Limited Scope Representation in Transactions - Put It in Writing

No written agreement is required in Illinois for limited scope transactional work. But as a recent New York case shows, it's best to put it in writing.

Limited scope representation has been ethically permissible in Illinois since at least 2010 and probably even before then. Initially conceived to make it easier to serve clients of modest means, it might be more important today as a way to accommodate changing consumer preferences about legal services.

Under Illinois Rule of Professional Conduct 1.2(c), the only express requirements are that any limited scope representation is "reasonable under the circumstances" and that the client give informed consent. For transactional work, no written agreement is expressly required. Nevertheless, as a recent New York case shows, it's best to memorialize a limited scope representation in writing.

To be clear, Illinois does require a written limited scope agreement in civil proceedings. Ill. S. Ct. R. 13(c)(6) (eff. July 1, 2013). Forms are even provided for this purpose. Ill. S. Ct. R. Article I Forms Appendix (eff. July 1, 2017).

But limited scope representations are often part of the suite of transactional products advertised by lead generation services. You've probably seen the online ads purporting to match lawyers with consumers looking for limited (and typically flat fee) services such as "contract review" or "drafting an employment agreement." Limited scope representations also present opportunities for lawyers who may seek to capture the growing pool of self-represented or "do it yourself" legal consumers.

The lesson of Genesis

The risks of not using a written agreement for limited scope transactional work are illustrated by Genesis Marchant Partners v. Gilbride, Tusa, Last & Spellane, 2018 N.Y. Slip Op. 00221 (Jan. 11, 2018). In Genesis, a legal malpractice case, the defendant lawyers were accused of failing to perfect security interests in a number of life insurance policies used as collateral in a loan transaction. The policies were valued at more than $84 million.

The lawyers' defense was that perfecting the security interest was outside the scope of the representation agreed to by the client. The court began its analysis with a clear sign of trouble ahead: "[T]here is no engagement letter that defines the scope of [the lawyers'] representation."

The court then embarked on a journey though conflicting and ambiguous "facts," not one example of which was conclusive in and of itself. The court looked at the parties' dueling affidavits of conversations and perceived intentions, ambiguous contract language, vague emails, and non-specific billing records. All of it merely confirmed a dispute, providing no clear answer as to the scope of the representation or the validity of any limitation.

Although the court reversed the trial court's grant of summary judgment against the lawyers, the problems exacerbated by the absence of a written limited scope representation agreement remain: additional litigation expense, the personal and professional strain of the litigation, putting the lawyers' practice in the hands of a potentially hostile jury, and ultimately, perhaps, losing the case on the merits.

Conversely, the benefits of a writing are clear. A written agreement establishes a clear and mutual understanding of the services you are providing. That will minimize disputes about the scope of the representation. A writing also goes a long way toward satisfying your ethical responsibilities to keep your client informed about the representation as required by Illinois Rules of Professional Conduct 1.4 (Communication) and 1.5 (Fees).

Beyond that, a writing avoids the Genesis situation where you're required to justify your conduct based on facts and circumstances subject to others' interpretations. As long as the limitation is set out in a writing and objectively reasonable, courts seem willing to give full effect to it should a dispute arise. Flatlow v. Ingalls, 932 N.E. 2d 726 (Ind. Ct. App. 2010).

Other authority

The importance of having a written limited scope representation agreement has been referenced by other authority. In its Formal Opinion 472 (2015), the ABA recommends that lawyers provide clients with a written limited scope representation agreement that clearly sets out what services will - and will not - be undertaken by the lawyer. See also Colorado Bar Association, Formal Opinion 101 (May 21, 2016).

Other states require a writing by rule. E.g., Md. Rule 19.301.2(c) ("An attorney may limit the scope of the representation in accordance with applicable Maryland Rules if (1)…(2)…, and (3) the scope and limitations of any representation, beyond an initial consultation or brief advice provided without a fee, are clearly set forth in a writing.…").

And some states essentially require it through guidance. See N.C.R. Prof. Cond. Rule 1.2, Comment [8] ("Although paragraph (c) does not require that the client's informed consent to a limited representation be in writing, a specification of the scope of representation will normally be a necessary part of any written communication of the rate or basis of the lawyer's fee.").

The message is clear: If you provide limited services, make sure the scope of those services is clearly spelled out in writing. State what you will and won't provide. If you're participating in any kind of lead generation service where the scope of your representation is spelled out by the service, review the limitations and make sure your client understands them. Doing these little things at the outset may save you headaches, money, and stress down the road.

Charles J. Northrup is the ISBA general counsel.
cnorthrup@isba.org