Building your firm’s library of engagement letters is hard. Your engagement letters need to be robust to give you the protection you need, should something ever go wrong, and clear so that all parties fully understand their responsibilities.

Typically you get given a bunch of engagement letter templates, which YOU have to decipher and correctly assemble into a suite of fully compliant documents, which, unless you had a team of experts devoted to this, has always been an impossible task.

It’s very often a real pressure for firms to get this right and in attempting to get this right they typically make a few mistakes that are really not their fault. I’m going to tell you what those are so you can avoid them in your firm…

#1 Using Engagement Letter Templates 

The first one is, you get given engagement letter templates.  This might be a bank of word documents that you’ve got to sift through and start to decipher. And all of a sudden now you’re expected to be a compliance expert and a legal expert, to be able to understand just how to assemble this documentation correctly in the first place.

You’re attempting to bridge this compliance gap in your firm and effectively these engagement letter templates are a set of building blocks, but you’ve got to bring the resources, the time, the experience, the knowledge to be able to assemble those in the correct way.

So the likelihood of you making mistakes with that is absolutely enormous because it’s such a huge task. And it’s an unfair burden that you were given in the first place.

So what might look like a great thing in terms of you’ve got this library of engagement letter templates actually becomes a huge problem because to get this right, is really, really difficult.

You have got to ensure that these documents reflect the exact circumstances of your firm and if those circumstances change, then all of your documentation needs to change as well.

So all of a sudden, if you’re a sole trader and you become a limited company, you’ve got to go back and change all of your documentation. If you get another director, you’ve got to change your documentation. If you start to offshore and outsource work, or you start to use cloud software, or you start to provide investment services, or you start to take commission, again, you’ve got to change all of this documentation.

#2 Using A Law Firm

Another mistake that firms make in trying to build out their suite of engagement letters in the first place, is to use law firms.

Law firms are great at understanding law, what they typically don’t understand is all of the regulations and compliance obligations that you’ve got to meet as an accountant or bookkeeping firm. And even if they do understand them, that regulatory landscape is constantly changing so we need to be looking to the horizon to see all of these changes coming so that we can be making the changes to your documentation before they happen, not after the fact and they need to be updated on a regular basis.

So, law firms can be great to ensure that you’re fully compliant and that your terms and conditions tick all of the boxes. Sometimes, they can be overcomplicated with legalese, but typically they don’t have all of the experience they need for your specific profession.

#3 They Over Complicate Them

The next mistake that firms make, and I think this is huge and it comes from a fear of wanting to make sure that you’re fully protected, which is a real fear. They create very, very robust documentation, but it’s done by making them overcomplicated.

So you’ve got something that has got every single term you could possibly imagine to protect you against every possible scenario, which creates very lengthy documentation BUT it’s very difficult to understand.

You, perhaps, don’t understand them fully unless you’re taken through them by an expert and if you do, which is a great achievement in its own right, the likelihood is that your clients don’t understand everything that is in there, even if they do read it and then, also, it’s perhaps unlikely that your team understands it either.

And at the end of the day, it’s your team that are delivering the services to your clients. If you’re going to sleep soundly at night, you need to know that your team are fulfilling your obligations.

So, if you don’t have clarity around all of your engagement letters, the likelihood is, your team don’t know exactly what they’re meant to be doing and when, and your clients don’t understand that either.

And so, what we end up with is an overcomplicated document that’s fulfilling the robustness that we need to have, but it’s failing on the clarity. And therefore, because we don’t satisfy both of those components, these documents don’t become as useful as they could be.

#4 Automating Garbage

The next mistake we make i, what I call automate garbage. We get a great automating system that will generate our engagement letters instantly for us, but what we put into those systems in the first place, just wasn’t good enough because of what we were given in the first place.

And it was too onerous for us to assemble those templates into usable, effective documents so what you end up doing is putting garbage into the system and garbage comes out.

What we can do is fall into a false sense of security because we think, ‘Hey, we’ve got an automated system. Look, this is producing our engagement letters for us’, but what we’ve not done is dug deeply into whether they’re actually robust enough and whether they’re clear enough in the first place.

#5 Relying On Hope

The final mistake I see firms making is that they have an overreliance upon hope. They hope that nothing’s going to go wrong.

They hope that their clients are great clients, and if there is a challenge, they’re going to come over and we’re going to chat about it and it’s all going to be okay.

They hope that their team knows exactly what they’re meant to do and that they do it all the time.

They hope that their clients understand their obligations and they’re going to give you exactly what you need when you need it.

They hope that if the worst were to happen, these documents are legally robust, that everything is there that’s meant to be there, and that they’re actually going to protect you in that circumstance.

But deep down, they know that that’s not going to hold up. And it’s only when something does happen.  I don’t want to be a fear monger, but the likelihood is in your professional career you will have a complaint made against you by a client, and at that point, you need something far more robust than hope to rely on.

Imagine Engagement Letters with the Expertise Built-In

We have taken the know-how of the leading compliance experts, and actually built their experience & technical expertise into OverSuite. So that with simple, known inputs, you can generate your library of engagement letters in minutes, that actively adapt to the changing circumstances of your firm and the nature of the clients you serve, however complex.

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"What we have gained is far beyond our expectations

We signed up to GoProposal to help us create engagement letters quickly and professionally. Now we can clearly articulate what services we provide and their value.
Pam Phillips | de Jong Phillips

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James Ashford

James Ashford

James is the Founder of GoProposal, Director of MAP., Keynote Speaker & Bestselling Author of "Selling to Serve". He helps accountants and bookkeepers around the world to price more profitably, sell more confidently and to give significantly more value to their clients.

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