[Name of Clients]
[Date]
Page 1
Sample Form of Engagement Letter
(Consent to Multiple Representation of Initial
Investors in Organizing a Limited Partnership
and Acting as its Counsel)
[PLEASE NOTE: This form is to be used when we are representing all the initial general and limited partners in the formation of the Partnership and is, therefore, inappropriate for most limited partnership formations, in which we typically will represent the general partner(s) only prior to completion of the formation of the partnership and then represent the partnership only. In those typical cases, please use the sample form for representation of general partner(s) in organizing a limited partnership and acting as its counsel (Doc. No. XXX).]
[PLEASE NOTE, FURTHER: UNLESS YOU HAVE HAD SUFFICIENT
EXPERIENCE WITH THIS FORM THAT YOU ARE CONFIDENT
OF YOUR ABILITY TO COMPLETE IT PROPERLY, PLEASE RUN A DRAFT BY XXX BEFORE FINALIZING THE LETTER]
[Date]
[Names and Addresses of Clients]
Dear ______:
We are pleased that you have requested that XXX (the "Firm") represent all of you in organizing a new limited partnership (the "Partnership") for the purpose of engaging in [Description of new limited partnership’s intended business]. You have also requested that the Firm serve as counsel to the Partnership following its organization. In that capacity, we will advise and represent the Partnership in connection with such matters as any authorized general partner or employee of the Partnership may request and we may agree from time to time.
We submit for your approval the following provisions governing our engagement, as well as the additional provisions set forth on the enclosed "General Provisions Relating to Relationships with Clients" (the "General Provisions"). If you have any questions about any of these provisions, or if you would like to discuss possible modifications, please call me.
1.Identity of Client. Once the Partnership has been organized, the Firm's client, for purposes of this representation, is the Partnership, and not any of its promoters, organizers, partners, employees, subsidiaries, parents, other affiliates, insureds or insurers. [This means that we will not have a conflict of interest if we represent other clients in matters in which they are adverse to parties having any of the specified relationships with the Partnership.]
In representing the Partnership after completion of its organization, we will act in accordance with the directions of the person or persons whom we believe to be authorized under the Limited Partnership Agreement to act with respect to the subject matter of such directions.
2.Fees and Expenses. Our fees will be based on the amount of time spent by our lawyers and paralegals on the Partnership’s behalf. Each lawyer and paralegal in our firm has a standard hourly billing rate, and the applicable rate times the number of hours spent by each lawyer or paralegal, measured in tenths of an hour, will determine our fees. Our standard billing rates currently range from $XXX to $XXX per hour for lawyers and $XXX to $XXX per hour for paralegals.
[Alternate—Fixed Fee for Organization of Partnership]
2.Fees and Expenses. Our fee for the organization of the Partnership, which is limited to the preparation of and advice concerning the terms and provisions of a Limited Partnership Agreement and Certificate of Limited Partnership [,______] and advice concerning compliance with federal and state securities laws (if appropriate in the circumstances), will be $______. Fees for additional services rendered after organization of the Partnership will be based on the amount of time spent by our lawyers and paralegals on the Partnership’s behalf. Each lawyer and paralegal in our firm has a standard hourly billing rate, and the applicable rate times the number of hours spent by each lawyer or paralegal, measured in tenths of an hour, will be the initial basis for determining our fees. Our standard billing rates currently range from $XXX to $XXX per hour for lawyers and $XXX to $XXX per hour for paralegals.
[Include in All Letters]
In addition to our fees, we will be entitled to payment or reimbursement for costs and expenses as set forth in the General Provisions.
If you have any questions or concerns about any of our statements for fees and expenses, please call me promptly so that we can discuss your questions or concerns and I can respond appropriately.
[Optional (but inclusion is encouraged)]
Your signatures on the enclosed copy of this letter will confirm that you will be jointly and severally liable for payment when due of all of our fees for services and costs and expenses in connection with the organization of the Partnership and that you jointly and severally, and unconditionally, guarantee payment when due of all of our fees for services rendered to, and costs and expenses incurred on behalf of, the Partnership after its organization.
[Include in All Letters]
3.Staffing. Although [I/name of lawyer to be primarily responsible] will be primarily responsible for this engagement, various portions of the work may be delegated to other members of the Firm, associate, staff, and of counsel lawyers, and paralegals, as the Firm deems appropriate in the circumstances. [Include one or the other of the following sentences unless Fixed Fee alternative has been selected: The current standard hourly billing rate for [my time/the time of ______] is $______per hour./The names and current standard hourly billing rates of the lawyers we expect will work on this matter are listed on the attached Schedule A.]
[Include in All Letters]
4.Professional Responsibility Issues.
(a)Applicable Rules. The discussion in this paragraph4(a) and paragraph4(b), below, relates solely to our representation of all of you in connection with the organization of the Partnership. Once the Partnership’s organization has been completed, the joint representation will end and our sole client with respect to matters involving the Partnership will be the Partnership. In order for us to represent all of you, certain ethical requirements, relating to conflicts of interest and common representation of multiple clients, must be met.
A lawyer has the duty to exercise independent professional judgment on behalf of each client. When a lawyer is requested to represent multiple clients in the same matter, he or she may not do so unless (i) the lawyer reasonably believes that he or she will be able to provide competent and diligent representation to each affected client and (ii) each client gives informed consent, confirmed in writing. To be “informed,” each client’s consent must be preceded by the lawyer’s communication of adequate information and explanation about the material risks of and reasonably available alternatives to the joint representation.
(b)Relevant Considerations. I have advised each of you of your right to obtain separate legal counsel to represent you in all matters relating to the organization of the Partnership. I also have discussed with each of you the advantages of joint representation, which in this matter are the probable savings in legal fees and expenses [and ______]. Based on the information you have provided, we have concluded that we can represent each of you competently and diligently. In determining whether you should consent to this joint representation, however, you should carefully consider the following:
The first matter is that of the attorney-client privilege. Although the law is not settled, under the prevailing rule, any information disclosed by you to us in connection with this representation would not be protected by the attorney-client privilege in a subsequent legal proceeding initiated by or against one of you and involving another of you or the Partnership. If we are to represent you, it will only be on the express understanding that each of you has waived the attorney-client privilege to the extent, but only to the extent, that the privilege might otherwise require us to refrain from disclosing, in connection with any subsequent legal proceeding initiated by or against one of you and involving another of you or the Partnership, information disclosed to us by any of you in the course of this representation. Moreover, we believe we cannot effectively represent each of you if information disclosed to us by one of you must be preserved by us in confidence from the others or the Partnership, and accordingly we will disclose to all of you and to the Partnership all information we receive from any of you relating to our representation of you in connection with the formation of the Partnership. If ►either ►any of you insists that we keep any such information confidential, we will be forced to withdraw from the representation.
Secondly, although at this time there does not appear to be any difference of opinion between any of you with regard to the major legal issues involved in organizing the Partnership, it may well turn out, upon further consultation, that you have varying opinions with respect to the Partnership's capitalization and other organizational matters. Issues about which you may disagree include the appropriateness of the selection of the limited partnership form to operate the contemplated business, the amount and form of your capital contributions, terms of any loans or leases of property to the Partnership by its general or limited partners, provisions for and limitations on future capital calls and partnership borrowings, voting rights of limited partners and limitations on the management powers of the general partner(s), and provisions regarding distributions to partners, transfers of partnership interests and admission of new partners, the treatment of partners withdrawing from the Partnership, and dissolution and liquidation of the Partnership. It is our duty to explore each of these issues with you, but we will not be able to play the partisan role normally expected of a lawyer who represents only one party to a matter. As a result, you will be required to assume greater decision-making responsibility than you would if each of you was separately represented. Should we determine that there are material differences among you on one or more of these issues that you cannot resolve on an amicable basis, or that we conclude cannot be resolved on terms compatible with the best interests of each party involved, then we must withdraw from the joint representation. We also must withdraw from the joint representation if any of you so requests. Upon withdrawal from the joint representation (for either reason) we will not be able to continue to represent any of you in this matter except, perhaps, with the consent of all of you. If we are required to withdraw, we will, if you wish, assist each of you in obtaining new counsel in this matter. You would, of course, be responsible for payment of all our accrued legal fees and any outstanding expenses we have advanced on your behalf.
Third, in the event of litigation involving the interpretation of any document which we might draft in connection with the organization of the Partnership, we would not be able to represent any of you in that particular proceeding.
[Fourth, as you know, the Firm has represented in other legal matters. Although we do not think that this prior representation will, in any material fashion, affect our ability to represent each of you on an impartial basis, you must understand that this prior representation may unconsciously bias us in favor of in the event of any disagreement between you. Should we at any time determine that such a bias exists, then the Firm must withdraw from the joint representation and will not be able to continue to represent any of you in this matter except, perhaps, with the consent of all of you.]
[The fifth matter is that of ultimately allocating our fees, disbursements, and so forth. Unless we receive joint instructions to the contrary, we shall send our entire bill for fees and disbursements for organizing the Partnership to . However, to reiterate, we cannot provide advice to any of you in connection with any claim you may possess or desire to assert against the others for indemnity or reimbursement of fees and disbursements billed by us in connection with this representation.]
[Optional (use only when applicable)]
We understand that each of you has retained separate counsel to advise you regarding issues relating to the organization of the Partnership. Messrs. ► and ► have retained ►, Messrs. ► and ► have retained ►, and Mr. ► has retained ►. Your separate counsel will review the organizational documents we draft and advise you concerning those documents. The Firm will not advise you individually regarding those documents or any issue relating to the organization of the Partnership. As noted above, once the Partnership’s organization has been completed, it will be our sole client in matters involving the Partnership, so the Firm will not advise you individually with regard to such matters, either.
[Optional (but inclusion is encouraged unless you believe the risk of a material adverse effect on our relationship with the client outweighs the likely benefit of a waiver of future conflicts)—Waiver of Future Conflicts]
(c)Conflicts of Interest. As you know, the Firm represents many other clients, and some of our present and future clients may have disputes, transactions or other business with the Partnership during the time that we are representing the Partnership. The Firm will be precluded, however, from (i) representing, in any matter that is the same as or substantially related to any matter in connection with which we have represented or are representing the Partnership, any other client whose interest in such matter is directly or materially adverse to the Partnership’s interest; or (ii)using any information relating to our representation of the Partnership to the disadvantage of the Partnership, except as permitted by applicable rules of professional conduct. Except as provided in the preceding sentence, the Firm will have the right to continue to represent or to undertake to represent existing or new clients in matters in which the interests of such clients are adverse to the interests of the Partnership, including litigation, transactional and other matters in which the Partnership is a party or is otherwise interested.
Without limiting the generality of the foregoing, [Include if the Partnership is a bank: we will have the right to represent present and future clients in connection with the negotiation and documentation of loans from the Partnership,] we will have the right to represent debtors or other creditors in bankruptcy, workout and other debtor-creditor matters in which the Partnership is a creditor, and we will have the right to represent other clients who are defendants or potentially responsible parties or are otherwise interested in federal and state Superfund and other environmental matters (including but not limited to litigation, administrative proceedings, alternative dispute resolution proceedings and private negotiations) in which the Partnership also is a defendant or potentially responsible party or otherwise has interests actually or potentially adverse to those of our other client.
Parties who are adverse to the Partnership in matters in which we represent the Partnership may, from time to time, seek to retain us to represent them in unrelated matters. We will have the right to represent any such party so long as the matter in which we represent it is not substantially related to any matter in which we represent the Partnership and we believe that the representation of such party will not adversely affect our relationship with the Partnership.
Your signature on and return of the enclosed copy of this letter will constitute the Partnership’s consent to any and all representations permitted by the terms of this Section 4 and waiver of any conflicts of interest inherent in any such representations. You should know that, in engagement letters with many of our other clients, we have requested similar consents in order to preserve our ability to represent the Partnership.
[If, notwithstanding the Partnership’s consent, the Firm concludes that it cannot or should not continue to represent the Partnership while also representing another client in one or more matters in which it is adverse to the Partnership or any of its affiliates, insureds or insurers, the Firm will have the right to withdraw immediately from its representation of the Partnership. The Partnership acknowledges that the Firm’s withdrawal in such circumstances will not breach any duty of loyalty or other duty of the Firm to the Partnership. If the Firm exercises its right to withdraw, the Partnership immediately will become a “former client” of the Firm for purposes of applicable rules of professional conduct.]
[Alternate Section 4(c): If you do not choose to include Optional Section 4(c), you must include the following, at least in the first draft presented to the client.]
(c)Representation of Other Clients. Your signatures on and return of the enclosed copy of this letter will constitute the Partnership's consent to the Firm representing [Include if the Partnership is a bank: other clients in connection with the negotiation and documentation of loans from the Partnership and other transactions in the ordinary course of the Partnership’s business,] debtors or other creditors in bankruptcy, workout and other debtor-creditor matters in which the Partnership is a creditor and other clients who are defendants or potentially responsible parties or are otherwise interested in federal and state Superfund and other environmental matters (including but not limited to litigation, administrative proceedings, alternative dispute resolution proceedings and private negotiations) in which the Partnership also is a defendant or potentially responsible party or otherwise has interests actually or potentially adverse to those of our other client, except that this consent will not apply to any representation of another client in a matter that is the same as or substantially related to a matter in which we have represented or are representing the Partnership. This consent applies with respect to both present and future clients of the Firm.