Arkansas Engagement Letter Compliance Review

ARKANSAS ENGAGEMENT LETTER COMPLIANCE REVIEW

Reviewer and Matter Information

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

☐ Contingent fee — writing signed by the client is mandatory under Ark. R. Prof. Cond. 1.5(c)
☐ Non-contingency engagement — basis or rate of fee and scope of representation communicated to client, preferably in writing, before or within a reasonable time after commencing representation (Rule 1.5(b))
☐ Engagement falls within Rule 1.5(b) exception (lawyer will charge a regularly represented client on the same basis as previously charged)
☐ Matter is a prohibited contingent fee under Rule 1.5(d) (see Part 4) — engagement letter does not structure the fee as contingent

Conclusion: ☐ Written signed agreement required (contingency) ☐ Written communication of fee basis required ☐ Prior-client exception documented

Part 2. Contingent Fee Agreement Requirements — Ark. R. Prof. Cond. 1.5(c)

The agreement is:

☐ In writing
☐ Signed by the client (required by Rule 1.5(c); attorney signature is best practice though Rule 1.5(c) requires only client signature)
☐ Duplicate signed copy provided to the client at the time the agreement was entered into

The written agreement states the method by which the fee is to be determined, including:

☐ The percentage(s) that shall accrue to the lawyer in the event of:
☐ Settlement: [____]%
☐ Trial: [____]%
☐ Appeal: [____]%
☐ Litigation and other expenses to be deducted from the recovery
☐ Whether such expenses are deducted before or after the contingent fee is calculated (must be explicit):
☐ Percentage applied before deduction of costs (gross recovery)
☐ Percentage applied after deduction of costs (net recovery)
☐ The agreement clearly notifies the client of any expenses for which the client will be liable whether or not the client is the prevailing party (Rule 1.5(c))

Post-Conclusion Statement Requirement (Rule 1.5(c)):

☐ Firm has a procedure to provide the client, upon conclusion of a contingent fee matter, with a written statement stating:
☐ The outcome of the matter, AND
☐ If there is a recovery: the remittance to the client and the method of its determination

Part 3. Non-Contingency Fee Communication — Ark. R. Prof. Cond. 1.5(b)

The engagement letter or written communication contains:

☐ The scope of the representation (matter, court/forum, services included)
☐ The basis or rate of the fee and expenses for which the client will be responsible
☐ Communication of any changes in the basis or rate of the fee or expenses to the client

Standard Rates Disclosed:

☐ For flat fees: the agreement explicitly identifies the services covered and the fixed amount
☐ For advance fee deposits / retainers: characterization is unambiguous (advance against future fees vs. true retainer for availability)
☐ Billing cadence and statement frequency are stated

Part 4. Ark. R. Prof. Cond. 1.5 — Reasonableness and Prohibited Contingent Fees

☐ The fee is reasonable under Ark. R. Prof. Cond. 1.5(a), applying the eight non-exclusive factors:
☐ (1) Time and labor required, novelty and difficulty of the questions involved, and skill requisite to perform the legal service properly
☐ (2) Likelihood that acceptance of the particular employment will preclude other employment by the lawyer
☐ (3) Fee customarily charged in the locality for similar legal services
☐ (4) Amount involved and the results obtained
☐ (5) Time limitations imposed by the client or by the circumstances
☐ (6) Nature and length of the professional relationship with the client
☐ (7) Experience, reputation, and ability of the lawyer or lawyers performing the services
☐ (8) Whether the fee is fixed or contingent

Prohibited Contingent Fees — Ark. R. Prof. Cond. 1.5(d):

☐ The agreement does NOT structure a fee as contingent on:
☐ Securing of a divorce, or the amount of alimony or support, or property settlement in lieu thereof (Rule 1.5(d)(1)) — any fee in a domestic relations matter so structured is prohibited
☐ Representation of a defendant in a criminal case (Rule 1.5(d)(2))

Part 5. Fee Division Between Lawyers Not in the Same Firm — Ark. R. Prof. Cond. 1.5(e)

Complete this Part only if a fee will be divided with a lawyer outside the firm.

☐ The division is either:
☐ In proportion to the services performed by each lawyer, OR
☐ Made by written agreement with the client under which each lawyer assumes joint responsibility for the representation
☐ The client has been advised of and does not object to the participation of all lawyers involved
☐ Agreement to the fee division is confirmed in writing (best practice: signed by the client)
☐ The total fee is reasonable (Rule 1.5(a))
☐ The referring lawyer reasonably believes the other lawyer is competent to handle the matter (Rule 1.1 and Rule 1.5 Comment)
☐ The agreement identifies the share each lawyer will receive (or the method of calculating it)

Part 6. Ark. R. Prof. Cond. 1.15 — Trust Accounts and IOLTA

☐ Client and third-party funds are held in a separate trust account — not in the firm operating account (Rule 1.15(a))
☐ Funds are maintained in a trust account in the state where the lawyer's office is situated, or elsewhere with the consent of the client (Rule 1.15)
☐ Qualifying nominal or short-term funds are deposited in an IOLTA account at an eligible institution approved by the Office of the Committee on Professional Conduct, with interest remitted to the Arkansas Access to Justice Foundation
☐ For client deposits large enough or held long enough to generate net interest for the client after costs, a separate interest-bearing account is established for the individual client (interest payable to the client)
☐ The eligible institution has agreed to provide overdraft notification to the Office of Professional Conduct
☐ The firm performs monthly three-way reconciliation of the IOLTA account (bank statement balance, internal checkbook/ledger balance, and sum of all individual client ledger balances must match)
☐ Required records are retained for at least five (5) years after the representation ends:
☐ Client ledger for every matter showing all deposits and disbursements
☐ Running ledger balance for each client
☐ All bank statements, canceled checks, and deposit slips
☐ Records of every trust account disbursement
☐ Monthly reconciliation reports
☐ The lawyer has filed the annual IOLTA certification with the Clerk of the Arkansas Supreme Court (filed in connection with annual license renewal)
☐ The engagement letter explains how unearned fees will be refunded upon termination (Rule 1.16)
☐ Credit card / electronic payment arrangements are structured to avoid commingling and to ensure that merchant fees and chargebacks are debited to the operating account rather than the IOLTA account

Part 7. Ark. R. Prof. Cond. 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, collection of judgment, related regulatory or tax issues)
☐ If the representation is limited in scope under Rule 1.2(c):
☐ The limitation is reasonable under the circumstances
☐ The client has given informed consent (Rule 1.0(e) definition met — material risks and reasonably foreseeable adverse consequences communicated)
☐ The agreement documents the limitation in writing
☐ Any unbundled court-appearance services comply with Arkansas court rules governing entry and withdrawal of counsel

Part 8. Ark. R. Prof. Cond. 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 (Rule 1.4(a))
☐ 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
☐ The agreement addresses the lawyer's duty to explain matters to the extent reasonably necessary to permit the client to make informed decisions (Rule 1.4(b))

Part 9. Ark. R. Prof. Cond. 1.16 / 1.19 — Termination and Client File Retention

☐ The engagement letter summarizes the attorney's right to withdraw under Rule 1.16 and the obligation to take reasonable steps to protect the client's interests upon termination
☐ The agreement explains how the client file will be released upon request, consistent with Ark. R. Prof. Cond. 1.19 (Client Files — Definition, Retention & Destruction)
☐ The firm's file retention period and destruction schedule are documented and consistent with Rule 1.19 and any applicable matter-specific retention requirements
☐ The agreement addresses return of unearned fees and unused cost advances upon termination (Rule 1.16(d))
☐ The agreement does not include any provision prospectively limiting the lawyer's liability for malpractice unless permitted by Rule 1.8(h)

Part 10. Other Required and Recommended Disclosures

☐ Conflicts of interest — agreement discloses that a conflict check has been completed and addresses procedures if a conflict later arises (Rules 1.7, 1.9, 1.10)
☐ Prospective client confidentiality — firm has procedures to honor Rule 1.18 duties to prospective clients
☐ Confidentiality — agreement acknowledges the duty under Rule 1.6, including reasonable efforts under Rule 1.6(c) to prevent unauthorized disclosure
☐ Cybersecurity / electronic communication — agreement explains use of email, cloud storage, e-signature, and any associated risks (Rule 1.1 competence / Rule 1.6 confidentiality)
☐ Use of generative AI — agreement discloses any intended use of generative AI in the representation, with attorney supervision and confidentiality safeguards (Rule 1.1 competence; Rule 5.3 nonlawyer assistance)
☐ Settlement authority — agreement states that decisions regarding settlement and other objectives rest with the client (Rule 1.2(a))
☐ Costs and expenses — categories of costs the client will bear are itemized; cost-advance policy stated
☐ Successor counsel — agreement explains how the client file will be released upon request (Rule 1.19; Rule 1.16(d))
☐ Annual license / good standing — engaging attorney confirms current payment of the annual license fee under Ark. R. Governing Admission to the Bar VII (failure to pay results in automatic suspension)
☐ Fee disputes — agreement notes that fee disputes may be addressed through the firm's internal grievance procedure or, in appropriate cases, through the Arkansas Bar Association's fee arbitration program (where available) before filing suit

Part 11. Signature and Delivery Verification

☐ Engagement letter signed by the attorney (best practice; required for contingent agreements by client only, but firm signature recommended for all)
☐ Engagement letter signed by the client (or authorized representative) — required for contingent fee agreements under Rule 1.5(c)
☐ Duplicate signed 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 date-stamped record of delivery
☐ For contingent matters: closing statement template prepared and tracked in the matter management system

Part 12. Reviewer Certification

I have reviewed the above engagement letter for compliance with the Arkansas Rules of Professional Conduct (including Rules 1.2, 1.4, 1.5, 1.15, 1.16, 1.18, and 1.19), the Arkansas Supreme Court Procedures Regulating Professional Conduct of Attorneys at Law, the Arkansas Access to Justice Foundation IOLTA program requirements, and current Office of Professional Conduct 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 Arkansas Bar No.: [________________________________]

Sources and References

• Arkansas Rules of Professional Conduct (current edition, Arkansas Judiciary)
• Ark. R. Prof. Cond. 1.5 — Fees (full rule, per curiam adoption 2016 Ark. 286)
• Ark. R. Prof. Cond. 1.15 — Safekeeping Property and Trust Accounts
• Arkansas Access to Justice Foundation — IOLTA Rules, Guidance & FAQ
• Arkansas IOLTA Program Guidebook for Attorneys (2025)
• Office of Professional Conduct — Arkansas Judiciary
• Arkansas Supreme Court Procedures Regulating Professional Conduct of Attorneys at Law
• Ark. R. Governing Admission to the Bar — Rule VII (Annual License Fee)
• Ark. Code Ann. § 16-22-201 et seq. (Attorneys at Law)
• Arkansas Bar Association — Professional Conduct Resources