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Every time you want to decline to represent a prospective client, you should use a non-engagement letter. Otherwise, you risk the possibility that the prospective client could mistakenly think you're their attorney on a matter.
After you left our offices yesterday, we performed a formal conflict-of-interest check and found that our firm does indeed have a conflict of interest involving your intended adversary in this case, [Name]. Unfortunately, this conflict cannot be resolved in a manner that would allow us to represent you in this matter.
Dear {Salutation}: In response to your request when you contacted this firm, I have reviewed the information you provided regarding possible representation in the matter of:________________. I appreciate the confidence you have expressed in our firm; however, the firm has decided not to represent you in this matter.
Be polite, but direct People today appreciate honesty and directness. Make sure that you're upfront and simply state your case. You don't owe them anything more than a ?Sorry, I can't help you,? but if you feel the need to explain, keep it simple and focused.
The opening paragraph states the legal issue the letter is addressing followed by the facts, a discussion of the law as it applies to the facts and a conclusion which is essentially the advice to the client. Often attorneys include headings to lead the client through this process to arrive at the same conclusion.