Whenever a client agrees to engage with your business for work, it’s best practice to make sure they sign something before you start working with them.

An Engagement Letter sets out the terms on which your business is entering into a relationship with your clients.

The purpose of an Engagement Letter is to set out the expectations of both parties to the agreement. 

It’s really important to have the terms on which you’re entering into a business relationship written out in this formal agreement. An Engagement Letter ensures both parties understand what services are being provided and how they’ll be delivered.

An Engagement Letter also serves as the common foundation between your business and its customers—establishing clarity through the progression of your business relationship.

When Do I Need An Engagement Letter? 

Engagement Letters are generally used when a professional services firm is engaged by their client for a piece of work. 

Most businesses use Engagement Letters when onboarding new clients. 

Generally, Engagement Letters are less formal than a contract. However, they are still legally binding. 

Importantly, Engagement Letters reduce liability and clearly outline the roles and responsibilities of both your business and its customers. 

What’s Included In An Engagement Letter? 

Engagement Letters outline the scope of services to be delivered to your customer. This lets your customer know exactly what they’re paying for and what they will be receiving.

You can also use an Engagement Letter to specify how your customer can proceed with additional services.

Even though Engagement Letters are intended to be brief, they efficiently communicate the scope of services to be provided to your customers, the terms and conditions of your business, and deadlines. 

Some common provisions you can find in an Engagement Letter include:

  • Payment and late payment 
  • Scope of services to be provided 
  • Liability protections 
  • Intellectual property ownership
  • Confidentiality 
  • Duration, termination and deadlines 

Need Help? 

Having a properly drafted Engagement Letter is essential to your business’ operations. It helps set your expectations with your clients and customers, secures your payments, protects your intellectual property, and prevents other legal risks from arising. 

However, if you don’t have legal experience, it can be hard to know whether you’ve got it right. 

Having a lawyer draft a strong Engagement Letter will give you clarity around the terms on which you’re working with your clients. It’ll also relieve you from the stress associated with the legal side of the business, so you can focus on what you love to do!

If you’re looking to get an Engagement Letter written up, feel free to shoot us an email at team@sprintlaw.com.au or give us a call on 1800 730 617. We’re available for a free, no-obligations chat to discuss your specific situation.

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