Engagement Letter Best Practices

by Maureen N. Purner, D&H Global Group – November 20, 2018
Engagement Letter Best Practices

No matter the size or specialty of a firm, client relations is a driving force. If there are no clients, there is no firm. This is why client relations or client relationship management, as it is sometimes referred to, is so important.

So what can be defined as good client relations? The short answer is having effective communication, the ability to personalize or make the client feel like more than just a number, and the aptitude to set expectations for not only the client but in understanding what the client expects of the firm. The following is an overview of engagement letter best practices and the important role client relations has in their development. A firm’s strength is in their clients and its ability to form trust with those clients. Engagement letters strengthen that trust by bringing together communication, personalization, and expectations in a streamlined document for both parties to reference.

Client Relations

Communication is the most important aspect of client relations. It requires active listening and asking questions. The internal communication between the firm’s staff involves gathering the client’s initial contact information, updating lead trackers, and keeping detailed notes on the conversations with the client, whether it be from email or phone conversations. It is good practice to have a process in place for tracking the information that is received prior to a client being entered into a Client Relationship Management program (CRM) or other database. The external communication is the direct contact with the prospective client or their proctors. This is where the relationship is built and where a professional begins to personalize his or her experience with a firm.

Personalization requires understanding the want and needs of the client. This is where a professional shows a client that he or she has heard what they said, understand what they are looking for, and have a plan of action for achieving their goal. Thus, the details for the engagement letter start to come together.

The final piece of the client relations process is setting the expectations. As it pertains to tax firms, this means making sure the client understands that they need to provide certain required information. It is important for the firm to make clear the due dates, time required to compile and the amount of time to prepare the returns. Due dates should always be clearly listed on the engagement letter.

Together, these parts provide the basic information needed to generate an engagement letter.

Engagement Letters

With a better understanding of how client relations and engagement letters are connected, let’s look at the engagement letter. The engagement letter clearly outlines the deliverables and due dates. It also informs the client of additional information requests that will be coming, and it should clearly reflect cost estimates discussed during initial conversations. It is good practice to have additional standard attachments accompanying the engagement letter not only to keep the letter streamlined but to emphasize the importance of the separate attachments. These attachments may include more in-depth information regarding your firm’s privacy policy or standard terms of engagement. In some cases, additional cost information should be provided if a clear estimate was never discussed. Additional information in the letter can include extra filing options or specific tax law information that could apply to your client’s filings. Although there are a few informal interactions with clients prior to the issuing of an engagement letter, the engagement letter itself is the first formal interaction with a new client. It is essentially a first impression, which shows a client that you not only listen but understand their wants and needs.

Ultimately, all firms what to build a strong client base. The firms that have the most success have mastered the art of client relations and engagement letters. Good client relations requires clear and consistent communication, with personalized touch, that clearly lays out expectations for both the client and the firm. The engagement letter is the ideal document for forming trust and outlining the deliverables and expectations for the client and the firm.  


Maureen N. Purner

Maureen N. Purner, BSBA, is the office supervisor at D&H Global Tax Group. She can be reached at mpurner@dhglobaltax.com or 856-347-2937.