No_____ 11. Do you use checklists for all areas of the law within which you practice?

Yes_____ No_____ 12. Do you require your staff members to utilize checklists in their procedural and administrative tasks?

Yes_____ No_____ 13. Are your checklists customized, if and as needed, for individual cases?

Yes_____ No_____ 14. By quickly reviewing the checklists, can you get an accurate update regarding the current status of the case?

Yes_____ No_____ 15. Do you review and revise all checklists at least twice each year?

Yes_____ No_____


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Explanatory Text For Self Audit I. TRAINING AND MONITORING FIRM PERSONNEL Comment 1 to Rule 5.03 of the Texas Disciplinary Rules states that attorneys should be responsible for the work of lay staff. This rule is supported by the imposition of common law liability on attorneys for the acts, errors and omissions of their staff. Firms and shareholder or partner attorneys have been held responsible for the acts of partners, other shareholders, and associates as well. It is thus critical to have a thorough system for training and monitoring the work of all personnel in a firm. A. ALL PERSONNEL A written policy manual is recommended for two reasons. First, it makes attorneys think through the structure of their practice so that they can identify what needs improvement. The second reason is to let everyone in the organization know what is expected of them, so that anticipated problems can be averted. Impaired attorneys and staff contribute to a disproportionate share of claims, in the opinion of this author. It is important to encourage personnel to seek help rather than to hide problems. While a "fire any alcoholic or drug abuser" policy seems to protect the firm from the acts of an impaired individual, the message sent to firm personnel is that impairment should be hidden, not faced. Also, there is often a significant investment in an impaired person-training, knowledge, contacts, etc.-which the firm could salvage with a treatment oriented policy. A structured policy which gives impaired individuals incentives to deal with their problems can save money in the long run. It should be stressed, however, that merely sending an impaired person for counseling or treatment may not be enough to assure that the firm is protected from future remissions. Monitoring of the impaired person's continuation of treatment and counseling might be necessary to protect the firm in some cases. Some of the questions in this section point to factors which can encourage a work atmosphere which makes the development of impairment problems less likely, and, not coincidentally, can make a law firm a more pleasant place to work. B. ALL ATTORNEYS Some of the questions here are designed to make sure that all attorneys are in good standing. If a firm lets an unlicensed associate or partner practice law, the

firm and its members could face liability for the acts of the unlicensed person. When a firm member dies, it is important to reassign his or her tasks or make sure that someone else takes over their work. State Bar regulations make partners responsible for making sure this occurs. When an attorney leaves the firm, it is important that both the attorney leaving and the firm understand whether the firm will continue to provide service to that client on outstanding matters. Whatever the understanding between the firm and the attorney, it should be confirmed with the client in writing. If the matter involves pending litigation, any substitutions or withdrawals of counsel should be confirmed as required by rules of court. This part of the questions also lets attorneys understand whether the attorneys in the firm have the resources to stay on top of ethics developments. The State Bar has a toll free line for attorneys to get advice on ethics matters, 1-800-532-3947. TLIE insureds can call 1-800-252-9332 to get our two cents worth on any ethical or malpractice related problem. Neither service provides legal advice-attorneys should still conduct their own research and evaluation of any problem. C. ASSOCIATES This section of the audit addresses some of the problem areas that can arise in making sure your associates are receiving appropriate training, on both a formal and informal basis. Associates learn as much or more from the example of senior attorneys as they do from organized, structured training. This author would suggest that associates also answer this questionnaire section-the answers might be enlightening. D. STAFF Lay staff are a very critical component of the legal service team, and cannot be ignored in a review of your firm's potential weaknesses. Staff can be both a source of great frustration and life saving, often on the same day. The questions presented here are intended to emphasize that attorneys can utilize staff in a way that enhances the law practice. Staff is often the main point of contact between your firm and clients, so they have to have some training in people skills. Staff is also often in a position to notice problems in your firm systems that attorneys might not catch. It is important for staff to communicate with attorneys, both for using the


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knowledge they have and the filling in the gaps in their knowledge and experience. II. DOCUMENTATION The types of documentation suggested by the questions are needed, if for no other reason, to serve as evidence in the event of a claim. Without documentation, the case may come down to the attorney's word against the client's word, and a jury is not likely to have any attorneys on it. The Disciplinary Rules favor written fee arrangements, and require them when the attorney is to receive a contingent fee. Many suits arise because people whom the attorney does not believe to be clients claim to be clients. Non-engagement letters help prevent these situations. Non-engagement letters should not usually state a specific date upon which limitations will run, particularly since the attorney may not have fully investigated all aspects of the case. A sample non-engagement letter is found in Appendix A. In some circumstances, it may be appropriate to get the "non-client" to sign a statement. A sample non-representation form is found in Appendix B, for situations where an attorney represents a lender in a real estate transaction where neither the buyer or seller is represented. Similar forms may be necessary whenever unrepresented parties are involved in a matter. Termination letters can avoid claims that the attorney did not finish the work. Telling the client at time of closing that the file may be destroyed can avoid your having to track down the client years later in the event that the firm decides to destroy the file. A sample termination letter is in Appendix C. Written confirmation of advice given to a client is especially important, since your memory and the client's memory may not be the same if a claim arises. Major strategy decisions and decisions to take actions with some risks to the client deserve extra attention. At times, any course of action for the client may have risks, and the attorney may need to document the alternatives laid out for the client. If a client refuses advice, written confirmation of the attorney's advice and the client's choice is critical. III. CLIENT RELATIONS A successful law practice depends on good client relations. If clients aren't satisfied, they won't recommend new clients, won't use the firm again, and are more likely to make a malpractice claim. If there is a malpractice claim, the entire attorney-client

relationship will be reviewed, and not just the "mistake." In many cases, juries have been willing to assess punitive damages for gross negligence-a finding of conscious indifference or that "that the (attorney) knew about the peril, but his acts or omissions demonstrated that he just didn't care." Burk Royalty v. Walls, 616 S.W.2d 911, 922 (Tex. 1981) The people who determine if the attorney treated the client right will not ordinarily be fellow attorneys, but rather lay jurors. Compliance with all of the ethics rules is a first step in assuring that a fact finder will look favorably on the attorney. Attorneys are required to give every client notice of the grievance process by Section 81.079 of the Texas Government Code, and to make them aware of the provisions of the Texas Lawyer's Creed as required by Article II.1 of the Creed. Some clients are going to be problems no matter how well they are treated. This section of the questions suggests some of the warning signs that may appear at the beginning of the representation. Many commentators suggest that involving clients with the "legal service team" as much as possible makes it less likely that they will feel like they have not received good representation. Allowing clients to choose alternatives when there are risks to proceeding in any manner is one way to involve the client. Another is to copy clients with as much of your work product as possible. In some cases, clients will appreciate the chance to assist in investigation of the case or in sorting through materials to assist in preparation of discovery responses. Many techniques for creating good client relations are no more than the Golden Rule: Do unto others as you would have them do unto you. Most of the remaining questions in this section focus on that aspect of client relations. IV. CONFLICTS OF INTEREST A thorough conflict of interest system is necessary. It is not sufficient to rely on memory, even if the attorney is a solo practitioner. It is also important that the conflict system is used every time a potential client consults you. In some cases, mere receipt of confidential information can create a duty not to reveal the information. This is true even if the attorney does not accept the person as a client. In a firm larger than a solo practice, it is recommended that the firm have new matter memos to let everyone in the office know who is a new client or prospective client. Simply having an index is not

http://www.TexasBarCLE.com/CLE/PMCasemaker.asp?table=TX_caselaw&volume=616&edition=S.W.2d&page=911&id=19126_01


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enough: there are all kinds of reasons why a conflict could not be detected by an index, but would be detected by having every attorney in the firm review who is becoming a client and for what purposes. The most common example of this is subject matter conflicts. If an attorney is representing one client in an appellate matter on a point of law, and a new client comes in who would need to make the opposite argument, the firm might choose to decline the case. Note that sharing info about new clients also permits monitoring whether any of partners are taking on otherwise questionable cases(credit risks, non-meritorious cases, etc.) Question 5 suggests the "ideal" entries in a conflict of interest index or database. One of the keys to avoiding conflicts of interest is knowledge of facts, and knowing who your firm represents and who they are in opposition to is critical. Some of the ideal entries might alternatively be taken into account on the new matter memo suggested by question 4. It is critical that the index be centralized and accessible, so that it will be used. In soliciting comments regarding this audit form, a number of people suggested that perhaps too many factors were included. The information suggested can help avoid conflicts, and a few examples from the more obscure listings will be noted. Family members is a good example. If an attorney has taken on a divorce client, no one else in the firm should represent the other spouse in a business deal. Sometimes the conflicts are more subtle. If an attorney represents one client on an estate plan, knowledge of the plan could be useful to other family members even though the client wants to keep the plans confidential. In many cases, it is important to fully evaluate the possibility of conflicts with family members of persons who appear to have similar interests, such as family members with different injuries in the same car accident. Finally, it is just embarrassing to explain to a business client that the firm would not have taken a case against the client's parents if the firm had only known... Consider the following situation regarding employees of clients. An attorney represents X company on a variety of corporate matters. A partner receives a call from Smith, an employee of X, who has a great new idea he wants to patent. Smith doesn't tell the partner he developed the idea while he worked with X, and the partner assists Smith on the patent application. X contacts the first attorney to challenge the patent, but she has to tell X that a partner is the one who assisted Smith. When dealing with officers and directors, it is similarly critical to keep in mind that representing them on their dealings with the corporation could be

a conflict if the firm represents the corporation on other matters. Attorneys for parties in the index was criticized by some reviewers. If an adverse attorney joins the firm, the potential scope of disqualification will be more clear. A lateral transfer may not be able to get information from his or her prior firm that will let the firm evaluate the situation properly. Written conflict disclosures and waivers are necessary if an attorney does not decline cases in which there is a potential conflict of interest. While the rules may not require that these disclosures and consents be in writing, there won't be any evidence but the attorney's word if the client says no disclosure or consent occurred. All situations in which a potential conflict is detected should be reviewed by other members of the firm. Larger firms may want to have a conflicts or ethics committee review the situation; smaller firms might just discuss the situation at a partners meeting or designate one attorney as the conflicts specialist. Acting as attorney and officer or director for a client has been a key factor in many of the claims made by the government in connection with the savings and loans problems. It can be dangerous to have a common financial interest with the client. Many attorneys have been sued even when all they did was point out an opportunity to a client that the attorney also invested in. Clients are not adverse to claiming later that they were led to believe the attorney checked on the situation. Representation of adverse parties is prohibited by the Disciplinary Rules in all situations. Confirming who the attorney represents and doesn't represent in writing is a key to avoiding conflicts problems. If someone can create a fact question as to whether they were the client, a letter which tells the person the attorney does not represent them could save a lot of headaches. These types of conflict allegations are the most frustrating-attorneys do not even perform a conflicts check for someone whom they do not think is a client. If an attorney talks with individuals who are not the client about a situation, such as partners when the firm is representing a partnership or family members when representing one person, the attorneys should send a letter confirming the attorney is not representing them. In commercial transactions, the attorney should get unrepresented parties to acknowledge in writing that the attorney does not represent them.


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V. DOCKET/WORK CONTROL A work control system is vital for every firm. This system is often called docket control, but should not be limited to use in litigation practices. All practices have work with deadlines-if there is no other deadline, there is the date on which the client will be so fed up with inaction that they pick up the file and go elsewhere. A centralized system is necessary in order to allow other firm members to know of deadlines if an attorney is absent, ill, or otherwise unable to carry out assigned work. Centralized work control can also assist in determining work loads for other reasons, such as efficiency of personnel or assigning new matters. The centralized system is not enough. Attorneys and their assistants should keep personal calendars, too. This can avoid simple mistakes, such as miss-entering deadlines or one person forgetting to enter a deadline. If sufficient leadtime is not allow to complete work entered on the calendar, the system won't be of much help. Some matters with long lead times will require entry of multiple deadlines, so that progress toward completion can be evaluated. It is a good idea to verify that hard deadlines have actually been met, rather than just assuming that a reminder is enough. The questions suggest a few of the matters that should go into the docket/work control system. One type of deadline that should not be overlooked is an arbitrary periodic review deadline. Some files may have to sit for months; it is a good idea to review such files on a regular basis and to remind the client why the file is temporarily inactive. VI. FILE MANAGEMENT It is critical that the firm keeps files in a way that allows tracking of files and documents taken from the files. Many of the questions in this section address the basics of taking care of files. File opening can be a good place to make sure firm policies are complied with, such as types of clients and cases. At some point, the firm may have to consider destruction of files. Appendix D suggests some considerations in file destruction. The firm should also consider means of protection for files from physical damage, and plan for worst case disasters. For some documents, the firm may need a safe or safety deposit box. Only keep valuable and original documents as long as required. Return such items to clients as soon as possible.

VII. BILLING AND COLLECTION Fees are a frequent source of friction between attorneys and clients. Clients of attorneys working on contingent fees should understand the difference between attorneys fees and expenses from the start: they will be very dissatisfied with the outcome otherwise. Attorneys working on an hourly basis should send detailed fee bills frequently. When this is done, the client has smaller individual payments and the firm can catch the slow or no payers before too much time and effort has been invested in an unexpected pro bono case. It is better not to sue clients for fees. Malpractice counterclaims occur frequently in fee suits. Juries are often left wondering if the attorney really cared about the client, or just wants money. The disciplinary rules do require that the fees be fair and reasonable to the client. If a firm is going to sue for fees, Question 10 in this section suggests factors to consider before filing suit. VIII. TRUST ACCOUNTS Misuse of trust accounts is a frequent source of disciplinary actions. Certain trust accounts must comply with rules regarding the IOLTA system which generates revenue for indigent legal service. As noted in the questions, Disciplinary Rule 1.14 requires that records of trust accounts be maintained for 5 years after representation ceases. That rule also prescribes a procedure for disbursement in the event that the attorney and the client disagree about the proper accounting of the fund, and many of the questions are geared to making sure that there is no disagreement about disbursement. Commingling of trust and operating accounts is a serious offense which a well meaning, but poorly trained, staff member could commit. Staff that works with trust accounts must understand that the rent cannot be paid out of the trust account, and that settlement proceeds must first be deposited in the trust account, for example. IX. OFFICE SHARING Office sharing relationships provide a number of questions for attorneys. Disciplinary Rule 7.04 (d) requires that attorneys not represent to clients that a relationship with other attorneys exists when no such relationship exists. From a malpractice standpoint, an apparent or de facto partnership between attorneys may be sufficient to subject an attorney who does not work on a case to vicarious liability. Appendix E is an article discussing office sharing in more detail.


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X. TIME MANAGEMENT Many malpractice problems arise when an attorney or his staff gets "snowed under." The questions in this section suggest a few ideas that may help an attorney "dig out" if he or she feels constantly behind, or avoid getting that feeling. Making and utilizing checklists on recurring cases or processes can avoid the need to reinvent the wheel every time, and ultimately save time. Checklists also help attorneys and staff improve the quality of work, since the lists provide a check against the firm's past experience as to what needs to be done in classes of cases and matters.


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Appendix A: SAMPLE NON-REPRESENTATION LETTER (DATE) (ADDRESS) RE: (STATE NATURE OF REPRESENTATION) Dear (NAME): I appreciate the opportunity to discuss the possibility of representing you in (STATE NATURE OF REPRESENTATION). After reviewing this matter, I have concluded that we are not the appropriate firm to represent you in this matter. (I am returning the documents you provided to me with this letter.) In declining to accept this matter, this firm is not expressing an opinion about (the merits of the action or whether you may ultimately prevail if suit is filed.)(your legal remedies in this situation, nor am I suggesting that a solution is or is not available.) The passage of time is always important and could (ultimately bar any claim you may have.)(restrict available alternatives.) I recommend you contact another attorney immediately to assist you with this matter. In accordance with our standard policy, we are not charging you for any legal fees. We charge for evaluation of a matter only when we express an opinion about the matter.(OPTIONAL: If you need legal assistance in the future, we would be happy to discuss the possibility of representing you in other matters.) Sincerely, (Attorney) (Enclosure: LIST DOCUMENTS RETURNED.) NOTE: This letter is based on forms 100.11 and 100.12 of the Legal Form Manual for Real Estate Transactions, State Bar of Texas (1992) The author does not advocate making any specific statements about statutes of limitations, unlike the Form Manual. Obtaining a signature from the party declined is acceptable, but unworkable in many cases. If proof of receipt is thought to be necessary, the letter can be sent by certified mail, return receipt requested. As with all of these samples, it may be necessary to modify this form to fit the circumstances.


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Appendix B: SAMPLE NON-REPRESENTATION LETTER TO BORROWER WHEN REPRESENTING LENDER Date Inside Address Re: Describe Transaction Dear NAME: I have represented LENDER in the preparation of legal documents for use in closing the transaction described above. While I have acted solely on behalf of LENDER, NAME, the buyer and NAME, the seller, acknowledge thta the legal fees incurred in preparing the legal documents will be paid by the buyer or seller even though I have not in any manner undertaken to assist or render legal advice to the buyer or seller, except in the preparation of the legal documents. The buyer and the seller further acknowledge and understand that they may retain independent legal counsel to represent their individual interests in the referenced transaction. The buyer and seller specifically recognize that I do not have the responsibility to provide any truth-in-lending disclosures, or any other truth-in-lending documents, or any other documents required by any regulations that apply to this transaction. The lender is responsible for providing these documents, and no charge may be made for providing them. Please sign below to acknowledge that you have been advised of my representation of the lender and that you understand that I am not your attorney. Sincerely, ATTORNEY SIGNATURE LINES FOR BUYER AND SELLER Note: This letter is based on Form 100.24 of the Legal Form Manual for Real Estate Transactions, State Bar of Texas (1992).


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Appendix C: SAMPLE TERMINATION LETTER-NO FEE PROBLEM (DATE) (ADDRESS) RE: (DESCRIBE MATTER) Dear (NAME): I appreciate the opportunity to have represented you in (DESCRIBE MATTER). (It is my understanding that you do not desire any further services from our firm in this matter. If you do believe further services are necessary, please contact me at once.) OR (We cannot represent you further in this matter, and you should secure other representation at once.) (As I have advised you previously, there are certain matters which you must follow up on in order to secure any rights you may have in this matter.) (LIST SPECIFIC MATTERS THAT MUST BE FOLLOWED UP, i.e. filing of tax forms, execution of documents,etc.) OR (You should consult with other counsel immediately regarding these matters). During our representation of you, we have created a file with copies of documents relating to your matter. (My records indicate that all original documents have been returned to you or sent to appropriate parties.) OR (All original documents not previously sent to you or given to appropriate parties are included with this letter.) It is our firm policy to destroy files when we no longer need them, but no sooner than 7 years after the end of the representation. If you need any copies of documents from the file we have generated, please contact us as soon as possible. (OPTIONAL: If you need legal assistance in the future on this case or any other matter, we would be happy to discuss the possibility of representing you.) Sincerely, (Attorney) (Enclosure: LIST DOCUMENTS RETURNED.) NOTE: This letter is to be used when representation has ended and no further services are to be provided. Form 100.25 in the Legal Real Estate Form Manual provides a sample termination letter when the attorney is withdrawing for non-payment of fees. As with all of these samples, you may need to modify this form to fit the circumstances.


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APPENDIX D: MALPRACTICE CONSIDERATIONS IN YOUR FIRM’S FILE

DESTRUCTION POLICY The Legal Malpractice Advisory, Summer 1991

One of the most frequent questions asked by TLIE insureds is whether TLIE has any guidelines for how long files should be retained. Answering that question is not as simple as giving a list with a certain number of years for each category of case. Each individual file has its own considerations. It is also often important to take a look at the context in which the question is asked. Because attorneys are more transient now than in the past, the question of what to do with closed files has become more complicated. The question of how long to retain files might be fairly easy if the widow or widower of a solo practitioner is asking the question, but might be very complicated for a large firm whose composition is likely to change considerably over the years. This article addresses the question of how and when to destroy files or parts of files in the context of avoiding or defending against malpractice claims. Liability considerations are not the only factors which may affect a file destruction policy. Such practical economic questions as the availability and cost of storage should also affect a file destruction policy for any given attorney or firm. How Files Are Used In Malpractice Claims The attorney’s file is frequently a key piece of evidence in a malpractice claim. The file could either help or hurt the firm or attorney in the event of a malpractice claim. The file can document that malpractice has occurred. One recent article notes that attorneys sometimes retain file information that can be misinterpreted. Our experience at TLIE has been that the lack of a complete file is more frequently a problem than is a retained file, though purging inappropriate material as part of a systematic policy can be useful. One of the most frequent evidentiary problems in the legal malpractice cases handled at TLIE is a lack of documentation. When an attorney has thoroughly documented fee arrangements, the scope of work to be performed, and the advice given to a client, the

chances of a legal malpractice claim are drastically reduced. In countless cases, litigation has boiled down to the client’s word against the attorney’s word. In those cases where the attorney’s version of the story is documented by a letter or notes, TLIE’s insureds have often been successful either in arguing a motion for summary judgment or in dissuading claimants from filing suit. When there is no written evidence of what the attorney did, the jury gets to decide who it believes. While proper file documentation retained by the attorney can be effective in helping to deal with malpractice claims, a poorly kept file may at least help the attorney to recall precisely what happened. In a number of cases, we have had attorneys who have turned over their file to clients without retaining a copy of the file. It is quite difficult to evaluate such cases until the file can be obtained from the client again during discovery. While this author has not dealt directly with a malpractice claim which involved a file which had been completely destroyed, it seems like the difficulties that have resulted from poorly documented files and files that have been turned over to the client would repeat themselves in cases where a file has been destroyed. The Effect of Statutes of Limitations on File Destruction Policy The remainder of this article will take as a given that if a claim is made against an attorney, it is better to have a file than not to have one. Just because it would be better to have a file does not mean that the benefit of retaining every file will remain constant over time. At some point, every claim could be barred by the applicable statute of limitations. With the advent of the discovery rule for limitations in legal malpractice claims, it has become harder to predict when the statute of limitations could run as to any particular file. Nonetheless, in order to make an orderly decision about when to destroy files, each file can be examined to determine approximate dates when statutes of limitations are likely to have run or dates at which the service provided to the client will have been provided so long before that problems are unlikely to arise. Taking a look at a few categories of legal services will illustrate why each individual file must be examined.


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Wills: An error in a will may not come to light until the death of the testator. In such a circumstance, retaining the file a certain number of years beyond the death of the testator may be appropriate. On the other hand, once distribution is made of a small estate, it may be possible to close the file within a very few years after finishing the services for the estate. Real Estate: An error in a deed of trust mortgage may not come to light in any particular situation until a foreclosure is contemplated on the deed of trust. Conversely, if an attorney has simply drafted a quit claim deed for an individual without providing any other advice, such a file could arguably be destroyed fairly quickly. Litigation: At TLIE, we have seen at least one case alleging an attorney’s failure to advise a client of the necessity of renewing a judgment which the claimant did not bring until over 20 years after the original judgment was taken. A simple litigation case resolved in favor of the client by settlement, on the other hand, might reasonably be destroyed within a relatively short time after closing of the file. With these examples in mind, there are some general themes that cut across specialty lines which may be useful in evaluating possible safe times for the destruction of files. • Events that can trigger clauses in documents. Provisions in wills and mortgages as noted above, set definite times at which the documents become important. Any settlement document, agreement between parties, or other such documents could contain similar provisions that are triggered by specific events. If the time at which those events might occur can be identified, a possible date for file destruction might be determined. • Continued litigation involving other parties. If other litigation related to litigation which was the subject of the legal services is expected to continue, decisions about when to destroy files probably should be postponed. As long as other litigation continues, interim settlement agreements between only certain parties to the litigation might be called into question. In one case handled at TLIE, the basic allegation of malpractice was that an attorney representing one of several plaintiffs recommended settlement too early. The later-settling plaintiffs received larger settlements than the early settling plaintiff.

• Final deadlines for challenging court decisions. In litigation situations, there are frequently methods for obtaining review of a case long after a judgment becomes final. The possibilities that these avenues may be pursued should be factored into any analysis of appropriate dates for file destruction. In Texas, for example, a final judgment may be challenged by a properly filed bill of review up to four years after the judgment becomes final. • Income tax statutes of limitations. Almost all legal services carry some type of federal income tax implications. The possibility, however remote, that the government could challenge the tax consequences for certain activities should be factored into any decision about dates for file destruction. • Factors that toll statutes of limitations. The most frequent factor that must be considered is tolling provisions based on minority. If legal services have been provided to someone under 18 years of age, special consideration may need to be given to appropriate time for destruction of the file. Evaluating and Destroying Files The best time to evaluate when to close any given file is when the firm or attorney proposes to close the file and remove it from the tickle or docket system. Since the file is being removed from the tickle system, the likelihood of additional activity in the case has been judged by the firm to be unlikely. A thorough review of the file at the time of closing can lead to a determination of a proposed destruction date while the details of the case are still fresh in the managing attorney’s mind, or before the attorney leaves the firm. Such an evaluation may also identify materials within the file which could be destroyed at time of closing or routed to other systems of document collection within the law firm. Destroying parts of the file can be dangerous, though if performed carefully, could greatly reduce storage space or the amount of media needed for some sort of permanent retention of the file. One of the most common examples of material which could reasonably be destroyed at the time of closing are pleadings in a litigation case. Copies of the pleadings will be available from the court in which the case was filed in most jurisdictions. So long as that is true, significant space at the law firm storage facility could be saved. In those litigation cases which do turn into claims, there may be significant expense incurred in recopying the pleadings from court files. There is also danger that either the


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claimant or some member of the public will simply remove documents from the file. This author neither recommends nor discourages the idea of relying on the pleadings available from the court of record at some point in the history of the file, but simply points to the possibility that public records could suffice as adequate documentation of the file. Many file materials can be routed either to other firm document files or to the client at the time of closing. Research materials, briefs, forms, or pleadings may be retained so that they can be compared and used in other cases the firm may handle. The file storage system should not be considered a research bank for the firm in the best of all possible worlds. It is far more efficient to maintain separate files for such purposes that are appropriately indexed. All original documents should be given to the client and not retained in any law firm files. If originals are kept by the client, the client may use them as he or she wishes and cannot claim, if a transmittal letter is retained, that the firm lost an original thus causing some harm to the client. Some firms consciously decide to act as a repository of important documents for certain clients. If the firm does undertake to do this, careful attention should be paid to protection of the documents to guard against inadvertent destruction. Many experts recommend sending a notice letter to clients before destroying files. This is a good practice, especially if the firm has not warned the client in writing during the course of the representation that the file will be destroyed at some point in the future. A good practice is to give the client a warning about future destruction in the final letter to the client closing out the file, while the whereabouts of the client are still known. The author does not mean to imply that failure to warn the client is grounds for liability. Having a written warning should act to dispel any impression the client may have picked up that the firm would safeguard his or her files indefinitely. Such a written warning is especially apropos if an established firm with long time clients is embarking on a file destruction policy for the first time. Conclusion This article is meant to simply outline some of the considerations in developing a file destruction policy. The author recommends the articles listed below for further discussion of economic factors in file destruction policies. With some planning, a file destruction policy can be formulated which balances

the need to keep files with the economic realities of storing files for too long a time. Articles on File Retention and Destruction Chester, et al., “Banking Your Briefs”, Legal Management p. 52-58 (March/April 1990). Dimitriou, “File Retention Schedules”, Law Practice Management p. 24-27 (January/February 1990). Krocheski, et al., “Solving the Records Management Crisis”, Texas Lawyer p. 38 (March 4, 1991). Smith, “Managing the Loss of Valuable Papers and Records”, Law Practice Management p. 43-47 (July/August 1990).


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APPENDIX E: HOW TO PROTECT YOURSELF IN OFFICE SHARING

ARRANGEMENTS

The Legal Malpractice Advisory, Issue No. 1, 1992 Office sharing can create one of the most frustrating forms of liability in your practice. Most attorneys assume, with some justification, that they are only liable for acts which they commit or which are committed by formal partners or associates. While this is generally true, office-sharing arrangements can create situations in which liability is imposed upon an attorney for the acts of another attorney with whom office space is being shared. This article will explain the basic reasons why office sharing can lead to such liability. A number of strategies will be suggested for avoiding such liability. The article will conclude with a discussion of “of counsel” relationships which can both create and help avoid this type of liability. THE BASIS OF OFFICE-SHARING LIABILITY Section 16 of the Texas Uniform Partnership Act (TUPA) provides that a person may be a partner by estoppel “when a person, by words spoken or written or by conduct represents himself, or consents to another representing him to anyone, as a partner in an existing partnership or with one or more persons not actual partners.... “ This simple representation is not enough in itself to create the partnership by estoppel. The person seeking to impose such liability must also have relied on the representation. In short, if the facts and circumstances would lead a reasonable client to believe that a partnership did exist and the client relied on that fact in order to engage in business with the attorney, the possibility for a partnership by estoppel exists. Partnership by estoppel is not the only way in which partnership liability could be visited upon an attorney who is simply engaging in an office-sharing arrangement with another attorney. Facts may exist which would support a claim that an actual partnership existed between the attorneys concerned. For example, regardless of whether they thought of themselves as partners, attorneys who share office space and proceeds in some regular manner could very well be considered partners under the TUPA. Section 6 of the TUPA defines a partnership as “an association of two or more persons to carry on as co-owners a business for profit.”

The TUPA is not the only potential source of liability arising from office sharing. In the right situation, an office-sharing attorney may appear to be an employee of the “main” attorney in the office. INSURANCE AND OFFICE-SHARING Because of the potential liability inherent in office-sharing situations, many malpractice insurers take steps to identify and minimize that liability. At TLIE, the application requests information on the attorneys with whom an applicant may share offices. A copy of the letterhead is also requested by the application. The TLIE policy forms exclude many types of liability that can arise from office sharing arrangements. Please contact us if you have any questions regarding the status of your coverage for office-sharing related liability. AVOIDING LIABILITY Liability arising from office-sharing arrangements depends upon the facts in any particular case. The primary method for avoiding unwanted liability is to create as many facts as possible that would dispel any notion that a client may have that a partnership exists. The physical arrangement of the offices is the first critical fact which can be created at the outset. Signs used on the office should not create a potential for a client to misunderstand the true relationship among the attorneys in the office. When office-sharing arrangements exist, signs should very clearly delineate whether attorneys within the office belong to partnerships or professional corporations within the office, or whether the attorneys are solo practitioners. For example, if the firm of Smith & Jones shares office space with Jane Johnson, the name of Smith & Jones should appear on the door, with a separate sign for Ms. Johnson. Preferably, Ms. Johnson’s sign should indicate that she is a solo practitioner, or, in appropriate cases, of counsel to Smith & Jones. If Ms. Johnson’s name does not appear on the door, a reasonable client might infer that Ms. Johnson is an associate of Smith & Jones, whether that is in fact the case or not. Other physical arrangements in the office need to be considered. The letterhead used by all of the attorneys in the shared offices should be reviewed. Each attorney should use only the appropriate letterhead for their situation, and not use just any letterhead which may be available. The manner in which the receptionist answers the phone is also important. The answer should not indicate that the


25

offices are only the offices of one particular attorney or firm if, in fact, many attorneys use the office. The attorneys in the office should also carefully instruct the receptionist in how to respond to clients’ questions such as who employs the receptionist. Another set of facts which could help avoid office-sharing liability involves formalization of the arrangements among the attorneys in the office. The terms of the office-sharing should be written in an agreement, which would allow reference to the agreement in the event of a suit by someone claiming that a partnership exists. In addition, if clauses are included in the agreement which prohibit the parties from representing that they are partners when, in fact, they are not, the uninvolved attorney may successfully argue that any representation of partnership was unauthorized. The terms of the partnership agreement should be scrupulously followed, with any exceptions to standard operating procedure being memorialized by a letter or agreement. For example, if two of the attorneys in an office-sharing arrangement decide to work on a case together, they should agree at the outset on how fees will be shared. This agreement should be written and should make clear that the situation involved is an exception to the usual situation under their existing office-sharing agreement. In those situations in which an attorney does work with any other attorney in the office, the client should be specifically informed of the nature of the consultation with the other attorney. This advice should be in writing. For example, consider a situation in which Garza and Hinojosa are office-sharing. Garza is contacted by a client and asked to form a corporation. A tax question arises, and Garza consults with Hinojosa on the question. Garza should inform the client, preferably in advance and in writing, that he will consult with Hinojosa on the tax question. The letter Garza writes to the client should also make clear that the fees for the tax question should be paid to Hinojosa. If such a procedure is not followed the client may argue that Garza has accepted responsibility for the tax advice provided by Hinojosa. When dealing with clients and other attorneys in the office, be certain to keep in mind that the other attorneys in the office are not partners. Attorneys in the office should not just come in through closed doors at will. Even random conversations in the hallway while clients are present require careful

thought. If you begin to relate the client’s story to the other attorney, the client may very well get the impression that the other attorney is somehow your associate. You should create systems to avoid any other attorneys accidentally or purposely looking at your clients’ files and correspondence. Regardless of whether the client may believe that another attorney in the office is a partner, an attorney in an office-sharing arrangement could bear responsibility if he or she allows confidential information to be passed to attorneys who are not partners or associates. “OF COUNSEL” RELATIONS One device which may assist in formalizing the relationships within a common suite of offices is the “of counsel” relationship. For attorneys who may wish to explore the use of “of counsel” agreements, TLIE recommends “The Of Counsel Agreement, A Guide for Law Firm and Practitioner”, published by the Senior Lawyers Division of the American Bar Association. The “of counsel” designation has been used in various ways over the years. Use of the “of counsel” designation by itself does not necessarily avoid the liability problems already discussed in other office-sharing arrangements, but can make clear to a client that the attorney’s relationship to another attorney or law firm is something other than that of a partner. A person who is “of counsel” can still conceivably be an employee of the firm or the attorney with which the individual is of counsel. Once again, it is important to formalize the relationships between the person who is “of counsel” and the other attorneys, and to observe proper protocol in dealing with clients.


Suggested Language for Estate Planning and Probate Forms

James E. Brill


SUGGESTED LANGUAGE FOR ENGAGEMENT AGREEMENT

Client understands that in order to protect Client’s interests in the event of disability or death of Lawyer, it may be necessary or appropriate for a staff member, a personal representative (including someone acting under a power of attorney), or another lawyer who is retained by any such person or by Lawyer to have access to Client’s files and records in order to contact Client, to determine appropriate handling of Client’s matters and of Client’s files, and to make referrals with Client’s subsequent approval to counsel for future handling. Client grants permission and waives all privileges to the extent necessary or appropriate for such purposes. Furthermore, in the event of Lawyer’s death or disability, if further services are required in connection with Client’s representation and another lawyer is subsequently engaged by Client, Client expressly authorizes a division of fees based on the proportion of work done or the responsibilities assumed by each. Such division specifically authorizes the payment of fees and expenses to Lawyer’s estate, personal representatives, and heirs. Lawyer confirms that Client owns and is entitled to the return of all documents and other items provided by Client plus the delivery of all other original documents. This is known as the “end product rule”. Lawyer is the owner of all other portions of your file(s) as well as all internal records relating to our representation. However, Client may make copies of any other items in the Client’s file(s). Lawyer may destroy any of Client’s files at any time with Client’s written consent and in all events, after five years from the conclusion of the representation. During that five year period, Lawyer shall make such files available to Client for copying. No further notice to client will be required prior to such destruction.


SUGGESTED LANGUAGE FOR TERMINATION LETTER

During our representation of you, we have created one or more files containing notes and documents relating to this matter. All original documents and other materials furnished by you have been returned to you previously, sent to other appropriate parties, or are enclosed with this letter. As stated in our engagement agreement the remainder of your file(s) as well as our internal records relating to this representation belong to this firm. It is our firm policy to destroy files when we no longer need them. We invite you to examine your files during our normal office hours to determine if you would like copies of any of their contents. Please consider doing so as soon as possible while this is fresh in our minds. We remind you that it is our policy to destroy most files after five years following the conclusion of our services and that our initial agreement confirmed this procedure. No further notice will be given to you prior to such destruction.


SUGGESTED LANGUAGE FOR LAWYER’S WILL

INSTRUCTIONS REGARDING MY LAW PRACTICE

I currently practice law as a solo practitioner. In order to provide a smooth transition for my clients and to assist my family, I am providing these guidelines to my Executor and any attorney(s) representing my Executor and beneficiaries under this Will. If my practice can be sold to a competent lawyer, I authorize my Executor to make such sale for such price and upon such terms as my Executor may negotiate, subject, however, to compliance with the Texas Disciplinary Rules of Professional Conduct and applicable provisions of law. If such sale is possible, I believe that it will provide maximum benefits for my clients as well as for my employees and family. If my practice cannot be sold and I have client files, I recommend that, subject to consent of my clients, estate planning and probate files be referred to (name); real estate files to (name); corporation, partnership, and limited liability company files to (name); family law matters to (name); and personal injury files to (name). In either instance, I recognize that my practice has developed because of personal relationships with my clients and that they are free to disregard my suggestions. Regardless of the method of disposing of my practice, I authorize my Executor to take all actions necessary to close my law practice and dispose of its assets. In doing so and without limiting the foregoing, my Executor may do each of the following:

(a) Enter my office and utilize my equipment and supplies as helpful in closing my practice.

(b) Obtain access to my safe deposit boxes and obtain possession of items belonging to clients.

(c) Take possession and control of all assets of my law practice including client files and records.

(d) Open and process my mail. (e) Examine my calendar, files, and records to obtain information about pending

matters that may require attention. (f) Notify clients and those who appear to be clients of my death and that it is in

their best interests to obtain other counsel. (g) Obtain client consent to transfer client files, property, and assets to other

counsel. (h) Provide clients with their property and assets and copies of material in their

files and return unearned retainers and deposits. (i) Notify courts, agencies, opposing counsel, and other appropriate entities of my

death and, with client consent, seek and obtain extensions of time. (j) File notices, motions, and pleadings on behalf of clients who cannot be

contacted prior to immediately required action. (k) Contact my malpractice carrier concerning claims or potential claims, to notify

of my death, and to obtain extended reporting period endorsement or “tail” coverage. (I) Dispose of closed and inactive files by delivery to clients, storage, and

arranging for destruction, remembering that records of my trust account are to be preserved for at least five years after my death as required by Texas Disciplinary Rule of Professional Conduct 1.14 and Rule 15.12 of the Texas Rules of Disciplinary Procedure, and files relating to minors should be kept for five years after the minor’s eighteenth birthday.


(m) Engage one or more attorneys to wind up my law practice, make arrangements to complete work on active files and to allocate compensation for past and future services.

(n) Send statements for unbilled services and expenses and assist in collecting receivables.

(o) Continue employment of staff members to assist in closing my practice and arrange for their payment.

(p) Pay current liabilities and expenses of my practice, terminate leases, and discontinue subscriptions, listings, and memberships.

(q) Determine if I was serving as registered agent for any corporations and, if so, notify each corporation of the need to designate a new registered agent (and perhaps registered address).

(r) Determine if I was a notary public and, if so, deliver the notarial record books to the county clerk of the county where I was so appointed in order to comply with Texas Government Code, Section 406.022.

(s) Rent or lease alternative space if a smaller office would serve as well as my present office. In performing the foregoing, my Executor is to preserve client confidences and secrets and the attorney-client privilege and to make disclosure only to the extent reasonably necessary for such purposes. My Executor shall be indemnified against claims of loss or damage arising out of any omission where such acts or omissions were in good faith and reasonably believed to be in the best interest of my estate and were not the result of gross negligence or wilful misconduct, or, if my Executor is an attorney licensed to practice in Texas, such acts or omissions did not relate to my Executor’s representation of clients as an attorney retained by those clients. Any such indemnity shall be satisfied first from assets of my law practice, including my malpractice insurance coverage.


Letter 3 from Texas Probate System

I. M. Lawyer P. O. Box 3636

Somewhere, TX 71111 Today’s date Mr. William Related 247 Shady Grove Smalltown, TX 72222 Re: Estate of Thomas Related, Deceased Dear Mr. Related:

Thank you very much for coming in today and for employing me to represent you in the probate of this estate.

Receipt is hereby acknowledged of a cash payment of $XX that you made to me today,

which will be applied to the payment of expenses incurred or for legal fees due with respect to such representation. As we agreed, my fee will be based on time spent on your behalf, with hourly rates of $X)(X for attorney’s time and $X for staff time. In addition to fees for services, you are to pay or reimburse me for expenses incurred on your behalf. These expenses include filing fees, recording charges, publication of notices, appraisal fees, long-distance, facsimile, delivery charges, photocopies, and postage.

The above fee is for the following services:

1. Preparing the application for probate of the will 2. Arranging for the proof necessary to have the will admitted to probate 3. Appearing in court to have the will so admitted 4. Preparing the order to be signed by the judge to admit the will to probate 5. Preparing and filing the oath of the executor 6. Preparing and arranging for the publication of notice to creditors 7. Preparing and serving notices to secured creditors 8. Preparing and sending required notices to beneficiaries 9. Preparing and filing the certificate or affidavit of notice to beneficiaries 10. Determining the nature, extent, and valuation of the estate 11. Preparing and filing the statutory inventory, appraisement, and list of claims and obtaining the judge’s approval of the same 12. Determining the nature and amount of the liabilities of the estate 13. Assisting in the transfer of title to all of the decedent’s assets 14. Investigating, determining, calculating, allocating, or dealing with asset valuations

and furnishing tax basis information to heirs and beneficiaries Preparing and filing the United States Estate (and Generation-Skipping Transfer) Tax

Return may be required but will be subject to additional charges. Because of the enormous detail involved in probate proceedings, except for tax audits, contested matters, litigation, and items specifically excluded above, you may assume that any work I am doing in connection with this estate will be covered by this fee arrangement.

We must deal with an important ethical matter before we begin in order to avoid

questions of conflicts of interest. In your capacity as independent executor of this estate, you are my client. While this may appear obvious, there are many instances in which family members and other beneficiaries believe that a lawyer represents “the estate” directly and thus


represents them indirectly. This is not the case. To avoid these conflicts, it is my policy to recommend that they obtain the advice and services of independent attorneys of their own choosing.

In almost every instance, I have found that it is good policy to keep affected family

members and beneficiaries fully informed by providing copies of wills, codicils, pleadings, routine correspondence, and tax filings. If you concur and will provide names and addresses of your desired recipients, we will provide them with those copies as they are created but, in doing so, I will make it clear that I represent only you.

I am not now aware of any conflicts that exist or any facts that would create a conflict,

although that possibility always exists. If you become aware of any conflict relating to this estate, your service as a fiduciary, or anything affecting my representation, you must call it to my attention.

I am pleased to provide you with a copy of the Texas Lawyers’ Creed. This mandate for

professionalism was promulgated by the Supreme Court of Texas and the Texas Court of Criminal Appeals in 1989. I do my best to adhere to the high standards it sets for the lawyers of Texas. I invite your questions and comments regarding that creed and your perception of my adherence to its objectives.

I take seriously my obligation to maintain the highest standards of ethical conduct toward

my clients and others. To enforce ethical conduct, the State Bar of Texas investigates and prosecutes complaints of professional misconduct. If you have questions about this process or how to file a complaint, you should contact the office of the State Bar of Texas at 1/800/932-1 900 toIl free for more information.

If the foregoing letter correctly reflects your understanding of our agreement, please sign

both copies of this letter, retain one for your files, and return one copy in the enclosed envelope. If you have any questions about the proposed engagement, please contact me as soon as possible. Certainly, you should feel free to consult with another lawyer about the effect of signing this letter.

Thank you again for the confidence that you have expressed in me at this very difficult

time. Please call me if you have any questions. Kindest regards. Yours very truly, I. M. Lawyer Enclosures

Texas Lawyers’ Creed Return envelope

The foregoing letter correctly reflects my understanding of our agreement. Dated ______________ 2008. ___________________________ WILLIAM RELATED


Letter 101 from Texas Probate System I. M. Lawyer P. 0. Box 3636 Somewhere, TX 71111 Today’s Date Mr. U. N. Related 123 Main Street Somewhereelse, TX 70000 Re: No. 681,927, Estate of Thomas Related, Deceased Probate Court Number One of Harris County, Texas Dear Mr. Related: This letter is to inform you that I have been retained by William Related for representation in his capacity as Independent Executor of this estate. Because you are a beneficiary, he has requested me to provide you with copies of various pleadings, government forms, and correspondence for your general information. In receiving these items, you should not infer that I also represent you. I do not. You should seek your own independent attorney for advice should you have any questions relating to any such document or any matter relating to this estate or to its administration. Yours very truly, I. M. Lawyer IML/boh


ESTATE PLANNING SERVICES EMPLOYMENT CONTRACT

Services. I employ the firm of LAW FIRM, (hereinafter called "Attorney"), to represent me in the preparation of simple wills/ tax planning wills/disclaimer trust wills/special needs trust wills/durable powers of attorney/medical powers of attorney/directives to physicians/designation of guardian/designation of guardian for child–incapacity/designation of agent for burial/irrevocable life insurance trust/revocable or living trust/Buy-Sell Agreement/Family Limited Partnership/2503(c) Trust for Minors/Beneficiary Designations for Insurance Policies, IRAs and Other Retirement Plans (does not include dealing with the insurance company or IRA provider to implement the designation) / Qualified Personal Residence Trust (QPRT) / Private Foundation / Sale to Intentionally Defective Trusts, other: ______________________________________________________________________________ (Items circled are services requested) Fees. In consideration of this representation, I agree to pay at the offices of LAW FIRM in Brenham, Texas, the following: $_______________________. This fee covers the initial conference, the planning and preparation of a draft of the documents, a conference regarding any misspelled names or typographical errors, and a final conference to explain and sign the documents. If there are more changes because of changes requested by me other than what was requested in the initial conference, if the information I supply is inaccurate or incomplete, if I request other work than that described herein, or if I fail to sign the documents before sixty (60) days after I receive them, I will be charged for the changes, additional work, or any time spent on this matter at the rate of $________________ per hour for attorney time and $_________________ per hour for support staff time. Each portion of a quarter hour is billed as a full quarter hour. All work is done and all fees are payable in Brenham, Texas. Costs paid to third parties are billed at cost plus. Citizenship and Document Review. I agree to read the documents thoroughly and notify the Attorney of any misspelled names or other errors obvious to me. Unless otherwise indicated on the contract, I am a United States citizen. Payment Terms. I agree to pay half the fee immediately and the other half upon the receipt of the documents. I agree to sign the documents within sixty (60) days after I receive them. If I fail to do so, all work done after that date will be charged on the hourly rate basis shown above. Witness. I understand that if the Attorney is called as a witness or asked to assist others acting on my or my estate’s behalf in a later proceeding, I bind myself and my estate to compensate the Attorney at the Attorney’s then-prevailing hourly rates.

Mediation. In the unlikely event I have a disagreement with the Attorney, before resorting to litigation or arbitration, any disputes arising out of or connected with this engagement agreement (including but not limited to the services performed by Attorney under this agreement) will be submitted to mediation in Washington County, Texas, in accordance with the rules for alternative dispute resolution set forth under Texas law. I and Attorney will mutually cooperate to select the mediator to be used. Any and all information, negotiation, and results of the mediation will remain confidential. Confidentiality. I understand that, generally, all information I provide to the Attorney will be kept confidential and will not be disclosed to persons outside the Attorney’s office without my consent. However, I authorize the Attorney to discuss my estate planning and share my confidential information: (1) with other of my professional advisors (such as CPAs, financial planners, insurance agents, etc.); (2) with persons named as an agent, trustee or other fiduciary in estate planning documents signed by me or prepared at my request; and (3) whenever my mental capacity is in question, with my children and other immediate family members, my health care providers, and other interested persons.

Drafting to Avoid Malpractice Chapter 4 Other clients. I agree that under the ethics rules, the Attorney can continue to represent existing and new clients regarding their estate planning or other matters even if these other clients are related to me (professionally or personally) and even if the interests of the other clients in those other matters may be adverse to me, but only as long as the matter is not substantially related to the Attorney’s work for me. (For example, the Attorney might prepare Wills for members of my family or business associates who might take me out of their Will.) Future legal services. I understand that changes likely will occur in tax, property, probate, and other laws which could impact my estate plan. The Attorney cannot economically review my file to determine the impact of changes in the law. Changes likely will occur in my own family, in marital circumstances, and in my finances, all of which could impact my estate plan. I understand I should contact the Attorney to have my plan reviewed regularly and I will be charged by the Attorney at the then prevailing hourly rates to answer questions and review my documents or estate plan. Termination. I have the right to fire the Attorney at any time and the Attorney has the right to resign as my attorney at any time. The Attorney’s active role, as my attorney, will terminate when my documents are signed. However, no termination will waive any of the remaining provisions of this agreement, including: (1) my agreement to pay the Attorney for all work performed prior to termination, (2) my consent to complete disclosure of confidential information to me and to others (to the extent authorized above), (3) the Attorney’s ethical duties to me, such as the Attorney’s duty not to disclose my confidential matters to third parties (except as authorized above), and (4) the obligation of my estate to compensate the Attorney if called as a witness in a later proceeding. Interest on Past Due Accounts. Unpaid fees and expenses will be considered past due if not paid within thirty (30) days of the billing date. I agree to pay interest on past due amounts at the rate of 1.5 % per month (18% Annual Percentage Rate), or the maximum rate allowed by law, whichever is less, until paid. Interest charges will be calculated on all past due amounts and added to the next month’s billing statement. Document Retention. I agree the Attorney is not responsible to keep copies of my documents. I agree to keep all originals and copies that I desire among my own files for future reference. Full Family and Financial Information. I have provided or have had others provide full family and financial information to the Attorney. I realize the documents prepared are based on this information I have supplied and are only as good as the information provided. Circular 230. I may ask the Attorney’s advice regarding federal tax issues. The Internal Revenue Service (IRS) does not allow me to rely on informal tax advice rendered before I file my tax return to avoid tax penalties. If I want to rely on the Attorney’s federal tax advice to avoid federal tax penalties, the IRS requires the Attorney to issue formal written tax opinions regarding the tax issue(s). Formal written tax opinions are not within the scope of this engagement. The IRS rules also prohibit someone else from using the advice the Attorney provides to me. All communications from the Attorney are intended for my use only and include, and are intended to reflect, in substance, the following notice:

Treasury Circular 230 Disclosure: to the extent this communication contains any statement of tax advice, such statement is not intended or written to be used, and cannot be used, by any person for the purpose of, or as the basis for, avoiding tax penalties that may be imposed on that person. This communication if not intended to be used, and cannot be used for the purpose of promoting, marketing, or recommending to another party any matter addressed in this communication. This legend is attached pursuant to U.S. Treasury Regulations governing tax practice, to comply with requirements imposed by the Internal Revenue Service.

Drafting to Avoid Malpractice Chapter 4 I will let the Attorney know if I want a formal, legal opinion regarding tax issues. I agree to sign a separate engagement letter with the Attorney to show I want such an opinion. I understand that the cost of such an opinion will be substantial given the IRS requirements.

*******

I HAVE READ AND UNDERSTAND THE TERMS OF THIS DOCUMENT.

SIGNED on ___________________________. _____________________________________ _____________________________________ Client Client NOTE:MARRIED CLIENTS SHOULD ALSO READ AND SIGN THE ATTACHED JOINT REPRESENTATION ADVISORY AND CONSENT Received the sum of $__________ in the form of check/cash on ________________, 20____. _____________________________________ Attorney


JOINT REPRESENTATION ADVISORY AND CONSENT Spouses can have differing, and sometimes conflicting, interests and objectives regarding their estate planning. For example, they may have different views on how property could pass after the death of one or both of them. In some situations, we may recommend that holdings be restructured to take advantage of available tax benefits, which may involve gifts from one spouse to the other. Some of these actions can affect the division of property in the event of divorce. These are just a few general examples. Each couple's situation is unique. If you each had a separate lawyer, you would each have an advocate for your position and would receive totally independent advice. Information given to your own lawyer is confidential and cannot be obtained by your spouse without your consent. That is not the case when one firm advises both of you. One firm cannot be an advocate for only one of you. Information that either of you gives to the firm relating to your planning cannot be kept from the other. We will have to immediately tell the other anything which one of you tells us that relates to the estate planning of either of you, since not to reveal such information to the other would be a violation of attorney-client joint relationship. If you ask us to continue to serve you jointly, our effort will be to assist in developing a coordinated overall plan and to encourage the resolution of differing interests in an equitable manner and in your mutual best interests. There are advantages to having one firm represent both of you. It is usually much less expensive. The work is usually done much more quickly because there is no need to consult with another lawyer. And there is a better chance of coordinating the will and trust provisions for each spouse. Some of the planning techniques such as irrevocable trusts, limited liability companies, and family limited partnerships are difficult or impossible to unwind on divorce. The unwinding can cause adverse tax consequences. If you think this will be an issue, you need to seek the advice of a family law attorney who is not a member of this firm before implementing any of these matters. I believe that my ability to provide appropriate representation to each of you is not adversely limited by the issues noted above. If I become aware of circumstances that might limit my ability to represent each of you adequately, I will discuss those with you or withdraw consistent with my professional obligations. In the event of a later dispute between the two of you, however, I would not be able to represent either of you. If at any time you believe that your interests differ, please let me know. In light of the considerations noted above, each of you must decide whether you wish the firm to represent you jointly in connection with your estate planning and related matters. If you do, please review the statement that follows, sign and date it as indicated. If either of you wants to have the advice of separate counsel, feel free to seek such counsel.

LAW FIRM Consent is on the following page


Consent

We have carefully reviewed the foregoing Advisory. Each of us realizes that there may be areas where our interests and objectives may differ and areas of potential or actual conflict of interest between us in connection with our estate planning and related matters. We understand the advantages and disadvantages of having one firm represent us. We understand that either of us may retain separate, independent counsel in connection with these matters at any time. After careful consideration, each of us requests that LAW FIRM represent us jointly in connection with our estate planning and related matters and each of us consents to that dual representation. Each of us also understands and agrees that all communications and information that LAW FIRM receives from either one of us, or provides to either one of us, relating to these matters will be shared and disclosed by said firm with the other spouse. Signed on ____________________________________________________. ________________________________________________ Client ________________________________________________ Client


MULTI-EXECUTOR CONFLICT DISCLOSURE AND CONSENT LETTER

DATE

Client 1 Client 2 Client 3 RE: Estate of John Doe, Deceased, In the County Court at Law of __________, Texas Dear 1, 2, and 3: I am sending you this letter because you need to understand I need to fully explain the consequences of joint representation. The (number) of you are appointed or are applying to be appointed as Independent Executors. You have asked me to represent all of you. I agreed to represent all/both of you together, as an intermediary, because I reasonably believe that, at this point, the resolution of any conflicting interests that you may have can be accomplished in a mutually advantageous basis without the necessity of litigation between or among any of you; that each of you will be able to make independent, rational decisions in the matter if I adequately inform you; and that there is little risk of material prejudice to any of your interests by this joint representation. You should, however, understand the following:

1. One of you might gain some advantage if you were represented by independent counsel and could freely consult with your own lawyer.

2. I cannot serve as an advocate for any one of you, but, instead, must assist all of you in pursuing

your common interests as Co-Executors of this Estate, as a consequence of which each of you must be willing to make independent decisions concerning whether you should agree to the resolution of any conflicts that you may have among or between you.

3. I have to deal fairly and impartially with each of you; no information that I receive or that anyone

in my office receives is confidential between or among you. 4. I will be required to disclose information to each of you if that information will materially affect

the position of any of you or would work a fraud on any of you, even if you request me not to do so. 5. I will be required to correct any false or misleading statements or material omissions relating to

my representation made by or on behalf of any of you, if the failure to do so would materially affect the position of any of you in this matter or would work a fraud on any of you even if requested not to do so.

6. I will be required to withdraw in the event any of you request me to or if, in my judgment or your

judgment, I cannot move this Estate forward in an expeditious manner. I will not be able to continue representing any of you unless you later decide that we can enter into a joint representation agreement, again.

7. A major advantage to having one lawyer represent all of you is that is usually results in

substantial savings of legal fees as well as time.


If this is satisfactory, please sign this document and return it to me. I cannot go forward on this matter until I receive a signed copy of this from all of you. Even though I have disclosed all of this information and much more to you, verbally, I need this to satisfy the rules that govern my work as a lawyer by sending this letter to you and having you sign it and return it to me before I get started. I am also sending you a copy of the agreement regarding fees and representation that supplements this agreement. Sincerely yours, LAWYER AGREED and ACCEPTED: _____________________________ ________________________ Client 1 Date _____________________________ ________________________ Client 2 Date _____________________________ ________________________ Client 3 Date Enclosure: Agreement for Representation for Probate


ESTATE LITIGATION AGREEMENT

DATE Re: _________________ v. _________________ Thank you for asking ______________ (“__________”) to represent the Estate of __________________________ in the above-referenced matter. This letter sets forth the terms of our representation:

PURPOSE OF REPRESENTATION AND CO-COUNSEL

LAW FIRM agrees to represent the Estate of ____________________ in the above-referenced matter. Although we will endeavor to achieve a result that is satisfactory to each of you, it is understood that we make no promises or guarantees concerning the outcome and cannot do so.

COOPERATION

To enable us to effectively to represent you, it is essential that you disclose fully and accurately all facts and keep us apprised of all developments relating to the grievance. You agree to cooperate fully with us.

LEGAL FEES AND EXPENSES _____________ and the Estate of __________________ agree to pay LAW FIRM its fees at the following hourly rates: LIST RATES FOR ATTORNEYS HERE Our fees are based on the time spent by the attorneys, the paralegals, and case clerks who work on the case. We will charge for all time spent in representing your interests, including, by way of illustration, telephone and office conferences with you and your representatives, opposing counsel, and others; conferences among our attorneys and paralegal personnel; factual investigation; legal research; responding to your requests for us to provide information to you or your auditors; drafting letters and other documents; travel; preparing for and taking discovery; and preparing for trial, if any, and representing your interests in trial. Once a year LAW FIRM reviews and adjusts its rates, with changes effective on January 1 of each year. We will inform you of and discuss with you any rate adjustment prior to its taking effect. In addition to LAW FIRM's hourly fees, LAW FIRM will bill you and you agree to pay, expenses LAW FIRM incurs in its representation of you. These expenses include, but are not limited to: filing fees, telephone charges, copy costs, fax charges, expert witness and consulting expert fees and expenses, commercial computer data base charges, deposition transcription charges, hearing transcription charges, trial transcription charges, charges for demonstrative aids, and travel expenses.


We will send our statements for legal fees and expenses to _______________ for payment, with a copy to ___________________________.

CLIENTS’ CONSENT RE: POTENTIAL FOR CONFLICT OF INTEREST

Any representation of multiple clients creates the possibility of conflicts of interest, the purpose of this section is to obtain your informed consent to the multiple representation of each of you. At this time, you do not believe that there is any conflict of interest between or amongst you that could affect LAW FIRM’s representation. Based on our understanding of the facts, LAW FIRM does not perceive a conflict at this time. It appears your interests are aligned. If this understanding is incorrect, please inform LAW FIRM immediately. Each of your signatures to this letter confirms that each of you understand that the potential exists for a conflict of interest. If, in our judgment, such a conflict arises or appears probable, LAW FIRM will advise you promptly. Likewise, you agree to advise LAW FIRM promptly if you believe a conflict of interest has arisen or is probable. Should a conflict of interest arise or appear probable, it may be necessary for LAW FIRM to withdraw from representing one or more of you. In that event, you will need to retain new counsel. This may entail additional expense above what you would have spent had separate counsel been retained from the outset. By signing below, each of you agree and understand that there is no attorney/client privilege or duty of confidentiality concerning any communications between you and LAW FIRM. If each of you retained separate counsel, then each of your communications with your respective counsel would be subject to client confidentiality and attorney/client privilege and could not be disclosed to the other or other’s counsel without your consent. Nothing in this paragraph shall alter the attorney/client privilege preventing disclosures to third parties, i.e. – the communications between the people signing this agreement are not subject to confidentiality as to each other, but all such communications are protected from disclosure to others not part of this agreement.

CLIENT DOCUMENTS

We will maintain all documents you furnish us in our client files. At the conclusion of this Matter,

it is your obligation to advise us as to which, if any, of the documents in our files you wish us to return to you. We may keep copies for our records. We will retain any remaining documents in our files for a period of time and ultimately destroy those documents in accordance with our record retention program. Under our present policy, these records will be destroyed two years after the conclusion of LAW FIRM's representation of you in this Matter.

ENTIRE AGREEMENT

This Agreement constitutes the only agreement of the parties.

BILLING

LAW FIRM will bill its fees and expenses on a monthly basis until this representation is concluded. You agree to pay such fees and expenses within thirty days from the date of the invoice. You accept responsibility for making payments to LAW FIRM. LAW FIRM will bill directly to_________________________.


We will not be offended if you have questions about our bills. We want you to address such questions to us as soon as they occur to you. It is our belief that problems can be resolved by a frank and good faith discussion.

TERMINATION OF AGREEMENT This agreement may be terminated by LAW FIRM or by you by written notice. In event of such termination, you agree to promptly pay LAW FIRM for all services, including fees, charges, and expenses incurred. In addition to terminating this agreement, if LAW FIRM’s fees and expenses are not timely paid, LAW FIRM specifically reserves the right to withdraw from representation of you, and you agree to take all necessary steps to facilitate LAW FIRM’s withdrawal.

CONFIDENTIALITY You and LAW FIRM agree to keep the terms of this letter agreement confidential and will not disclose this letter agreement and its terms to any third party except as required by applicable law. Further, you and LAW FIRM agree to take all necessary steps to preserve any privileges that are applicable to this letter agreement.

TEXAS LAWYER’S CREED

The Supreme Court of Texas has adopted a Lawyer’s Creed, which sets forth standards for attorney professionalism. A copy can be found at http://www.law.uh.edu/ ethics/lcreed/creedindexb.html.

CONCLUSION

If the foregoing meets with your approval, and you consent to our representation under the terms outlined in this letter, please date and sign a copy of this letter. Please keep a copy of this agreement for your files.

We are honored you have asked us to help you. Never hesitate to contact us with your questions and concerns. We are here to help you.

Sincerely, LAWYER APPROVED BY: _________________________________ _________ Date _________________________________ _________ Date

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