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Law Society of Saskatchewan For Lawyers and Students Locum Registry The Contract: Potential Issues and Sample Clauses

The Contract: Potential Issues and Sample Clauses

The Contract: Potential Issues and Sample Clauses Index

The relationship between the locum lawyer and the contracting firm/lawyer is contractual in nature, so a written agreement is strongly recommended.  The contract requires the same amount of careful drafting and review as you would give to a client’s contract.  Whether you use an agreement, engagement letter or some other form of contract, ensure that you address all the relevant issues for your circumstances.

Below is a list of important items that may form part of your contract.  We have also identified potential issues and provided sample contract clauses:

1. Definitions

The parties may want to define some or all of the following terms:

  • End Date
  • Start Date
  • Term
  • Locum Lawyer
  • Contracting Firm/Lawyer
  • Termination
  • Services
  • Compensation
  • Client [Note: The definition of the term “client” does not permit the parties to derogate from the meaning of the term “client” or related obligations set out in the Rules of the Law Society of Saskatchewan and the Code of Professional Conduct]

2. Parties

Who are the parties to the agreement (e.g. lawyers, law firms or professional corporations)?

3. Date of agreement

The parties should identify the signing and effective dates of the agreement.

4. Preamble

It may be helpful for the parties to set out the context of the locum lawyer’s agreement.

SAMPLE CLAUSE:

“Whereas the contracting firm/lawyer is about to commence a maternity leave, but wishes to ensure that the needs and interests of her clients are preserved and protected during her absence”; and

“Whereas the locum lawyer is prepared to substitute for the contracting firm/lawyer during the said maternity leave”, etc.

5. Term or duration

Typically, a contract will be for a short term and/or defined duration, whether for a vacation, maternity leave, medical leave or other circumstance.  Accordingly, you might want to address such questions as:

  • What is the start date?
  • What is the completion or termination date of the relationship?
  • How will the parties make provision for the extension of the term, if, for example, the absent practitioner is away longer than expected?

SAMPLE CLAUSE:

The locum [lawyer]’s agreement is for a fixed term, commencing on [date] (the “Start Date”) and ending automatically on [date] (the “End Date”), unless terminated earlier in accordance with the provisions set out below [refer to termination provisions by section or paragraph], or extended by mutual, written agreement.

The contracting firm/lawyer will be absent from [his or her] practice, in order to [insert reason for leave, e.g. maternity leave, disability leave, etc.]. The Contracting [Lawyer] may, at [his or her] discretion, elect to return to work earlier than the End Date by providing notice in accordance with the provisions set out below [include terms that describe how a Contracting Lawyer may return earlier than the End Date, e.g. written notice of x weeks or months, whether compensation will be provided for the fixed Term, or whether it will be reduced; whether the locum lawyer is expected to keep working for a certain period while the Contracting Lawyer returns to work (see Section 18). The parties may wish to include terms that address how the relationship could be extended, including whether written notice is required and how compensation will be addressed]

6. Title, where appropriate

In most cases, a locum lawyer will not take on a title; but where a title is appropriate, what is it?

7. Duties and nature of work

The scope of the work and duties for which the locum lawyer will be responsible will be an important topic for discussion.  These details should be recorded in and/or appended to the agreement.  Will the contracting firm/lawyer provide a detailed memo on active files for which the locum lawyer will have carriage?  If so, by what date will the transfer memo be delivered to the locum lawyer, and will it allow for an opportunity before the departure of the contracting firm/lawyer for discussion and questions?  Will the contracting firm/lawyer specify the steps to be completed, or stage to be reached, by the locum lawyer?  Will the locum lawyer be responsible for checking and responding to voicemail and e-mails, or will the contracting firm/lawyer’s staff initially clear all messages and direct those requiring a lawyer’s attention to the locum lawyer?

You may also want to outline the approach and preferences of the contracting firm/lawyer in handling client matters and/or files, e.g. returning client phone calls within 24 hours, which the locum lawyer will be expected to maintain.  If so, this should be recorded in the agreement to avoid misunderstanding.

The lawyer parties are reminded of their obligations under Rule 3.1-2 of The Code of Professional Conduct concerning the relationship with clients and competence.

8. Supervision

Where the locum lawyer is in need of supervision, having regard to his or her degree of experience and expertise, the agreement can set out how and by whom such supervision will be provided.  Similarly, if the locum lawyer’s duties under the arrangement include providing supervision of junior lawyers, and/or legal staff, then the parties may wish to reflect that expectation.

SAMPLE CLAUSE:

The locum [lawyer] [or use the locum lawyer legal name] agrees to supervise associate lawyers [name lawyers as appropriate], legal assistants and staff [name staff and positions as appropriate].  Supervision shall include the following [revise as appropriate]:

  • Associate lawyers: [describe supervisory duties the locum lawyer is expected to perform, e.g. supervise preparation for court appearances etc.].
  • Legal Assistants: [describe supervisory duties the locum lawyer is expected to perform, e.g. delegation of work, day-to-day supervision of administrative and work-related responsibilities legal assistants].
  • Staff: [describe day-to-day supervision, including hours of work, any special arrangements with particular employees of which the locum lawyer should be aware, payroll and/or benefits administration if applicable, performance management and discipline scenarios].

9. Access to contracting firm/lawyer and notices

How and when may the locum lawyer be able to contact the contracting firm/lawyer, if necessary, or at all?  Where should important, time-sensitive documents be sent?

SAMPLE CLAUSE:

The Locum [lawyer] must contact [Name of Contracting Firm, Lawyer] in any of the following circumstances [the circumstances will vary for each Contracting Firm, Lawyer practice and personal preferences,] for example:

  • upon receipt of x, y, z pleadings or motions in respect of all, or specific, clients
  • upon receipt of an inquiry about a specific matter which the [Name of contracting firm/lawyer] would like to handle himself or herself
  • upon receipt of an inquiry about an account
  • upon receipt of any questions from a financial institution, insurance company, payroll administration company, etc.]

The locum [lawyer] should contact [Name of contracting firm/lawyer] in situations where a response or action is required and, in his or her professional estimation, it would be more appropriate for [Name of contracting firm/lawyer] to respond. [The parties may want to provide more detail on the circumstances under which the locum lawyer should respond on his or her own.]

The locum [lawyer], or [his or her designate, e.g. an employee of the Contracting Firm or a named individual], may open mail addressed to the [Name of contracting firm/lawyer], save and except for any mail from [list any senders whose mail should not be opened by the locum lawyer]. Any important notices that require a response from [Name of Contracting Firm] by a specific deadline, and which cannot be answered by the locum lawyer, should be forwarded to [insert forwarding instructions].

10. Hours of work

Depending upon the nature of the practice and the work for which the locum lawyer is being retained, the parties may wish to specify certain office hours or hours of work.

The contracting firm/lawyer may want the locum lawyer to devote full time and attention to the contracting firm/lawyer’s practice during the Term, such that the locum lawyer will not have competing obligations. If so, this requirement should be set out in the agreement.

11. Vacation

Arrangements may have to be made for the locum lawyer’s vacation if the locum lawyer term is lengthy.

12. Remuneration and/or fee arrangement(s)

The parties will want to specify how the locum lawyer will be paid. For example, a fixed fee or salary for the services, and/or an hourly rate for billable, recorded time.

How does the contracting firm/lawyer want work/time to be recorded? This is important for client billing purposes and/or payment to the locum lawyer.

SAMPLE CLAUSES:

[The parties will have to decide whether the Agreement will reflect an employment relationship, or an independent contractor relationship. Lawyer parties are advised to review the description of professional liability insurance considerations in Section 23, below, and may wish to contact SLIA to discuss specific details of the Agreement.]

    1. In consideration of the performance by the locum [lawyer] of the Services, [Name of contracting firm/lawyer] shall provide payment in fixed [weekly, bi-weekly, monthly] installments of [$ dollars]. [The parties may wish to include a clause to address whether additional compensation will be provided where the locum lawyer exceeds a set number of billable recorded hours and whether a limit is appropriate.]
    2. The locum lawyer shall be responsible and shall remain exclusively liable for payment of all applicable governmental charges on any amounts paid to the locum lawyer by [Name of contracting firm/lawyer], including but not limited to federal and provincial income taxes, GST, provincial sales taxes, employer health tax, Canada Pension Plan and any other taxes as required, and any interest or penalties related to any of the foregoing. The locum lawyer shall be responsible for remitting any such amounts to the appropriate regulatory agency as required by law.

[The following clauses apply where the parties have selected an independent contractor type of relationship.]

Indemnity for income taxes:

    1. The locum [lawyer] hereby covenants and agrees to save harmless and indemnify [Name of contracting firm/lawyer]
      [The parties will have to decide whether the Agreement will reflect an employment relationship, or an independent contractor relationship. Lawyer parties are advised to review the description of professional liability insurance considerations in Section 23, below, and may wish to contact SLIA to discuss specific details of the Agreement.]

Indemnity:

    1. The locum [lawyer] agrees to indemnify [Name of contracting firm/lawyer] and its agents, servants and employees [delete or add as appropriate] against all claims, damages, losses and expenses (including but not limited to legal fees incurred in defending such claims) arising out of the performance of the Services by the Locum [lawyer] which are caused in whole or in part by the Locum [lawyer]’s act or omission. It is a condition of this Agreement that the Locum [lawyer] have valid professional liability insurance as required by the Law Society of Saskatchewan.

13. Expenses

How will expenses be covered for disbursements or non-disbursable costs incurred by the locum lawyer?

14. Housing

If the locum lawyer is going to be provided with housing during the locum lawyer period, the terms should be specified.

15. Support Staff

Will the contracting firm/lawyer’s support staff be available to the locum lawyer and/or will the locum lawyer be expected to use his or her own staff?

16. Office – equipment and resources

Where will the locum lawyer work? Will the locum lawyer have use of the contracting firm/lawyer’s office equipment, such as his or her desk, computer equipment, and access to the contracting firm/lawyer’s resources?

17. Office policies and procedures

To the extent that the contracting firm/lawyer has office policies and procedures, is it expected that the locum lawyer will comply with those policies? If so, how will the locum lawyer be fully informed of and trained regarding the policies?

18. Cancellation or termination

On what terms may either party end the relationship?

Will it end automatically at the completion of the term, subject to extension on mutual consent in writing?

Can the contracting firm/lawyer terminate the relationship, without cause, by giving the contracting firm/lawyer notice? If so, how much notice is required, having regard to the needs of clients, the length of the agreement, the nature of the relationship, etc.?

Can the locum lawyer terminate the contract before the end of the term? If so, how will the potential difficulty of an early termination be addressed by the contracting firm/lawyer? Will it be specified as a condition of early termination by the locum lawyer, that he or she will be responsible for the orderly transfer of client files to a mutually acceptable back-up? Should that back-up arrangement be in place in advance of the contracting firm/lawyer’s departure? The Code of Professional Conduct should also be kept in mind in such circumstances.

SAMPLE CLAUSES:

[Name of contracting firm/lawyer] may terminate this Agreement at any time by providing the Locum [lawyer] with [insert number of days’ or weeks’ notice] written notice, or pay in lieu thereof, without any further obligation or compensation.

The locum [lawyer] may terminate this Agreement on giving [insert number of days’ or weeks’ notice] prior notice of termination, which may be waived in whole or in part in the sole discretion of [Name of contracting firm/lawyer]. Upon the expiry of the notice period (or that part of the notice period which is not waived), [Name of contracting firm/lawyer]’s sole liability to the Locum [lawyer] shall be to pay to the Locum [lawyer] any Compensation up to the last day on which the Locum [lawyer] performs the Services.

Notwithstanding the foregoing, it is a condition of early termination by the Locum [lawyer] that [he or she] is responsible for the orderly transfer of client files to a mutually acceptable back-up lawyer [consider naming an individual or listing the minimum qualifications that a back-up lawyer must have].

The Locum [lawyer] agrees that upon any termination of this Agreement for whatever reason, the Locum [lawyer] shall at once deliver or cause to be delivered to [Name of contracting firm/lawyer] all books, documents, effects, monies, securities or other property [insert or delete items as appropriate, e.g. computers, keys] belonging to [Name of contracting firm/lawyer] or for which [Name of contracting firm/lawyer] is liable to others which are in the possession, charge, control or custody of the Locum [lawyer].

In the event of the termination of the Agreement under this section, the Locum [lawyer] and [Name of contracting firm/lawyer] shall both ensure that there is no disruption to providing service to clients in a professional and competent manner. Furthermore, in the event that the Agreement is terminated for whatever reason, neither party shall engage in conduct that breaches the Code of Professional Conduct.

The parties confirm that the notice provisions in this Agreement are valid and reasonable and are fair and equitable. The parties agree that upon any termination of this Agreement in compliance with this Agreement, the payments made by [Name of contracting firm/lawyer] in accordance with this Agreement shall satisfy all of the obligations that [Name of contracting firm/lawyer] has to the Locum [lawyer], and that upon the making of any such payments the Locum [lawyer] shall not have any action, cause of action, claim or demand against [Name of contracting firm/lawyer] or any other person as a consequence of this Agreement or the termination of this Agreement, whether such claim arises pursuant to any applicable legislation, pursuant to this Agreement or otherwise at law.

19. Default or breach

Termination with cause, by either party, should be addressed in the contract. In the case of a termination by either party (e.g. locum lawyer terminates for breach of the contracting firm/lawyer’s obligation to pay the locum lawyer, or contracting firm terminates for breach of locum lawyer to undertake the duties as agreed) the clients’ needs and the parties’ obligations pursuant to the Code of Professional Conduct to the clients should be considered and should take precedence.

SAMPLE CLAUSES:

The [Contracting Firm/Lawyer] may terminate the Agreement upon the occurrence of any of the following events:

  • The failure or refusal of the Locum [lawyer] to perform the Services within [a number of days or weeks by which the locum lawyer should begin to work] after the Start Date.
  • Any breach by the Locum [lawyer] of any material term of this Agreement.
  • Any [professional negligence, gross negligence, malfeasance], including any breach of the Code of Professional Conduct, on the part of the Locum [lawyer] in performing [his or her, as appropriate] duties hereunder or rendering the Services.

The Locum [lawyer] may terminate the Agreement upon the occurrence of any of the following events:

  • Any breach by [Name of contracting firm/lawyer] of any material term of this Agreement.
  • [Insert other circumstances in which the locum lawyer may terminate the Agreement for cause].

In the event of the termination of the Agreement under this section, the Locum [lawyer] and [Name of contracting firm/lawyer] shall both ensure that there is no disruption to the provision of legal services to clients in a professional and competent manner. Furthermore, in the event that the Agreement is terminated for whatever reason, neither party shall engage in conduct that breaches the Code of Professional Conduct.

20. Solicitation of clients

The contracting firm/lawyer may want to protect his or her client relationships from solicitation by the locum lawyer during and after the term.

Both lawyer parties should note that under the Code of Professional Conduct, a client is free to select the lawyer of his/her choice. The commentary to Rule 3.7-1 (1), dealing with withdrawal from representation provides:

“Although the client has the right to terminate the lawyer-client relationship at will, the lawyer does not enjoy the same freedom of action.”

The locum lawyer should be mindful of Chapters 4.1 and 4.2 of the Code of Professional Conduct relating to Making Legal Services Available and the Marketing of Legal Services.

The parties may also want to restrict the extent to which the locum lawyer will solicit the contracting firm/lawyer’s clients, at least during the contract and for some reasonable period following the contracting firm/lawyer’s return.

SAMPLE CLAUSES:

The Locum [lawyer] shall not, for the duration of this Agreement, including where it is extended by mutual agreement as described in paragraph [insert reference where applicable], or for a period of [number of months] following the termination of the Agreement for any reason:

  • Solicit any clients with whom she or he had contact with on behalf of [Name of Contracting Firm, Lawyer] during the life of the Agreement, including where extended by mutual agreement.
  • Take any steps or make an approach, either directly or indirectly, to any prior existing client of [Name of Contracting Firm, Lawyer], which is designed to cause the client to discontinue his or her prior existing relationship with [Name of Contracting Firm, Lawyer].

Nothing in this paragraph should be interpreted or applied such that the Locum [lawyer] or [Name of Contracting Firm, Lawyer] would be in breach of the Code of Professional Conduct concerning a client’s right to approach a lawyer for the provision of legal services, or to terminate his or her lawyer-client relationship with any lawyer. The restrictions that the parties may agree to under this Agreement and/or the definition of the term “client” for the purposes of same does not permit the parties to derogate from the meaning of the term “client” or related obligations set out in the Rules of the Law Society of Saskatchewan or the Code of Professional Conduct.

21. Solicitation of staff

The contracting firm/lawyer may wish to protect against solicitation of his or her staff. The locum lawyer can agree not to solicit the contracting firm/lawyer’s staff to leave the contracting firm/lawyer’s employ to work with the locum lawyer for a reasonable period, after the locum lawyer term.

SAMPLE CLAUSES:

The Locum [lawyer] shall not, for the duration of this Agreement, including any additional period by which the Agreement is extended by mutual agreement as described in paragraph [insert reference where applicable], or for a period of [number of months] following the termination of the Agreement for whatever reason:

  • Solicit any employees with whom she or he had contact with on behalf of [Name of Contracting Firm, Lawyer] during the life of the Agreement, including where extended by mutual agreement; or
  • Take any steps or make an approach, either directly or indirectly, to any employee of [Name of Contracting Firm, Lawyer], which is designed to cause the employee to discontinue his or her employment with [Name of Contracting Firm, Lawyer]. [Consider naming particular employees or positions that are particularly sensitive to solicitation, e.g. an experienced clerk or a valued associate]

22. Confidentiality

The contract should specify that the locum lawyer will keep confidential all matters and information pertaining to the business and practice of the contracting firm/lawyer.

23. Professional liability insurance

It is the locum lawyer’s responsibility to ensure that his or her professional liability insurance practice coverage is in place and properly accommodates the locum lawyer’s work. This includes ensuring, for example, that locum lawyer’s work is appropriately insured by the Saskatchewan Lawyers’ Insurance Association’s mandatory coverage liability policy.

The contracting firm/lawyer should satisfy themselves that the locum lawyer is properly insured, since the locum lawyer is working on their behalf and they may be affected and have related policy obligations. It is also important for both parties to consider whether they have excess insurance needs.

The Saskatchewan Lawyers’ Insurance Association provides further information on practice coverage and related issues on the LSS website (Membership login required).

24. Indemnities

Is the locum lawyer an employee of the contracting firm/lawyer? If so, wages or salary paid to the locum lawyer are subject to all applicable/statutory deductions and withholdings.

The locum lawyer may be an independent contractor retained by the contracting firm/lawyer to provide services, but not as an employee, in which case the locum lawyer’s remuneration would not be subject to employment-related withholdings.

Particularly in the latter instance, the parties should include a statement that the locum lawyer is responsible for taxes, along with an indemnity of the contracting firm/lawyer from obligations, interest and/or penalties for employment-related taxes and withholdings.

25. Disputes and arbitration

The parties may want to include an arbitration clause, so that any disputes between the contracting firm/lawyer and the locum lawyer will be resolved by way of binding arbitration. The parties may also wish to specify that even jurisdictional issues are to be determined by the arbitrator.

Other considerations include:

  • Whether arbitration will be in accordance with The Arbitration Act, 1992.
  • Location of the arbitration hearing.
  • Method of selecting an arbitrator, and whether the arbitration will proceed before a sole arbitrator or a panel.
  • Who will bear the cost of the arbitration and whether the arbitrator will have discretion to award costs.
  • Whether the process is confidential.
  • What procedure will be used and/or how procedural issues will be resolved.

26. Entire agreement

The parties may want to state that the contract is the entire agreement between the parties, and that neither party is to rely upon any representations or other agreements.  If there are other agreements that should be incorporated by reference (e.g. a separate document addressing retainers with particular clients), that should be stated in the contract.

27. Amendments

How may the parties make amendments to the agreement and must they be in writing?

28. Governing law

Particularly where the locum lawyer is retained while outside the province, it is advisable to identify the governing law, and, particularly absent an arbitration clause, the preferred jurisdiction in which disputes will be determined.