Managing Client Expectations through an Engagement Letter
Congratulations! You landed that new client that you have been working so hard to get. Now it’s time to get to work.
But before you dive into all those new assignments for your client, you need to take some time and put to paper everything you discussed with your client in writing. Regardless of profession, it is wise to set forth the expectations of each party before the project begins. The resulting document is typically called an Engagement Letter.
Understandably, many professionals feel like this formality may run counter to all of their efforts to establish a personal relationship with this client. Hitting someone with a formal legal document can seem like it would alienate the client just when you are getting off the ground. However, an engagement letter does not need to use any “legalese”. Rather, you should write the engagement letter in everyday language, and if possible, verbally let them know that the engagement letter is coming for them to review in order to minimize any “off-putting” effect.
You could say something like “I have found that it makes sense for us to document in writing exactly what you are hiring me to do. This has worked well for me in the past as it makes sure everyone is on the same page. If there is anything in here that does not reflect what we talked about, let me know. Thanks!” By using this language, this will invite the client to be a part of the engagement process, and contribute to the collaborative nature of y[node:summary]our relationship.
The major issue you want to address is the scope of your engagement. Just because you have been engaged for a certain project does not mean that you are engaged for matters that go beyond, or are unrelated to, that scope. If you do not manage these expectations, you may find yourself in a matter for which you are not qualified, that may conflict with your duties to other clients, or that may stretch your time or resources beyond what you are able to provide in light of your work-life balance.
Just because you have been engaged for a certain project does not mean that you are engaged for matters that go beyond, or are unrelated to, that scope.
Below is a sample engagement letter with commentary interspersed throughout. Feel free to adopt this form and change as you see fit for your practice!
Sample Engagement Letter
Adding a precise subject line aids in defining the scope of the project.
[As we discussed], the purpose of this letter is to confirm, based on our conversation of [date], that [insert name your company] will assist you in [describe subject matter of engagement]. We will provide the following services: [list of services to be provided]
If you can tie the engagement back to a conversation on a certain date, that is preferable but not required. However, the subject matter of the engagement and list of services should be precise and not open-ended.
We will bill you in the following manner: [Describe your billing mechanism, such as any billing in advance/retainer, how often bills will be generated, etc.] My fees are [insert dollars per hour] for the services provided and [insert dollars per hour] for the services provided by my staff. I will also bill you for expenses incurred on your behalf. We expect you: [list all expectations regarding the payment of invoices, responses to inquiries, etc.]
Setting forth expectations of your compensation, timing of payments, etc. is crucially important. If you are not on the same page with your client in this regard, it is much better to realize this now before you put too much work into the project. Billing disputes are often the root cause of many malpractice claims against service providers.
In order to provide you with an estimate of the total costs associated with this engagement, an estimate of the costs is set forth below. Please keep in mind that this is only an estimate and that, depending on the time required and the complexity of the work, the actual costs may exceed this estimate.
Provide a realistic estimate of fees and expenses. Sometimes expenses other than your billable rate is an overlooked component of your engagement. You are trying to avoid any surprises down the road.
Although it is impossible to predict how long it will take to complete this project, a general schedule is provided below. Again, this is only an estimate and the actual time required to complete this project may be longer than expected.
Provide a realistic estimate of the time to be devoted to the project. Often a client can have unrealistic expectations in this regard. Do not overpromise the timing of project completion. It is usually better to under-promise and over-deliver!
I have attached a copy of the initial interview form for your information and files. If any information on this form is incorrect, please notify me immediately. If you have any questions about this information or anything in this letter, please call me to discuss.
Your initial interview form should contain items regarding the client’s contact information, billing address, method of payment, etc.
I generally am available Monday – Friday from 8 am to 5 pm. You can reach me on my office phone [insert number], on cell phone for calls or texts [insert number] or by my email at firstname.lastname@example.org.
Setting forth your hours of availability will head off any miscommunication in this regard. Some clients mistakenly assume you are “on call” 24/7. This will adjust their expectations towards your work-life balance as a solo professional.
I very much look forward to working with you on this project. Thank you.
Although sending out an engagement letter may seem like an unnecessary burden on your business, you are likely to be very happy down the road that you took this extra step to ensure a wonderful working relationship with your client.
Read More on the Following Client Topics
- Find New Clients Easier
- Selecting Good Clients
- Managing Client through an Engagement Letter
- Terminating a Client Relationship