Practice Tips & Pitfalls

How to Meet the Standards of Adequate Professional Service with a Letter of Engagement

The Legal Profession (Professional Conduct) Rules (‘the Rules’) came into force on 1 June 1998 and were revised on 1 September 2001. Rules 12 to 21, 35, 36 and 40 prescribe the specific standards by which advocates and solicitors would be judged to decide whether they have failed to provide adequate professional services to their clients. Under s 75B of the Legal Profession Act (Cap 161) (‘the Act), a client can make a complaint to the Council of having received inadequate professional service.

The Second Schedule to the Act sets out the remedies the Council can order if a finding of inadequate professional service is made after an inquiry.

Most complaints of inadequate professional services can be avoided if you send out to every client a comprehensive Letter of Engagement. Most of the complaints of inadequate professional service received by the Law Society for contentious business arise from: (a) the failure of lawyers to explain to their clients the manner in which the client would be charged fees (as required by rule 35 of the Rules); (b) the failure at the outset, and at appropriate stages, to explain the concept of solicitor-and-client costs and party-and-party costs (as required by rule 36 of the Rules); and (c) the failure to kept the client informed on the progress of his matter (as required by rule 17 of the Rules).

Set out below is a precedent Letter of Engagement for a law practice when a new client of the law practice engages of the practice for a contentious matter.

The sample Letter of Engagement for contentious business is reproduced, with the kind permission of Mr Vinodh Coomaraswamy, who presented the same at a Law Society seminar last year on Client Care for litigators.

Ho Meng Third
Law Society of Singapore
E-mail: mengthird@lawsoc.org.sg

By Facsimile and Post

Date

To: Addressee
     Address

Attention: Mr ABC

Dear Sirs,

SUBJECT MATTER: SUIT NO 123 OF 2002
LETTER OF ENGAGEMENT

1  We refer to the meeting on _____________ between the undersigned and your Mr _________.
2 May we first of all take this opportunity to thank you for instructing us in this matter.
3 As required under Singapore’s Legal Profession (Professional Conduct) Rules 1998, we set out below the principal terms of our engagement as your solicitors in Singapore.
4 The Partner in charge of your matter will Mr ____. He will be assisted by Mr _____. During the course of the matter, we shall keep you fully advised of all developments on a regular basis either by telephone, electronic mail or more usually, by fax or letter enclosing copies of relevant correspondence. Either of the abovenamed can, of course, be contacted for a progress report at any time. Their respective direct lines are (65)__________ and (65)_________ and their e-mail addresses are ___________ and _____________.
5 As we foresee matters now, the scope of our services will extend to the following:
  5.1 Advising you on matters of Singapore law related to the dispute which has arisen between you and XYZ Pte Ltd.
  5.2 Representing you in legal proceedings brought in Singapore (if it is determined to be the appropriate jurisdiction) in connection with the foregoing.
  5.3 Doing all things as may be required or necessary and/or incidental in connection with the foregoing.
6 This letter countersigned by you constitutes your Warrant to Act in favour of us with respect to representing you generally in Singapore in connection with the above matter and no further warrant to act shall be necessary for compliance with Order 64 Rule 7 of the Rules of Court.
7 Our legal fees will be based on the actual time spent in connection with this matter by the solicitors having conduct of your matter, including the time spent in meetings with you and others; preparing, reviewing and working on papers including correspondence; making and receiving telephone calls to or from you and others; preparing for and attending court on your behalf; travelling and waiting; and the overall management of this matter.
8 In addition to the actual time spent, we may also add a premium to take into account a number of factors including the complexity of the issues addressed, the speed at which action must be taken, the expertise or specialist knowledge which your matter may require; the amount of work required to be done outside normal office hours; the importance of the matter; and, if appropriate, the value of the property or subject-matter.
9 The hourly rate of the lawyers who will be handling your matter are as follows:
[The hourly rate of our senior partners is S$_______________ per hour; of our junior partners is S$_____________ per hour and that of our associates is S$_______________ per hour].
10 We keep our hourly rates constantly under review and will notify you of any changes to them.
11 We are mindful of the need to keep your costs under control, and will endeavour to do so by ensuring that all work is done at the appropriate levels of seniority with the requisite degree of supervision.
12 In accordance with our firm’s policy, we will render invoices for our services on a quarterly basis or whenever the work in progress reaches a natural break or a level which warrants an interim invoice.
13 Our invoices will be rendered in Singapore dollars and will be payable in Singapore dollars. If our invoices are not paid in full within 30 days of presentation, we reserve the right to charge interest on the amount remaining unpaid at the rate of 1% per month from the date of presentation until the date of payment. We also reserve the right, after our final invoice is sent, to issue a further invoice for any disbursements incurred by us which were omitted from that invoice. Prompt payment of our interim invoices is a condition of our continuing to act for you in this matter.
14 As this matter is a (Companies Act) matter, if the value of the subject-matter of these proceedings exceeds S$250,000 (between S$60,000 and S$250,000) (below S$60,000), it must be brought in the High Court (district court) (magistrates’ court). For your guidance only, in our experience, each day of a hearing in open court in the High Court (district court) (magistrates’ court) equates to approximately ________ hours of total work from the time of first instruction until the conclusion of the trial by the team handling the matter. This equates roughly to between S$__________ and S$___________ per day at a blended rate of between S$_________ and S$_________ per hour.
15 A dispute such as the present one, if it proceeds to trial, can take up to _____days in open court at a total cost, exclusive of disbursements, of between S$_________ and S$_________. If the matter is settled before trial, as happens in many litigious matters, our fees will be correspondingly lower. Please note that this estimate of likely fees is provided for your guidance only, and that our invoiced charges will in any event be based on the actual time spent by the lawyers handling this matter.
16 Please note that we are prohibited by Singapore law from charging fees on a contingency basis.
17 Our hourly rates set out above exclude disbursements, which are out-of-pocket expenses which we incur on your behalf. These expenses include postage charges, telephone charges, photocopying charges, court fees and the costs of airfare and/or hotel accommodation for any travel outside Singapore relating to this matter by our lawyers. A classified list of disbursements will be provided in each invoice, and an itemised list of disbursements can be provided upon request.
18 If we instruct experts, translators or other third parties on your behalf and with your approval, you will be responsible for paying their fees directly to them upon presentation of their invoices. Further, when the matter is set down for trial, it will be necessary to pay hearing fees to the court. On the basis that this matter will require a ______- day trial in the __________ Court, the hearing fees will be S$_______________. We will ask you to pay this fee directly to the court upon the matter being set down for trial.
19 As we are a business registered under Singapore’s Goods and Services Tax Act, our legal fees and certain disbursements will be subject to a 4% Goods and Services Tax (‘GST’) to be borne by you.
20 We are required by law to draw to your attention that:
20.1 you will be personally responsible for the payment to us of our legal fees, disbursements and GST in full whether or not you succeed and whether or not the Court makes an order that your opponent pay your legal fees;
20.2 in the event that you are unsuccessful, you will be ordered to pay your opponent’s legal fees, and you will have to pay these legal fees in addition to the legal fees due to us; and
20.3 even if you succeed in the litigation and the Court orders your opponent to pay your legal fees, your opponent may not be ordered to pay the full amount of the legal fees actually payable by you to us, and your opponent may not in fact be capable of paying what has been ordered against him.
21 It is normal practice for law firms to require clients to pay sums of money from time to time on account of anticipated professional fees and disbursements. We will therefore require an initial deposit of S$_______________ (approximately Singapore Dollars ______________________) before we can start work on your matter. The said deposit may be remitted via telegraphic transfer in Singapore Dollars to our bank account, the details of which are as follows :
22 Please quote our file reference in your instructions to your bankers to assist us in tracing your remittance.
23 As your matter progresses, we reserve the right to ask for further deposits from you of a quantum commensurate with the anticipated professional fees and disbursements at that stage of the matter. If such a further deposit is requested, remittance of that deposit will be a condition of our continuing to act for you. Please note that these sums are deposits only, and the total amount of professional fees and disbursements payable to us may exceed or fall below the total amount of deposits remitted to us.
24 We will hold all deposits remitted to us in our client account for your benefit. Unless you give us specific instructions, it shall be in our discretion whether or not to place such monies on interest-bearing deposit. We are entitled to set off the monies standing to your credit in our client account and any interest accrued thereon against legal fees and disbursements due to us. We will not, however, effect any set-off against our legal fees and disbursements unless we have rendered an invoice to you and notified you in writing to your last known address of our intention to effect the set-off.
25 For the purpose of exercising such set-off, we shall have the right to uplift any of your monies placed on interest-bearing deposit by us, whether at or prior to the time of maturity of the deposit and regardless of any penalty which may be imposed for early withdrawal.
26 We are entitled to terminate our engagement on the grounds set out in Rule 42 of the Legal Profession (Profession Conduct) Rules 1998. You are entitled to terminate our engagement at any time and on any grounds. Where, however, our professional costs and disbursements have not been paid in full at the time of termination, we are entitled to exercise a lien over all documents and monies held on your account until full payment is received. In the event you decide to appoint new solicitors, we will release all documents to them only upon receipt of an undertaking from your new solicitors to protect our lien as to costs over the documents handed over to them.
27 We trust that you will find the terms of our engagement satisfactory and if so, we shall be grateful if you would sign and return to us the attached copy of this letter and the enclosed Warrant to Act.
28 Please do not hesitate to contact our Mr ____________ or Mr ____________ if you require any clarification on any of the above matters or for any other purpose as this matter progresses.

Yours faithfully,

WARRANT TO ACT

I, ______________________ (NRIC No _______________) hereby agree to engage the services of M/s_____________________ on the terms and conditions set out above and hereby grant that firm my Warrant to Act for me in Singapore in connection with legal proceedings relating to ___________________________.

Signed on the                     day of                          2003.

________________________________

Name :
NRIC No

[Note: The sample Letter of Engagement reproduced above is based on time costs. You may adapt the letter to suit the manner in which you practise or how you wish to charge your client. What is important is that you must explain clearly to your client the manner in which you charge your fees.]