Let us start by answering the very first question which might come to your mind.

What is an Engagement Letter?
It is a formal document that is exchanged between the client and the law firm or a lawyer. It describes various important aspects of any engagement such as:

• Scope of Work
• Timelines
• Cost
• Resources
• Terms of Services

Why Engagement Letter is important?
Setting a clear expectation is very important for any business relationship. An engagement letter serves the same purpose.

So, we’re kind of all set with the context and ready to dig a little further into this subject. Let’s discussed the aspects in detail.

1. Scope of Work
   • Analyse the requirement carefully.
   • Derive two parts from the requirement.
     • Title or the Requirement, it’s a 3-4 lines statement outlining the requirements.
     • Scope of work is the requirement broken down into small units and mentioned as points or numbered items.
   • Identify the information on which you need the input from your client.
   • Don’t Assume! Every grey area needs to be well thought and mentioned.
     
     Example: Suppose you’ve got a new engagement that is ‘Drafting of Shareholders Agreement’ for say ‘ABC Corporation’
     
     Title/ Requirement: Drafting of Shareholders Agreement for ABC Corporation.
     
     Scope of Work:
     • Drafting of Primary term of the agreement
     • Shareholding pattern
     • Termination clause
     • And, whatever you feel needs to be included, include.

2. Timelines
   Mention the timeline clearly. Also, it’s advisable to keep the buffer depending on the nature of the work. You should have a clear schedule along with the dates.
   The schedule might look as below:

   Task	ETA
   General Meeting and understanding the requirements.	01/01/2021
   Share the First Draft and take the inputs.	08/01/2021
   Sharing the amended document.	11/01/2021
   Sharing the final version of the agreement	14/01/2021

3. Cost
   Costing is one of the most important aspects of any business relationship. Casual cost estimation can not only cause loss to the laws firm but also it could lead to a bad relationship with the client. So, this piece needs to be prepared cautiously.
   • Estimation of Work and arriving to cost conclusion as per time.
   • Identifying the resources going to be engaged on the assignment.
   • Most importantly, identify the appropriate billing type that you could offer considering the nature of engagement e.g., Fixed Cost, Hourly, Retainer, Milestone Based or something else.

   Please check our blog post ‘Top 5 Billing Types Used by Most Law Firms’ to understand various billing types used by any law firm.

4. Resources
   It’s advisable to share the details of resources going to be engaged.
   You could mention the following information about the team:
   • Name
   • Qualification
   • Area of Expertise
   • Mention the point of contact and contact details.

5. Terms of Services
   Do remember to mention your terms of Services. It could be related to engagement, payment, confidentiality or legal issues.

Sample Engagement Letter for Download

Hope you find the information useful.
Would like to make a mention Legalxgen can generate the formal engagement letters just in a click. Email us for a personalized demo to see how Legalxgen could add tremendous value to your law firm.