Is Your Engagement Agreement Jeopardizing Your Defenses to Claims Arising Out of Your Legal Representation?

Is Your Engagement Agreement Jeopardizing Your Defenses to Claims Arising Out of Your Legal Representation?

02/03/2021

An engagement agreement is fundamental to defining the relationship between you and your client. An engagement agreement establishes the scope of your representation, manages your client’s expectations, and ensures that you and your client are on the same page. Carefully defining the scope of the representation in an engagement agreement can also provide you with a critical defense in the event of a legal-malpractice action.

Under Michigan law, most claims against attorneys fall within the domain of legal malpractice. But in some circumstances, courts have also recognized independent claims that sound in breach of contract.

A legal-malpractice claim sounds in tort and arises out of deficient or inadequate representation. A breach-of-contract claim, by contrast, arises out of the failure to perform a specific task, fulfill a “special agreement,” or achieve a certain outcome. So when determining whether a claim sounds in legal malpractice or breach of contract, the court may examine your engagement agreement. Did you agree to perform a specific act or did you agree to simply exercise appropriate legal skill and judgment? If the former, the claim sounds in breach of contract. If the latter, the claim sounds in legal malpractice.

Why does this matter? A legal-malpractice claim is subject to a two-year statute of limitations. A breach-of-contract claim, on the other hand, is subject to a six-year statute of limitations. If your client sues you and asserts a legal-malpractice claim that might be time-barred, chances are that your client will also throw in a breach-of-contract claim. But courts don’t care about the label attached to the claim and won’t allow your client to avoid the statute of limitations through “artful pleading.”

A recent Court of Appeals’ decision illustrates the way in which an engagement agreement can jeopardize a statute-of-limitations defense. In Jones v Law Firm, the engagement agreement stated that the client retained the attorneys with respect to a “divorce/motion to dismiss matter.” The attorneys never filed the motion to dismiss but continued to represent the client through trial. The client sued the attorneys for legal malpractice and breach of contract. The attorneys argued that the breach-of-contract claim was duplicative of and subsumed by the legal-malpractice claim, which was barred by the statute of limitations. The Court agreed that the legal-malpractice claim was time-barred but disagreed that the breach-of-contract claim was also time-barred. The Court held that the breach-of-contract claim was distinct from the legal-malpractice claim because the engagement agreement established a “special agreement” to perform a specific task—file a motion to dismiss—rather than a general agreement to provide the requisite professional skill.

 


 

What this means for Michigan attorneys

Although you should tailor your engagement agreement to your client’s specific matter, the takeaway from Jones is that you may want to consider more general language when you define the scope of the representation—perhaps a provision in which you agree to render adequate legal services. If you promise to perform a specific task or achieve a specific outcome, be on alert that the failure to perform that task or achieve that outcome may significantly lengthen the period in which your client can sue you. You may also want to consider including an integration clause in your engagement agreement to ward off claims that you made a pre-contractual promise to perform a specific task or achieve a specific outcome. Taking these preventative measures at the outset will help you limit your liability in the event that you face a lawsuit concerning your representation.


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