What is a limited scope engagement?

What is a limited scope engagement?

Foundry Legal can provide certain types of assistance as “limited-scope” engagement (also called “unbundled legal services”). This may help you save on legal fees. However, there are some risks you should be aware of when considering such an arrangement. Read more below to determine if a limited-scope engagement is right for you.

A limited scope engagement is a certain type of engagement that a client enters into with a lawyer to save on legal fees. Limited-scope engagements are usually distinguised from “full” or “hourly” engagements.

Until recently, limited scope legal services were frowned upon by the regulatory bodies that oversee attorneys. However, demands from the public to increase ways for the public to access reasonably priced legal gave rise to what is called “unbundling,” or “a-la-carte” legal services. In these engagements, the lawyer takes on certain parts of a matter while the client handles the rest. This separation of responsibilities will lower overall costs for clients and give them more flexibility and control over their legal matters.

There are a few risks of entering into a limited scope engagement; these may or may not be risks you are willing to take on.  These include but are not limited to the risk that your lawyers may not have adequate opportunity to learn facts or thoroughly consider all the relevant law applicable to your matter.  For example, you may ask that we only point out the important issues in a lengthy contract but not to do the drafting or negotiations appropriate for minimizing the risks of those issues. Or you could request a form contract, but if you use that contract in the wrong context, it may lack the clauses or language that would be best for that particular business scenario. It is often difficult to know if we have all the information to determine if a contract is “ideal” for your situation until we’ve had time to figure out your unique business model, risk tolerance, and commercial goals. These types of limits or restrictions on our engagement will limit our efficacy. 

Your alternatives include declining our representation altogether, which would be less expensive, or accepting full representation.  Of course, proceeding without any representation carries the risk that you could make sub-optimal decisions that would be very expensive to correct or that might not be fixable at all.  You could also accept full representation at the firm’s standard hourly rates, which minimizes the risks outlined above but carries higher immediate / short-term costs.

Sometimes clients opt for a limited-scope representation to minimize the highest risks for their early-stage operations, and then will revisit things in a few months or years once the business’s cash flow justifies the additional expense.

As with any attorney-client relationship, it’s impossible to eliminate all legal risks entirely: after all, taking on risk is often part and parcel of operating a business. You should consider all of your options and the various risks prior to accepting limited scope representation. If you have any questions, feel free to reach out to us to find out more at info@foundry.legal.