Delaware Engagement Letter Compliance Review

DELAWARE ENGAGEMENT LETTER COMPLIANCE REVIEW

Reviewer and Matter Information

Part 1. Threshold Question — Writing Requirement Under DLRPC 1.5

☐ Contingent fee — writing signed by the client is mandatory under DLRPC 1.5(c)
☐ Advance fee / retainer — written statement is mandatory under DLRPC 1.5(f) (refundability and basis for earning must be disclosed)
☐ Non-contingent fee — basis or rate must be communicated "preferably in writing" under DLRPC 1.5(b); a written engagement letter is strongly recommended
☐ Regularly represented client charged on the same basis/rate as before — DLRPC 1.5(b) writing not strictly required, but firm has documented prior course of dealing

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

Part 2. DLRPC 1.5(a) — Reasonableness of Fee and Expenses

The fee agreement, on its face, satisfies the eight non-exclusive Delaware reasonableness factors:

☐ (1) Time and labor required, novelty and difficulty of the questions, and skill requisite to perform the service
☐ (2) Likelihood, if apparent to the client, that acceptance will preclude other employment by the lawyer
☐ (3) The fee customarily charged in the locality for similar legal services
☐ (4) The amount involved and the results to be 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(s) performing the services
☐ (8) Whether the fee is fixed or contingent

☐ Expenses to be charged are reasonable; in-house expenses (copying, telephone, etc.) are either charged at a reasonable amount agreed in advance or at an amount that reasonably reflects the lawyer's cost (DLRPC 1.5 cmt. [1])

Part 3. DLRPC 1.5(b) — Basis or Rate of the Fee and Expenses

The agreement, in writing:

☐ States the scope of the representation with reasonable specificity (matter, forum, services included)
☐ States the basis or rate of the fee (hourly rates, statutory fees, flat fee, contingent percentage, or other)
☐ States the expenses for which the client will be responsible
☐ Was communicated to the client before or within a reasonable time after commencing the representation
☐ Provides that any changes in the basis or rate of the fee or expenses will be communicated to the client (DLRPC 1.5(b))

Standard Rates Disclosed:

Part 4. DLRPC 1.5(c) — Contingent Fee Agreement

☐ The contingent fee agreement is in a writing signed by the client
☐ The agreement states the method by which the fee is to be determined, including the percentage(s) to accrue to the lawyer in the event of:
☐ Settlement — [____]%
☐ Trial — [____]%
☐ Appeal — [____]%
☐ The agreement states the litigation and other expenses to be deducted from the recovery
☐ The agreement states whether expenses are deducted before or after the contingent fee is calculated (gross vs. net):
☐ Percentage applied to gross recovery (before deduction of expenses)
☐ Percentage applied to net recovery (after deduction of expenses)
☐ 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
☐ The firm has a workflow in place so that, upon conclusion, the lawyer will provide the client with a written statement of the outcome and, if there is a recovery, the remittance to the client and the method of its determination (DLRPC 1.5(c))

Part 5. DLRPC 1.5(d) — Prohibited Contingent Fees

The matter does not involve a fee prohibited under DLRPC 1.5(d):

☐ Not a domestic relations matter in which the fee is contingent upon securing a divorce or upon the amount of alimony, support, or property settlement in lieu thereof
☐ Not a contingent fee for representing a defendant in a criminal case

Part 6. DLRPC 1.5(e) — Division of Fee Between Lawyers Not in the Same Firm

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

☐ The client has been advised in writing of the participation of all lawyers involved (identities and roles)
☐ The client has not objected to the participation
☐ The total fee is reasonable under DLRPC 1.5(a)
☐ Signature: For contingent fee matters, the client's signed written agreement reflects the division (best practice in all referral cases)
☐ Each lawyer participating in the division maintains a bona fide office in Delaware as required by Delaware Supreme Court Rule 12(d) (or the participating lawyer's role and admission status are otherwise compliant)

Part 7. DLRPC 1.5(f) — Advance Fees and Trust Account Treatment

For any fee collected in advance of work performed:

☐ The agreement contains a written statement that the fee is refundable if it is not earned (DLRPC 1.5(f)(1))
☐ The agreement states the basis under which the fees shall be considered to have been earned, in whole or in part (DLRPC 1.5(f)(2))
☐ The agreement provides that all unearned fees shall be retained in the lawyer's trust account (DLRPC 1.5(f)(3))
☐ The firm's procedure ensures that a statement of the fees earned is provided to the client at the time the funds are withdrawn from trust (DLRPC 1.5(f)(3))
☐ The agreement avoids labeling any advance fee as "non-refundable" (impermissible under DLRPC 1.5(f))
☐ Replenishment threshold (if any) is clearly stated: replenish when balance falls below $[________________]

Part 8. DLRPC 1.15 — Safekeeping Property (Delaware Recordkeeping Specifics)

The firm's trust-account and recordkeeping infrastructure supporting this engagement:

☐ Client and third-person funds are held separate from the lawyer's own property (DLRPC 1.15(a))
☐ Funds are held in an account designated solely for funds held in connection with the practice of law in Delaware
☐ Any lawyer funds in the trust account to cover bank charges do not exceed $2,000 and are separately stated and accounted for (DLRPC 1.15(a))
☐ Upon receipt of funds in which the client or a third person has an interest, the firm promptly notifies the client/third person and promptly delivers funds the client/third person is entitled to receive (DLRPC 1.15(b))
☐ When the lawyer and another person both claim an interest, the property is kept separate until accounting and severance; disputed portions remain separate until the dispute is resolved (DLRPC 1.15(c))
☐ The firm maintains, on a current basis, financial books and records (bank statements, cancelled checks/images, electronic-transfer records, duplicate deposit slips), and will preserve them for at least 5 years after the year to which they relate (DLRPC 1.15(d)(1))
☐ Records of electronic transfers from fiduciary accounts identify the authorizing person, date, recipient, and bank confirmation (DLRPC 1.15(d)(1))
☐ Fiduciary bank accounts are specifically designated as required by DLRPC 1.15(d)(2) and 1.15A (see Part 9)

Part 9. DLRPC 1.15A — Trust Account Overdraft Notification and Approved Depositories

☐ Each trust/escrow account used for this engagement is titled in conformity with Rule 1.15A (e.g., "[Firm Name] — Rule 1.15A Attorney Trust Account")
☐ Each such account is maintained at a financial institution approved by the LFCP, which has on file with the LFCP a current Overdraft Notification Agreement
☐ The firm understands that dishonored instruments are reported to ODC with a copy of the instrument (within 7 calendar days of ODC request) and that instruments paid against insufficient funds are reported within 7 calendar days of presentation (DLRPC 1.15A(d)–(e))
☐ The firm's IOLTA account is held at a financial institution with a Delaware physical presence and is approved by the Delaware Bar Foundation for IOLTA participation
☐ The firm has not made any change to its bank, account title, or "Delaware Lawyer in Charge" without timely updating the LFCP

Part 10. Lawyers' Fund for Client Protection — Annual Certificate of Compliance (DELAWARE UNIQUE)

The firm's engagement letter and intake workflow assume that the following Delaware-unique annual obligations are met:

☐ The reviewing attorney's annual Registration Statement has been timely filed with the LFCP and the annual assessment paid
☐ The firm has identified its Delaware Lawyer in Charge for purposes of Rule 1.15 recordkeeping, and that identification is current on the lawyer's most recent Certificate of Compliance
☐ The Delaware Lawyer in Charge has personally reviewed DLRPC 1.15 and 1.15A within the current compliance year and certified compliance
☐ The Certificate of Compliance accurately reflects each Rule 1.15A attorney trust/escrow account and IOLTA account used by the firm
☐ The firm has implemented written internal controls supporting the certifications on the Certificate of Compliance, including but not limited to:
☐ Three-way reconciliation (bank balance, book balance, client subsidiary-ledger total) at least monthly
☐ Dual review/authorization for trust disbursements over a defined threshold: $[________]
☐ Prompt review of bank notices and ODC overdraft reports
☐ Annual review of approved-bank list published by the LFCP
☐ The firm has a written succession or receiver-readiness protocol consistent with ODC guidance on closed practices

Part 11. DLRPC 1.2, 1.4, and 1.16 — Scope, Communication, and Termination

☐ Scope (DLRPC 1.2): The agreement describes the scope of representation with reasonable specificity; any limited scope representation is reasonable and the client has given informed consent (DLRPC 1.2(c))
☐ Communication (DLRPC 1.4): The agreement identifies the primary contact attorney, describes how the firm will keep the client reasonably informed, and explains how material changes to fee or scope will be communicated
☐ Termination (DLRPC 1.16): The agreement summarizes grounds for and procedures upon withdrawal/termination and the obligation to take steps reasonably practicable to protect the client's interests, including return of the client's file and any unearned advance fees
☐ Successor counsel and file: The agreement explains how the client file will be released upon request, consistent with DLRPC 1.16(d)

Part 12. DLRPC 1.7 / 1.10 — Conflicts and Other Disclosures

☐ A conflict check has been completed for the client and adverse parties (DLRPC 1.7, 1.10)
☐ The agreement addresses procedures if a conflict later arises
☐ Confidentiality under DLRPC 1.6 is acknowledged
☐ Use of generative AI in the representation, if any, is disclosed (consistent with DLRPC 1.1 (competence) and 1.6 (confidentiality))
☐ Cybersecurity / electronic communication practices (email, cloud storage, e-signature) are explained
☐ Fee-collection clause: If the agreement includes attorney's fees and costs for collection of past-due amounts, the clause complies with DSBA Ethics Opinion 2009-2 and DLRPC 1.5
☐ File retention and destruction: Retention period stated; the firm retains DLRPC 1.15 financial records for at least 5 years (fiduciary records, 5 years after completion of the fiduciary obligation)
☐ Settlement authority: The agreement states that decisions on settlement and other objectives rest with the client (DLRPC 1.2(a))
☐ Costs and expenses: Categories of costs the client will bear are itemized; the cost-advance policy is stated

Part 13. Signature and Delivery Verification

☐ Engagement letter signed by the responsible Delaware attorney
☐ Engagement letter signed by the client (mandatory if contingent under DLRPC 1.5(c); best practice in all cases)
☐ A signed duplicate has been delivered to the client
☐ 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, and preserved consistent with DLRPC 1.15(d) recordkeeping periods

Part 14. Reviewer Certification

I have reviewed the above engagement letter for compliance with the Delaware Lawyers' Rules of Professional Conduct (including Rules 1.5, 1.15, and 1.15A), the rules and forms of the Lawyers' Fund for Client Protection of the Supreme Court of Delaware, Delaware Supreme Court Rule 12(d), and current Office of Disciplinary Counsel guidance, and certify:

☐ 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 Delaware Bar ID: [________________________________]

Delaware Lawyer in Charge (Rule 1.15): [________________________________]

Sources and References

• Delaware Lawyers' Rules of Professional Conduct — Rule 1.5 (Fees)
• Delaware Lawyers' Rules of Professional Conduct — Rule 1.15 (Safekeeping Property)
• Delaware Lawyers' Rules of Professional Conduct — Rule 1.15A (Trust Account Overdraft Notification)
• Lawyers' Fund for Client Protection — Certificate of Compliance
• Lawyers' Fund for Client Protection — Approved Financial Institutions
• Delaware Bar Foundation — IOLTA Program for Attorneys
• Delaware Bar Foundation — Frequently Asked Questions Regarding IOLTA
• Office of Disciplinary Counsel — Digest of the DLRPC
• DSBA Ethics Opinion 2008-1 (Rule 1.5)
• DSBA Ethics Opinion 2009-2 (Rule 1.5 — collection costs clause)
• DSBA Ethics Opinions Index