Alabama Engagement Letter Compliance Review

ALABAMA ENGAGEMENT LETTER COMPLIANCE REVIEW

Reviewer and Matter Information

Part 1. Threshold Question — Is a Written Agreement Required?

☐ Contingency fee agreement — writing mandatory under Ala. R. Prof. C. 1.5(c)
☐ Non-contingency engagement — writing strongly recommended under Ala. R. Prof. C. 1.5(b) and Comment to 1.5(a) (signed writing weighs against "clearly excessive" finding)
☐ Lawyer has previously represented this client on the same basis and rate (writing not strictly required for fee basis, but a current engagement letter is still best practice)
☐ Matter is within a prohibited category for contingency — see Part 2 below

Conclusion: ☐ Written agreement required ☐ Strongly recommended (document basis above)

Part 2. Ala. R. Prof. C. 1.5(d) — Prohibited Contingencies

If a contingency or hybrid structure is contemplated, confirm:

☐ The matter is not a domestic relations matter in which the fee is contingent on securing a divorce or on the amount of alimony, support, or property settlement
☐ The representation is not a criminal defense matter
☐ The matter is not otherwise subject to a statutory fee cap that the agreement must respect (e.g., workers' compensation fees subject to court approval under Alabama law; medical liability matters; wrongful death; minor's settlements requiring court approval under Ala. Code § 26-2A-6 / Rule 17(d), Ala. R. Civ. P.)

Conclusion: ☐ Contingency permitted ☐ Contingency prohibited ☐ Contingency permitted but subject to statutory cap or court approval

Part 3. Contingency Fee Agreement Requirements (Ala. R. Prof. C. 1.5(c))

The agreement is in writing and:

☐ Signed by the client (signature by the attorney is best practice; signed writing weighs against "clearly excessive" finding under 1.5(a))
☐ States the method by which the fee is to be determined, including the percentage that accrues in the event of settlement, trial, and appeal: settlement [____]%, trial [____]%, appeal [____]%
☐ States the litigation and other expenses to be deducted from the recovery
☐ States whether expenses are deducted before or after the contingent fee is calculated:
☐ Percentage applied before deduction of costs (gross recovery)
☐ Percentage applied after deduction of costs (net recovery)
☐ Identifies which costs (filing fees, depositions, expert fees, medical records, mediation, travel, etc.) the client will bear
☐ Addresses how medical bills, liens, and subrogation will be handled at disbursement (hospital liens under Ala. Code § 35-11-370 et seq.; Medicare/Medicaid; ERISA)
☐ States how the agreement is to be terminated by either party and what fee the attorney is entitled to if discharged before the conclusion of the matter (quantum meruit principles under Alabama law)
☐ Upon conclusion of the matter, the attorney will provide the client a written closing statement showing the outcome and, if there is a recovery, the remittance and the method of its determination

Tiered rate (if applicable):

Part 4. Non-Contingency Fee Agreement (Hourly, Flat, Hybrid) — Ala. R. Prof. C. 1.5(b)

The agreement (preferably in writing) contains:

☐ The basis or rate of the fee communicated to the client before or within a reasonable time after commencing representation
☐ The scope of representation (matter, court/forum, services included)
☐ A schedule of hourly rates for each timekeeper (attorney, associate, paralegal) or, for flat fees, the precise services covered
☐ The categories of costs and expenses the client will bear, and any markup or pass-through methodology (consistent with RO-2005-02 / ABA Formal Op. 93-379)
☐ A statement that office overhead (library, malpractice insurance, rent, utilities) is included in the professional fee unless expressly disclosed otherwise
☐ Disclosure of any advance fee deposit / retainer, and whether such advance is held in trust until earned (see Part 5)
☐ A statement regarding how rate changes will be communicated and become effective (advance written notice; signed amendment if scope changes)
☐ A statement of the firm's billing frequency and payment terms, including any interest or late charges (which must themselves comply with Rule 1.5(a) "clearly excessive" analysis)

Standard Rates Disclosed:

Part 5. Ala. R. Prof. C. 1.15 — Trust Accounts and IOLTA Compliance

☐ The firm maintains a client trust account at an "eligible institution" as defined in Ala. R. Prof. C. 1.15(g) (an FDIC-insured Alabama-authorized bank or savings and loan that has agreed to report overdrafts and to remit interest to the Alabama Law Foundation)
☐ The firm has filed annual IOLTA certification with the Alabama State Bar; next due October 31, [____]
☐ The agreement explains that unearned fees and client funds are deposited into the IOLTA (or, if substantial in amount or to be held for a long period, into a separate interest-bearing account for the individual client's benefit)
☐ The agreement states that the lawyer will withdraw fees from trust only as they are earned, with notice to the client at withdrawal as appropriate
☐ The agreement does not label any advance fee as "non-refundable" except to the extent permitted by Alabama authority (a true general retainer for availability may be earned on receipt; a flat fee for future services must be held in trust until earned, consistent with Rule 1.15 and current Alabama State Bar guidance)
☐ The agreement explains how unearned fees will be refunded upon termination (Ala. R. Prof. C. 1.16(d))
☐ The firm performs three-way reconciliation (bank statement / client ledgers / trust journal) at least monthly
☐ The firm retains trust account records for at least 6 years after the end of the representation (Rule 1.15)
☐ Only the lawyer's own funds necessary to pay bank service charges, and unearned client funds, are held in trust (no commingling)
☐ The firm has documented procedures for handling disputed funds (held in trust until the dispute is resolved per Rule 1.15(d))

Part 6. Ala. R. Prof. C. 1.5(e) — Fee Division With Lawyers Outside the Firm

Complete this Part only if a fee will be divided with a lawyer not in the same firm.

☐ The matter is a contingency fee case — division between referring and receiving lawyer is permitted without joint responsibility under Ala. R. Prof. C. 1.5(e)(1)(c); OR
☐ The matter is non-contingency — division is in proportion to services performed under 1.5(e)(1)(a); OR
☐ The matter is non-contingency — by written agreement with the client, each lawyer assumes joint responsibility for the representation under 1.5(e)(1)(b)
☐ The client is advised of and does not object to the participation of all the lawyers
☐ The client is advised that a division of fee will occur
☐ If the client asks, the share each lawyer will receive is disclosed
☐ The total fee is not clearly excessive under 1.5(a)
☐ Best practice: client signs a written acknowledgment of the division

Part 7. Ala. R. Prof. C. 1.2 — Scope of Representation

☐ The scope of representation is described with reasonable specificity (matter, court/forum, services included)
☐ Services expressly excluded are listed (e.g., appeals, post-judgment collection, related regulatory or tax issues, immigration consequences in criminal matters)
☐ If the representation is limited in scope:
☐ The limitation is reasonable under the circumstances
☐ The client has given informed consent after consultation
☐ The limitation is documented in writing
☐ The agreement notes that decisions on settlement, plea, and other objectives rest with the client (Rule 1.2(a))
☐ The agreement notes the lawyer shall not counsel or assist in conduct the lawyer knows is criminal or fraudulent (Rule 1.2(d))

Part 8. Ala. R. Prof. C. 1.4 — Communication

☐ The agreement identifies the primary contact attorney and a back-up contact
☐ The agreement describes how the firm will keep the client reasonably informed about the status of the matter
☐ The agreement explains how material changes to the fee or scope will be communicated (advance written notice of rate increases; signed amendment for scope changes)
☐ The agreement identifies preferred channels (mail, email, secure portal) and expected response times
☐ For matters with multiple decision points (litigation strategy, settlement, plea), the agreement describes the consultation process with the client

Part 9. Conflicts of Interest — Ala. R. Prof. C. 1.7–1.10

☐ A conflict check has been completed against current and former client databases
☐ The agreement discloses any current or potential conflict for which informed consent may be required (Rule 1.7, 1.8, 1.9)
☐ For conflicts requiring informed consent confirmed in writing, the written consent has been obtained and is attached or incorporated
☐ The agreement addresses joint representation (where applicable): consequences if a dispute arises among co-clients, sharing of confidences within the joint representation, and the lawyer's obligation to withdraw if the joint representation becomes unworkable
☐ The agreement addresses business transactions with the client (Rule 1.8(a)) if any are contemplated
☐ The firm screens for imputed conflicts under Rule 1.10

Part 10. Other Recommended Disclosures

☐ Confidentiality — agreement acknowledges the duty under Rule 1.6
☐ Professional liability insurance — current carrier and coverage limits noted internally; disclosure to client recommended as best practice (Alabama does not impose a Rule 1.4–type minimum-insurance disclosure mandate, but disclosure is good practice for solo and small firms)
☐ Use of generative AI — agreement discloses any intended use of generative AI in the representation, and the firm has documented an AI usage and supervision policy consistent with Rule 1.1 (competence) and Rule 1.6 (confidentiality)
☐ Cybersecurity / electronic communication — agreement explains use of email, cloud storage, e-signature, and any associated risks; client consents
☐ File retention and destruction — agreement states the firm's retention period (recommended: 6 years minimum to align with the Alabama State Bar disciplinary limitations period and Rule 1.15 trust record requirements; longer for criminal, estate planning, minor's matters)
☐ Withdrawal and termination — agreement summarizes the lawyer's right to withdraw under Rule 1.16 and the obligation to take reasonable steps to protect the client's interests upon termination
☐ Successor counsel and the client file — agreement explains how the file will be released upon request (Rule 1.16(d); see Alabama State Bar guidance on client files)
☐ Costs and expenses — categories itemized; cost-advance policy stated
☐ Settlement authority — decisions regarding settlement rest with the client (Rule 1.2(a))
☐ Dispute resolution — any agreed-upon fee-dispute resolution process (Alabama State Bar Fee Dispute Resolution Program is voluntary; mandatory pre-dispute arbitration of malpractice claims requires informed consent under Rule 1.8(h) and should ordinarily be avoided)

Part 11. Signature and Delivery Verification

☐ Engagement letter signed by the attorney
☐ Engagement letter signed by the client (or authorized representative)
☐ Copy delivered to the client at the time the contract was entered into
☐ Method of delivery documented: ☐ In person ☐ Mail ☐ Email ☐ Secure portal ☐ E-signature platform: [________________]
☐ Signed copy retained in the matter file (paper or electronic) with a date-stamped record of delivery
☐ The firm's retention policy will preserve the executed engagement letter for at least 6 years after the close of the matter

Part 12. Reviewer Certification

I have reviewed the above engagement letter for compliance with the Alabama Rules of Professional Conduct (including Rules 1.2, 1.4, 1.5, 1.6, 1.7–1.10, 1.15, and 1.16), the Alabama Rules of Disciplinary Procedure, the Alabama Law Foundation IOLTA program rules, and current Alabama State Bar Office of General Counsel and Disciplinary Commission guidance, and certify the following:

☐ All applicable items are checked, OR
☐ Deficiencies have been identified and a remediation plan is documented below

Deficiencies / Remediation Notes:

[____________________________________________________________]

[____________________________________________________________]

[____________________________________________________________]

Reviewer Signature: ________________________________ Date: [__/__/____]

Reviewer Printed Name and Alabama State Bar ID: [________________________________]

Sources and References

• Alabama Rules of Professional Conduct (current edition) — Alabama Judicial System
• Ala. R. Prof. C. 1.5 (Fees)
• Ala. R. Prof. C. 1.15 (Safekeeping Property)
• Alabama State Bar — Office of General Counsel
• Alabama State Bar — Formal Opinion RO-2005-02 (Billing for Fees, Costs and Expenses)
• Alabama State Bar — Formal Opinion on Fee Splitting (Rule 1.5(e))
• Alabama State Bar — Trust Accounting for Alabama Attorneys Handbook
• Alabama Law Foundation — IOLTA Program (sole IOLTA recipient effective Feb. 2025)
• Ala. Code § 34-3-1 et seq. (Attorneys at Law)