Corporate
Corporate Tip 1: Engagement Letter - Who is Your Client?
When drafting an engagement letter, identifying the client is not always straightforward. For instance, when instructed by a legal counsel of a parent company to represent one of its subsidiaries, determining whether the client is the subsidiary, the parent, or both can be ambiguous. To address this, it is advisable to incorporate standard language in the engagement letter template, explicitly stating that only the specific group company or companies for which work is undertaken will be considered clients. This clarification not only helps in conflict management but also ensures clarity in representation.
Similarly, when individuals or a group of individuals are initiating the establishment of a company, it becomes uncertain whether these individuals or the company itself should be regarded as the client. As the company formation progresses, the client's identity may shift, necessitating the law firm to transition to representing the company directly. In such cases, it is prudent for the firm to conclude its engagement with the individuals and issue a new engagement letter to the company.
Law firms may also receive instructions from individuals acting on behalf of others, such as requests from another law firm for assistance, instructions from someone with power of attorney, or instructions from a spouse regarding jointly owned property. In each case, it is crucial for the firm to determine the true client, to ensure there is no risk of prejudicing the client's interests, and to verify that the intermediary has the authority to give instructions. Careful consideration is crucial in all such instances to protect the client's interests and prevent potential conflicts.
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