¶ 5301
Overview
Scope of the chapter. The intake described in chapter 52 determines whether an engagement should be accepted (see supra ch. 52). This chapter addresses the terms on which it is accepted and the record that is kept. It covers the identification of the client, the scope and limits of the engagement, the representations the client makes and the covenants the client gives, the attorney-client privilege and the crime-fraud exception, the liability of advisers to the client's creditors, fees and retainers, the planning file, and withdrawal. It closes with engagement terms in the Threat Matrix.
The engagement letter as evidence. An engagement letter is usually treated as a contract between lawyer and client. In asset protection it is also evidence. The general rule is that the identity of the client, the fee arrangement and the general purpose of the work are not privileged, so the letter will be produced if the plan is challenged. See Argyle Online, LLC v. Nielson (In re GGW Brands, LLC), 504 B.R. 577, 589 n.13 (Bankr. C.D. Cal. 2013) (citing Clarke v. Am. Commerce Nat'l Bank, 974 F.2d 127, 129 (9th Cir. 1992)). In the reported cases, creditors have proved the client's intent with the lawyer's own documents: a retention letter, a lawyer's file, intake notes made by staff, and the lawyer's testimony (see infra ¶ 5340). The letter and the file should be written on the assumption that a judge will read them.
The duty to inquire. Since August 2023, the ABA Model Rules have required a lawyer to "inquire into and assess the facts and circumstances of each representation to determine whether the lawyer may accept or continue the representation." Model Rules of Prof'l Conduct r. 1.16(a) (amended 2023) (see supra ch. 52). The engagement letter and the planning file are the means by which a lawyer shows that the inquiry was made and that it continued through the engagement.
Relationship to other chapters. The professional responsibility framework is introduced in chapter 3 (see supra ch. 3), and the intake and solvency analysis that precede the engagement in chapter 52 (see supra ch. 52). The annual review that keeps the planning file current is addressed in chapter 54 (see infra ch. 54), and the cases in which advisers were sued, sanctioned or called as witnesses in chapter 55 (see infra ch. 55). Forms of engagement letter appear in Appendix F (see infra app. F).