Establishing Attorney-Client Relationship

Preliminary Considerations

The functions and benefits of an attorney for a new or established business should extend beyond legal factors to include independent and candid advice on economic and business aspects of the business. It is critical when counseling a client who wishes to form a new business to get that client to fully explore the business risks of the proposed venture, since those risks, such as failure to benefit from the expected market, are often, but no always, more important than the legal risks. The client starting a new business should be assured that one realistic approach in appraising whether to begin a business is to overestimate the difficulties and financial commitment and underestimate the profits. Additionally, it may be helpful to remind the client that this is not the only business opportunity that will present itself. If the attorney thinks that the business will not be profitable for the client or that it is underfinanced or not worth the risks, he or she would do the client a favor by saying so. Providing a candid appraisal of whether a client should go forward with the business is sometimes the best advice that an attorney can provide; the business and financial advice may well prove far more valuable to the client in the long run than pure legal advice.

Agreement for Services

The attorney-client relationship is generally established by agreement when the client consults with the attorney regarding a specific legal problem and the lawyer agrees to accept the matter. There need not be a written contract except when the legal fees are reasonably expected to be above $1,000. In some cases, the attorney client relationship can be implied from the actions of the parties without any express agreement. A written contract specifying the terms of the representation can help reduce misunderstandings and increase client satisfaction. Form of Agreement

A written attorney-client fee contract with a retainer should be used in cases where the parties desire a formal arrangement regarding the services that will be rendered by the lawyer. The agreement should cover all the important aspects of the attorney-client relationship.

Business Entity, Consulting and Economic Advice

First and foremost, counsel must be able to provide expert guidance on selection of the appropriate business entity and the procedures that must be followed in order to comply with the operational rules of the selected entity. Beyond expertise with a given entity, counsel must be able to provide

Counsel also must be knowledgeable about the permit and licensing requirements that may apply to the particular business. Finally, counsel must provide guidance regarding the terms of various commercial transactions that are typically faced by any new or growing business.

Business Information

Information regarding the proposed business activities of the client should include:

1. A detailed description of the proposed business, including the types of products and services which are to be provided by the business, the geographic regions in which the business will be conducted and the nature of the customer base;
   
   
2. In the case of existing businesses, a brief description of the history of the business;
   
   
3. A summary of the actual gross receipts, net profit before taxes and tax liabilities of the business over the last three years, as well as an estimate of such amounts for the next three years;
   
   
4. A description of all of the known licensing or permit requirements associated with the conduct of the business, including any material information regarding past efforts to comply with such requirements;
   
   
5. A description of the value and the nature of any machinery, equipment or inventory of the business, as well as an estimate of the relative importance of such items to the conduct of the business in relation to any other production or service factors (e.g., capital or human resources);
   
   
6. An estimate of the working capital requirements of the business for the next three years and a description of the manner in which the funds are to be raised (e.g., retained earnings, equity investment or borrowings from private or commercial lenders);
   
   
7. A summary of any known prohibitions on the type of legal business entity which can be used to conduct the proposed business); and
   
   
8. A description of any known economic or legal risks which may be associated with the business, including product liability, automobile liability, potential tort liability due to the hazardous nature of facilities provided or the services to be performed, employee compensation, risk of financial losses and need to enter into any long-term contractual obligations which may survive the termination of the business.

AGREEMENTS, DOCUMENTS & FORMS:

Attorney-Client Fee Agreement with Retainer
Engagement Letter
Conflict of Interest
Consent to Representation
New Corporation Questionnaire
New Partnership Questionnaire
New Limited Partnership Questionnaire
New Limited Liability Company Questionnaire
General Information Collection Worksheet
Conflict Letter for Formation of General Partnership