Engagement Letter template

Engagement letters are a daily requirement in fields like law, accounting, and consulting. They serve as a formal agreement outlining the scope of work, terms, and conditions between a professional and their client. If you haven't drafted one already, chances are you'll need to in the future.

Let's take a closer look at what engagement letters are, who uses them, and how you can create a template to make this process easier.

What is an Engagement Letter?

An Engagement Letter is a legal document that defines the relationship between a professional (such as a lawyer, accountant, or consultant) and their client. It outlines the services to be provided, the terms of the agreement, and any other obligations or expectations. You could also call it a Letter of Engagement - it just depends on your personal preference.

You need this kind of business contract to set clear boundaries and expectations between the professional and the client. It provides a detailed description of the services to be rendered, the fees for these services, and the responsibilities of each party. It also often includes clauses related to dispute resolution and confidentiality.

Engagement letters are essential tools for professionals, offering a clear and concise way to define the scope of their services and protect their interests. However, drafting and reviewing those letters of engagement (especially in the absence of a Letter of Engagement template) can quickly become a burden. For those in fast-growing businesses, paperwork volumes can become overwhelming - let's find out how to avoid that.

Check out our latest Tech GC Report to take the temperature of in-house legal teams in 2023.

When should you use a Letter of Engagement?

Now that you understand what an engagement letter is and why they are important, let's look at when you should actually use one. The most common use cases for engagement letters include:

1. Starting a new client relationship: When you first work with a new client, you need to establish the terms of your professional relationship. An engagement letter outlines the services you'll provide, the fees for these services, and any other obligations or expectations.
2. Beginning a new project: If you're starting a new project with an existing client, an updated engagement letter can help clarify the scope of the project and any changes to your fees or terms.
3. Changing the scope of services: If the scope of your services changes during your relationship with a client, an updated engagement letter can help ensure both parties understand the new terms.
4. Renewing a client relationship: If you're renewing a relationship with a client after a period of inactivity, a new engagement letter can help refresh everyone's memory about the terms of your professional relationship.

Who creates Engagement Letters?

Engagement Letters are typically drafted by the professional or their firm. Legal teams will usually lead, or be key stakeholders, in this process. The company might source a free Engagement Letter sample template to make this process easier.

Engagement Letters are then reviewed and signed by the client. In some cases, the client may also have their own legal counsel review the letter before signing.

It's important to note that while the professional or their firm typically drafts the engagement letter, the client must agree to its terms. This often involves some negotiation and revision before the letter is finalized.

What kind of information should be covered by an Engagement Letter template?

The information that your engagement letter covers will depend on the nature of your services and the needs of your client. However, certain categories of information almost always warrant protection. Here are some common examples of information protected by engagement letters:

• Scope of services
• Fees and payment terms
• Confidentiality clauses (this could include non-disparagement)
• Dispute resolution procedures
• Termination conditions

Is an Engagement Letter legally binding?

Engagement letters are legal contracts, which means that they are enforceable by law and within courts - so long as they are written and used correctly. However, it's important to note that the enforceability of an engagement letter can depend on the specific terms and conditions it contains, as well as the laws of the jurisdiction in which it is enforced.

How to create an Engagement Letter

Finding a way to create and process engagement letters efficiently is crucial for any fast-growing business. Whether you're struggling to decide what your engagement letter should include, or you're simply unsure where to start, drafting these agreements can quickly become a bottleneck that holds your team back. You can get started with our Engagement Letter example PDF above.

Let's explore the manual engagement letter process from end to end. We’ll discuss how to create an engagement letter, the challenges you might face, and the clauses you can’t afford to forget!

What should an Engagement Letter include?

Creating a comprehensive engagement letter is key to ensuring that your professional services and client relationships are well-defined and protected. Therefore, it is critical that you include all of the important information and necessary clauses within your engagement letter. Not sure what to include? Well, in addition to the basic elements of a contract, an engagement letter will typically include the following provisions:

1. Details of the parties involved: Your engagement letter should include basic information about the parties involved and the people that the agreement will cover. This should refer specifically to the different groups and individuals involved in the agreement.

2. Description of services: When drafting your engagement letters, you need to set out a clear scope of what services will be provided. This may vary between parties and use cases, but each and every engagement letter needs to define clearly which services are to be rendered.

3. Fees and payment terms: As with all contracts, engagement letters should clearly define the fees for the services and the terms of payment. This can either be a clear and measurable amount, such as a flat fee or hourly rate, or it can be based on the outcome of the services, such as a contingency fee. This is consideration, in contract terminology.

4. Term of the agreement: Engagement letters should clearly define the contract's duration. This can either be a clear and measurable duration, such as six months, or it can be indefinite, meaning that there is no set end date for the agreement.

5. Confidentiality clause: While engagement letters are designed to outline the terms of a professional relationship, they often involve the sharing of sensitive or confidential information. Therefore, it's important that your engagement letter includes a confidentiality clause to protect this information. (Need an NDA template?)

6. Dispute resolution clause: An engagement letter will also usually set out what procedures will be followed in the event of a dispute. For example, the parties may agree to resolve any disputes through mediation or arbitration before resorting to litigation.

7. Termination clause: This section will typically address the conditions under which the agreement can be terminated, and what happens if the agreement is breached.

8. Legal jurisdiction: An engagement letter should also outline what jurisdiction(s) the legal agreement will be governed under if a dispute were to occur.

The manual Engagement Letter process

However, even with an exhaustive list of what to include, creating an engagement letter from scratch can be a tiresome ordeal. At its worst, the process looks something like this:

• A client requests services from a professional
• The professional, likely buried in work, suggests that the client reviews a draft engagement letter sample they found somewhere
• The client reviews the draft, makes changes, and sends it back
• If there are disagreements over the terms, each party will redline the document and pass it back and forth, typically saving and sharing a new document each time.

Eventually, once the version control nightmare is over, an agreement is reached and both parties sign, either with a wet signature and a sign/scan/send process or an eSignature provider. Once signed, the engagement letter will be emailed to the relevant parties and stakeholders (legal, sales, and so on), and then filed away in a shared drive or document management system. 

This process is slow, inefficient, and prone to errors. It's also a poor experience for the client, who has to deal with a mountain of paperwork before they can even begin to receive the services they need. It's no way to kick off a business relationship.

Using an automated Engagement Letter template

Fortunately, there's a better way. With Juro, you can automate your engagement letter process, making it faster, more efficient, and less prone to errors. Here's how it works:

1. Create a template - use our Engagement Letter sample

Start by creating an automated template for your engagement letter (the PDF that's free to download on this page can get you started). This Engagement Letter template will include all of the necessary clauses and information, and it can be easily customized for each new client or project.

2. Automate the process

With Juro, you can automate the entire engagement letter process. This means that you can automatically generate a new engagement letter for each client or project based on inputs from your colleagues, and the majority of contract language will be auto-populated, alongside the key variables for the contract in question.

3. Collaborate in real-time

With Juro, you can collaborate on your engagement letters in real-time. This means that you can make changes and revisions directly within the document, and you can see and respond to comments from your clients or colleagues instantly. (Get in touch to find out more about in-browser negotiation).

4. Sign electronically

Once your engagement letter is finalized, you can sign it electronically with Juro. This means that you can avoid the hassle of printing, signing, scanning, and sending your engagement letter, with Advanced electronic signature on any device.

5. Store and manage your documents securely

With Juro, you can store and manage all of your engagement letters in one secure contract repository. This means that you can easily find and access your documents whenever you need them.

Automate Letters of Engagement with Juro

Engagement letters are a crucial part of doing business for so many companies, but they don't need to be so cumbersome to draft, review and get out for signature. By using the latest contracting technology, you can generate Letters of Engagement from a digital template in moments, so you can concentrate on actually getting value from the business relationship you're creating.

Ready to streamline your Engagement Letter process? Hit the button below to get in touch.