Engagement Letters for Ontario Lawyers:
What to Include and Why

Defines the scope

Clients often believe their lawyer is handling more than the lawyer thinks they were retained for. A clear scope prevents this misalignment.

Manages fee expectations

Fee disputes are the #1 source of LSO complaints. A signed engagement letter with clear billing terms dramatically reduces the risk.

Creates the limitation period paper trail

For litigation matters, documenting your limitation period discussion protects you if a deadline is later missed due to client-provided information.

Satisfies LSO requirements

Rules 3.2, 3.3, and 7.8 together require specific disclosures that an engagement letter formalizes.

Full legal name of the client, whether individual or corporate. If corporate, include the name of your contact person and their authority to instruct. For joint clients, identify all parties and confirm they have been advised of potential conflicts.

Clearly describe what you are and are not being retained to do. A matter labelled 'real estate purchase' should specify the property address, closing date, and whether it includes title insurance review, HST certificate review, or mortgage advice. Scope creep is a claims risk — define the edges.

Hourly rate or flat fee, how and when invoices are issued, payment terms, and interest on overdue amounts. If hourly, include an estimate of the range of expected fees with a clear disclaimer that it is an estimate only. HST registration number and the 13% HST rate must appear on every invoice.

If you are collecting a retainer deposit, state the amount, that it will be held in trust, and the conditions under which it will be applied to fees. Under LSO By-Law 9, trust funds can only be withdrawn once the fees have been earned and invoiced. Be specific about when replenishment is required.

How and when you will communicate with the client, expected response times, and who to contact if you are unavailable. This section manages expectations and reduces 'my lawyer never calls me back' complaints that lead to LSO complaints even in cases where the legal work is fine.

For litigation matters, include an explicit notice that the client is responsible for advising you of any additional facts that might affect the limitation period, and that you will advise them of the applicable period as the matter proceeds. This is your first layer of malpractice protection on limitation periods.

Confirm that you have conducted a conflict of interest check, describe any disclosed conflict that has been waived, and include the client's written consent if applicable. For matters with no conflict, a brief statement confirming the check was run provides a paper trail.

What the client must provide: documents, instructions, information, and prompt responses to requests. If the client fails to provide documents or instructions in a timely way, your ability to meet deadlines is compromised — this section puts that risk back on them.

Your right to withdraw in certain circumstances (non-payment, client misconduct, irreparable breakdown of relationship), notice you will provide, return of client documents, and handling of trust funds on withdrawal. Rule 3.7 governs withdrawal — your engagement letter should align with it.

How long you will retain the file after the matter closes, how the client can request their documents, and your policy on destruction. The LSO requires you to retain files for at least seven years after the matter closes — your engagement letter should confirm this.

Reference to PIPEDA and your privacy policy, disclosure of any third-party service providers who may access client information (including cloud software and AI tools per Rule 3.3), and your obligations to keep client information confidential.

If you use AI tools — whether for document drafting, research, or practice management — Rule 3.3 requires that clients understand how their information may be processed. Include a brief disclosure of the AI tools you use, that data is held in Canada where applicable, and that you supervise all AI-generated work.

The deposit is held in trust until fees are earned and invoiced

Fees cannot be taken from trust without an invoice — not even as a draw

If the retainer is exhausted, describe when and how it must be replenished

On matter closure, any unearned trust balance must be returned to the client

Trust funds cannot be mixed with your general account

✗ Sending the same template for every matter

Fix: The scope section must be specific to the matter. A template for a will is not appropriate for a corporate transaction. Customize the scope, fee estimate, and limitation period language per matter.

✗ Vague fee estimates

Fix: "Fees will depend on the complexity of the matter" is not useful. Give a range based on your typical experience with similar matters, with a clear disclaimer that it is an estimate. Clients remember a number, and if the final bill is 3x the number you mentioned, you have a problem.

✗ No retainer replenishment clause

Fix: If the trust retainer runs out mid-matter, do you stop work? Do you continue on credit? Your engagement letter must answer this or you will be in an uncomfortable conversation later.

✗ Skipping the AI disclosure

Fix: If you use ChatGPT, Claude, Atticus, Clio AI, or any other AI tool, Rule 3.3 requires client disclosure. Not having it in your engagement letter is a compliance gap.

✗ Not requiring client signature

Fix: An engagement letter that is not signed and returned provides less protection than one that is. Build the signature step into your intake workflow — send, wait for signature, then begin work.