Engagement letters: what to include and why they go unsigned

An engagement letter does two jobs. It tells the client what they are getting and what it costs, and it gives you something to point at when a disagreement appears months later. Both jobs fail in the same way: not because the letter was badly written, but because it was never signed.

What an engagement letter should cover

The specifics vary by profession and jurisdiction, and your professional body may set requirements. As a general structure, most engagement letters need to be clear about the following.

• Who the parties are, including which entity you are engaged by when a client has several.
• The scope of work, stated in terms of what the client receives.
• What is explicitly not included, which is usually the most valuable section.
• Fees, how they are calculated, and what triggers additional charges.
• Timing and any dependencies on the client providing information.
• Responsibilities on each side, including what you are relying on the client for.
• Confidentiality, data handling and how long records are kept.
• How either party ends the engagement.

Why engagement letters go unsigned

In most firms the letter is not unsigned because the client objected. It is unsigned because of friction that has nothing to do with the content.

1. 1The letter arrives as an attachment in a second email, after the proposal the client actually read.
2. 2Signing requires printing, signing, scanning and emailing back, or creating an account in a portal.
3. 3The client intends to do it, and then does not.
4. 4Work starts anyway, because the relationship feels settled.
5. 5Nobody notices until something goes wrong.

The practical fix

Attach the terms to the thing the client is already saying yes to. If the scope, the price and the engagement terms are accepted in a single action, the signature rate rises because there is no second task to postpone.

• Send terms with the proposal rather than after it.
• Let the client sign online without creating an account or installing anything.
• Capture the signer name and a timestamp so the record stands on its own.
• Send both sides the signed document automatically, so filing is not a task anyone has to remember.

For the proposal side of this, see our accounting proposal template, and for what to collect once the letter is signed, our client onboarding checklist.

Is an electronically signed engagement letter valid?

In New Zealand and Australia, yes, for ordinary commercial engagements. New Zealand is governed by Part 4 of the Contract and Commercial Law Act 2017, and Australia by the Electronic Transactions Act 1999 (Cth) together with state and territory equivalents. We cover both in detail: electronic signatures in New Zealand and electronic signatures in Australia.

How Proffa handles this

Proffa keeps the engagement terms attached to the proposal, so accepting the price means accepting the terms. The client signs online with no account, both sides receive the signed PDF, and an onboarding form can collect the details you need to start work in the same flow.