Managing Your Practice

The Business Side of Practicing Law

Finance, HR, and IT basics for lawyers and law firm managers.  
Law Practice Management resources provide lawyers, law firm managers and legal professionals with information on practice management trends, marketing, client development, legal technology and finance. Whether you’re a solo practitioner or a managing partner at a national law firm, you’ll find law practice management and business resources to meet your day-to-day practice needs. Checklists, best practices, publications and continuing legal education programs provide up-to-date information and practical tips to help you better manage your law practice.  From retainer agreements, information about bill collection and accounting to document management and file retention, the New York State Bar Association is helping you be a better lawyer and law firm manager. 

NYSBA Publication: Best Practices in Legal Management

Best Practices in Legal Management:  A Comprehensive Guide (Includes forms on CD)
This is the most complete and exhaustive treatment of the subject of the business aspects of running a law firm available anywhere. Approximately 90 law practice management experts were asked to submit what they considered best practices for managing all "back office" functions of a law firm. The result is this comprehensive textbook which provides practical tips and best practices as well as useful forms and templates. 

Retainers, Engagement Letters, Disengagement Letters, Statement of Client Rights and Responsibilities

Requirement for Retainer Agreements
All four of the Appellate Divisions adopted a rule governing contingent fees in claims and actions for personal injury and wrongful death. This rule is mandatory. The rules for the respective Appellate Divisions are: First Judicial Department (22 N.Y.C.R.R. Section 603.7[e]); Second Judicial Department (22 N.Y.C.R.R. Section 691.20[e]); Third Judicial Department (22 N.Y.C.R.R. Section 806.13[c]); and Fourth Judicial Department (22 N.Y.C.R.R. Section 1022.31[c]). Lawyers should be aware that the language varies slightly among the different Judicial Departments. Please note, these changes do NOT apply to medical malpractice cases, which are NOT subject to the new rules and must be handled in accordance with NYS Judiciary Law 474-a.

New Client/Matter Intake

Any client who is unhappy with a law firm’s representation is a potential plaintiff in a subsequent legal malpractice action.  Be sure to analyze a prospective new client and the potential matter prior to engagement, in an effort to minimize the risk of a future disciplinary action, legal malpractice action or fee dispute. Pursuant to Rule of Professional Conduct 1.1(b): “A lawyer shall not handle a legal matter that the lawyer knows or should know that the lawyer is not competent to handle, without associating with a lawyer who is competent to handle it.” Be sure the prospective client’s matter will not overburden the firm’s finances, time and staff resources. You may also want to perform a state and federal docket search to determine whether the prospective client has been involved in any legal malpractice actions or fee disputes.

Conflicts Checks
Rule of Professional Conduct 1.7, Rule of Professional Conduct 1.9
Performing a conflict check prior to engagement will help prevent later claims of legal malpractice arising from an alleged conflict of interest. Get as many facts as possible regarding the potential parties to the matter to be sure that you do not have any conflicts of interest with any other parties or potential parties should a litigation matter result in third-party claims, counterclaims or cross-claims. Utilize a conflict checking software program to ensure that engagement is proper.

It is good practice to create and maintain the following file opening procedures:
* Prepare a file-opening form.
* Establish procedures so that a file/billing number cannot be assigned without first performing a conflicts check.
* Update file-opening forms when new parties are added to a matter.

Utilize conflict checking software which searches all active, inactive and closed matters for potential conflicts. Conflict checking software is only as good as the information that is inputted into the system. Be sure that all relevant client information is entered into the system, updated and adequately backed up in the event of system failure.

Engagement Letters/Part 1215 Requirement
Engagement letters confirm the scope of representation and set forth the parties’ responsibilities, billing rates/contingency agreements and expense costs. Engagement letters discuss the scope of the firm’s representation and the limits of it. A simple litigation matter can become quite complicated if a party files for bankruptcy, takes an appeal, enters receivership, becomes subject to a guardianship situation or dies. Make sure that the prospective client understands the exact scope of the firm’s representation. The retainer agreement should memorialize the bounds of the firm’s actual representation. If the law firm has no intention of pursuing appeals on behalf of its client, then it must explicitly state that appeals are not part the firm’s representation, unless a separate retainer is executed.

Title 22 Part 1215 of the Official Compilations of Codes, entitled “Written Letter of Engagement” mandates that attorneys provide their clients with engagement letters. Part 1215.1 states:
a. Effective March 4, 2002, an attorney who undertakes to represent a client and enters into an arrangement for, charges or collects any fee from a client shall provide to the client a written letter of engagement before commencing the representation, or within a reasonable time thereafter (i) if otherwise
impracticable or (ii) if the scope of services to be provided cannot be determined at the time of the commencement of representation. For purposes of this rule, where an entity (such as an insurance carrier) engages an attorney to represent a third party, the term “client” shall mean the entity that engages the attorney. Where there is a significant change in the scope of services or the fee to be charged, an updated letter of engagement shall be provided to the client.

b. The letter of engagement shall address the following matters:
1. Explanation of the scope of the legal services to be provided;
2. Explanation of attorney’s fees to be charged, expenses and billing practices; and, where applicable, shall provide that the client may have a right to arbitrate fee disputes under Part 137 of the Rules of the Chief Administrator.

c. Instead of providing the client with a written letter of engagement, an attorney may comply with the provisions of subdivision (a) by entering into a signed written retainer agreement with the client, before or within a reasonable time after commencing the representation, provided that the agreement addresses the matters set forth in subdivision (b).

The engagement letter must: 1) explain the scope of the legal services to be provided; 2) explain the attorney’s fees to be charged, expenses and billing practices; and 3) where applicable, provide that the client may have a right to arbitrate fee disputes under Part 137 of the Judiciary Rules.

Part 1215 has exceptions.  Engagement letters are not required in the following situations: 1) where the fee to be charged is expected to be less than $3,000; 2) where the attorney’s services are of the same general kind as previously rendered to and paid for by the client; 3) when representing a client in a domestic relations matter subject to Part 1400; or 4) where the attorney is admitted to practice in another jurisdiction and maintains no office in the State of New York, or where no material portion of the services are to be rendered in New York.

Non-engagement Letters
To minimize risk a firm should send a non-engagement letter when it decides not to accept a client. A non-engagement letter should be direct, concise and in plain English, and it should explicitly inform the prospective client that the law firm will not accept retention. It is highly advisable to send such letters via certified mail, return receipt requested, such that evidence exists in the event a statute of limitations issue later arises.

Disengagement Letters
When a matter or transaction has concluded, send a letter to the client advising that the attorney-client relationship has terminated. Disengagement letters are best delivered via certified mail.  Sending a disengagement letter is an effective risk prevention tool, as it provides a concrete date for purposes of statute of limitations defenses in the event of a later legal malpractice claim. Disengagement letters may act to curtail any later tolling arguments of a continuous representation.

Additional Documents:
Sample Letter of Engagement

Statement of Client Rights and Responsibilities

Purchase Laminated Statement of Clients Rights and Responsibilities

CNA Lawyer's Toolkit 3.0: A Guide to Managing the Attorney-Client Relationship

NYSBA CLE Malpractice Programs

Applying for Malpractice Insurance 2018 | 2.0 Law Practice Management
Learn about malpractice insurance considerations while gaining practical tips when applying for and purchasing the appropriate coverage. 

Understanding Your Malpractice Insurance | 2.0 MCLE Credits 
This program will provide a thorough understanding of your malpractice insurance policy and the insurance application process. Panelists will take you step-by-step through the application process and will provide practical tips when applying for professional liability insurance. Fee suits will also be discussed. Panelists will also cover when it is appropriate to sue for fees and how to manage the risk of fee disputes in a tough economy. Topics also include conflicts, the New York Rules of Professional Conduct, engagement and non-engagement letters, and serving on client board.  

Legal Malpractice 2017 | 4.0 MCLE Credits 
Lawsuits against lawyers arising from errors and/or omissions in the performance of legal services continue to rise. It is an essential part of a law firm’s business practice to evaluate its legal risk and malpractice insurance needs. This program is designed to educate attorneys on how to prosecute and/or defend a legal malpractice action. In addition, this program will educate attorneys about their legal malpractice exposures, what they should do in the event that a lawsuit or a grievance complaint is filed against them, and what they should do when situations arise that indicate that a legal malpractice claim is likely. Both solo practitioners and members of larger firms would benefit from knowing how to assess professional liability risk and manage legal malpractice litigation.

Malpractice Insurance - The Application Process | 1.5 MCLE Credits 
This program provides an overview of malpractice insurance and the application process. Get tips and best practices from both the carrier and broker perspective.

Docket and Calendar Management

Approximately twenty-five percent of legal malpractice claims result from calendaring issues, such as failure to know a deadline, failure to timely file, failure to record in a calendar or failure to respond to a calendar reminder.  A law firm should use calendaring for all projects, events and deadlines. To prevent delays and missed deadlines, supervisory attorneys should perform a workload analysis of subordinate attorneys on a frequent basis. The use of a central department to monitor individual supervision will assist in the monitoring of important dates. For more information about the New York State Bar Association's Affinity Partnership with CLIO visit  Clio.  NYSBA members receive a 10% lifetime discount; newly admitted attorneys receive a one-year FREE period. Click here to learn more.


Billing Systems and Controls
A law firm should send clients bills frequently and in accordance with the terms of engagement letters. Clients are more likely to feel that their matters are being actively managed. Articles of interest on billing are posted below.  

Converting Hours Worked into Dollars Received: How to Get the Bills Out and Receivables Collected by Joel A. Rose  
Nine Essential Billing and Collection Skills for Lawyers
 by Joel A. Rose  
For CLE programs on Alternative Fee Arrangements and Billing,  click here.

Escrow Accounts and IOLA

Attorney Escrow Accounts - Your "must have" book
Attorney Escrow Accounts, Fourth Edition is a handy reference for newly admitted and seasoned attorneys. It comprehensively covers the most common situations where attorneys handle client funds and clearly discusses the legal and ethics issues encountered.

Insurance Programs for NYSBA Members

Take advantage of comprehensive, competitive insurance programs available through our exclusive insurance administrator, USI Affinity. USI Affinity offers a broad spectrum of insurance products for NYSBA members, their firms, and their employees – ranging from Individual Life, Disability, Auto & Home…to Lawyers’ Professional Liability…to group Medical & Prescription Drug, and more.

Document Management and File Retention

There are tens of thousands of boxes of closed client files sitting around in warehouses, storage buildings, spare offices and, believe it or not, probably garages. Some firms spend thousands of dollars on closed file storage. While many firms are starting to move towards paperless office environments, many attorneys are asking about what to do with their banker boxes full of closed files. “How long do I have to keep my closed files?” is one of the most frequent questions sent to the “Ask LPM” email box.   Rule 1.15(d) of the New York Rules of Professional Conduct outlines bookkeeping requirements.

Rule 1.15(d) of the New York Rules of Professional Conduct:
(d) Required Bookkeeping Records.  
(1) A lawyer shall maintain for seven years after the events that they record:  
(i) the records of all deposits in and withdrawals from the accounts specified in Rule 1.15(b) and of any other bank account that concerns or affects the lawyer’s practice of law; these records shall specifically identify the date, source and description of each item deposited, as well as the date, payee and purpose of each withdrawal or disbursement;  
(ii) a record for special accounts, showing the source of all funds deposited in such accounts, the names of all persons for whom the funds are or were held, the amount of such funds, the description and amounts, and the names of all persons to whom such funds were disbursed;  
(iii) copies of all retainer and compensation agreements with clients;  
(iv) copies of all statements to clients or other persons showing the disbursement of funds to them or on their behalf;  
(v) copies of all bills rendered to clients;  
(vi) copies of all records showing payments to lawyers, investigators or other persons, not in the lawyer’s regular employ, for services rendered or performed;  
(vii) copies of all retainer and closing statements filed with the Office of Court Administration; and   
(viii) all checkbooks and check stubs, bank statements, prenumbered canceled checks and duplicate deposit slips.

We refer attorneys to consult Ethics Opinion 460 – 2/18/77 (12-77) - Preservation of Closed Files which describes the circumstances under which lawyers may dispose of closed files. To quote from the opinion “What is required of lawyers must for the most part be determined in the light of common sense and certain general principles of considerably broader application.” The final paragraph of the opinion states “Whenever possible, the client should be consulted concerning the disposition of his files and encouraged to preserve them on his own. Lawyers are advocates and advisors.  They are not warehousemen or perpetual repositories for the files of their clients. A good lawyer need not retain his clients by holding on to their files and a poor one will soon learn that such tactics avail him nothing but additional expense.” Ethics Opinion 623 should be reviewed when dissolving a law firm and procedures for disposing of closed files.

Ethics Opinion 641
- 02/16/1993 (40-92)
discusses disposition procedures and compliance with recycling regulations. In many communities there are recycling regulations. “A lawyer who is subject to a recycling law must ensure that compliance with that law does not entail violation of the lawyer's obligation to maintain the confidentiality of client information.” 

In disposing of client files, it is important to remember the need to preserve client confidences and secrets. If you use a recycling or shredding company to dispose of paper, take extra care to ensure that disposed documents are not reviewed by third parties.  Similar steps should also be taken when donating, recycling, or disposing of firm computers. Deleting an electronic file from a hard drive does not mean that a record is destroyed in the same way that paper can be destroyed. “Scrubbing” software should be used.   

File Retention Policies – Your Firm Should Have One
Your firm should have a file retention policy in place.  A file retention policy is provides a step-by-step outline of the processes and procedures on how firm files should be closed, retained and destroyed. Links to sample file retention policies and resources on document management are available at the links below:

Sample Document Retention Policy from Prolegia  
Practice Management Resource Center Sample Closed File Check List

Tell Your Clients about Your File Retention Policy – Review Your Retainer
You should tell your clients about your file retention and destruction policy when you are retained. You should include your policy in your retainer agreement or engagement letter to set expectations at the outset and clearly indicate that file destruction is anticipated a certain number of years after the representation. This keeps everyone on the same page as to what happens with the contents of the file while the matter is pending and after the file is closed. For example your retainer can include the following language: “The firm retains closed files for at least seven years after they are closed.”

You should also include a reminder that copies of all pleadings, correspondence and other documents will be provided to the client during representation. The client is free to maintain a copy of the file and keep it forever. For those firms striving to go paperless, retainers sometimes note that most original documents will be scanned and forwarded to clients as they arrive at the office, and that the firm will keep only an electronic record of that document.  

What You Should Keep for More than Seven Years
You should always evaluate the statutes of limitation for legal malpractice cases; retain these files for at least as long as anyone could conceivably make a claim in connection with your work. Original wills, client files involving minors or those under a disability, select real estate files, family law matters for instance those involving matters relating to future college or school tuition and expenses should be kept for more than 7 years. Disposing of closed client files requires good judgment and common sense.  

Article of Interest |  Safe-Guarding Client Information: Basic Data Security Training for Lawyers by John R. McCarron, Jr., Esq.   
For more information, review the NY Rules of Professional Conduct, Ethics Opinions 460, 623 and 641.

Ethics Opinions on Document Management, File Retention, Closed Files 

New York Rules of Professional Conduct

Opinion 680 – 1/10/96(57-95 )
Digest: Lawyers may retain some records in the form of computer images, but certain records must be retained in original form
Question: May lawyers comply with the mandatory record-retention provisions of the Code by storing records in the form of computer-generated images or by other electronic means?

Opinion 724 -11/30/99
Digest: A lawyer who drafts a client’s will should agree in advance whether the lawyer will maintain the original will for safekeeping and, if so, what obligations the lawyer will thereby assume. At least absent agreement to the contrary, if the lawyer has maintained the client’s original will, after the client’s death the lawyer must assure that the executor and/or beneficiaries are aware of its existence, unless the lawyer knows of a later valid will. Absent agreement, the lawyer has no obligation to take steps to learn of the client’s death or to file the original will with an appropriate court. However, the lawyer should clarify in advance whether or not the lawyer is to undertake these or other additional obligations and must comply with whatever agreement is made.
Code: DR 2-103 (A), 4-101; EC 2-3, 4-6
Question: If a lawyer keeps custody of a client’s original will, absent agreement does the lawyer have an obligation to learn of the client’s death, to file the original will with an appropriate court?

Opinion 623 –11/7/01(38-90)
Digest: Procedures for disposing of closed files; partners’ ethical obligations are joint and several
Code: DR 1-102 (A)(5), 4-101(B)(1), 4-101(D), 9-102(B), 9-102(D), 9-102(G); E-C 1-5, 4-4, 4-6, 7-1, 7-8, 7-11, 7-12.
Question: What procedures should a lawyer undertake when disposing of closed files and to what extent are those procedures affected by dissolution of the lawyer’s firm?

Opinion 460 – 2/18/77 (12-77)
Digest: Circumstances under which lawyers may dispose of closed files
Code: EC 1-5, 4-6, 7-1, 7-8, 7-11, 7-12; DR 1-102 (5), 4-101
Question: Under what circumstances may a lawyer properly dispose of closed files relating to his client?

Disaster Planning and Emergency Preparedness

We have all witnessed in graphic detail scores of people and regions around the world devastated by unforeseen and wholly unpredictable events – natural disasters, fires, storms, floods and earthquakes, along with the specter of terror attacks or power outages. Law firm businesses cannot afford to take a “wait and see” attitude in this crucial business reality. In addition to the serious human toll of such events, the business implications are astounding and often crippling – potential loss of income and clients, malpractice liability exposure and worse.

Is your firm prepared?
Most law firms know they need a disaster recovery plan, but don’t have one. Maybe your firm has started its emergency planning procedures, but how can you be certain it is comprehensive or that you are not overlooking important functions, contingencies and considerations? Without an effective and customized plan, your firm is at risk. An action plan and checklist incorporating the best practices in emergency planning and disaster recovery for law firms is key. Click here to start your firm’s planning and to download a sample Disaster Recovery Template created by Barry Jackson, CPA, CLM. You can use this as a loose guide and specifically tailor it for your firm. There are much more sophisticated procedures out in the marketplace. This template is simply designed to start the process.  A records disaster recovery program identifies and protects records encompassing vital files, documents (hard copy and electronic) and information necessary for a law firm to maintain business continuity in case of a disaster or emergency. Knowledge of the physical layout of your premises is critical to safe evacuation of personnel, retrieval of important documents and equipment, restoration of services, and planning to repair or rebuild. A detailed floor plan should be part of your disaster plan.  

Disaster Planning and Emergency Preparedness - Best Practices for Solo Practitioners
An unforeseen crisis can be difficult to manage and can jeopardize your law practice. Planning ahead is essential to providing competent representation and preventing disciplinary problems. Most law firms know they need a disaster recovery plan, but don’t have one. Maybe your firm has started its emergency planning procedures, but how can you be certain it is comprehensive or that you are not overlooking important functions, contingencies and considerations? Without an effective and customized plan, your firm is at risk.

This program covers:

  1. Law Practice Continuity - Learn how to prepare for retirement, disability or other planned or unplanned interruptions in the practice of law
  2. Ethical Risks – Don't risk your good standing status by neglecting to plan ahead
  3. Preparedness Manuals, Action Plans and Checklists - Best practices in emergency planning and disaster recovery for law firms
  4. Physical Facilities: Knowledge of the physical layout of your premises is critical to safe evacuation of personnel, retrieval of important documents and equipment, restoration of services, and planning to repair or rebuild
  5. Records Protection, Retention and Storage: A records disaster recovery program identifies and protects records encompassing vital files, documents (hard copy and electronic) and information necessary for a law firm to maintain business continuity in case of a disaster or emergency.

View an outline from the program | Disaster Planning and Emergency Preparedness for Solo and Small Firm Practitioners by Deborah Scalise, Esq.

Professional Services Guide

NYSBA's Legal Resource Guide features comprehensive information on products, companies and vendors that may be of interest to attorneys in New York.

Member Benefits and Savings Programs

Enhance the efficiency and lower the cost of your practice with special discount programs for NYSBA members. From insurance and financial services to discounted office products, your NYSBA membership gets you dramatic savings on important services every practice needs.  Save time and money with members-only programs like group health insurance from MVP, financial services from Bank of America, free legal research, discounts on CLE of more than 30%, practice management software, hardware and resources, and much more.

Human Resources and Hiring Staff

The following programs on human resource compliance and hiring staff provide insights to growing your firm and managing staff. 

The Lawyer as Employer 2018 | 2.0 Law Practice Management
This program addresses deciding when you need an employee and what that employee should be, an association or a paralegal. Additional topics to be covered are human resource issues, exempt vs. nonexempt, and millennial exemptions in the workplace.

HR Issues for the Solo or Small Practice | 1.0 Areas of Professional Practice
This program will include the following topics: What Types of Staff Members Should You Hire? When Is the Best Time to Hire? How Can You Create a Competitive Competition Structure You Can Afford? What Types of Incentive Programs Can You Put Into Place? How Will You Manage Your Team? Partner, Employee or Contractor – Which Is Best?  What Legal and Tax Responsibilities Do You Have as an Employer? How Will You Deal with the Affordable Care Act? 

Article of Interest |  Contract Attorneys: How A Small Firm Can Reap Huge Benefits by Cynthia Feathers and Craig S. Brown