Australia: Client engagements: are you clear about what you agreed to do?

In brief - Clarity in the engagement helps you to avoid problems in the future

If you are facing a claim on the basis of advice you have given or work you have performed for a client, you need to be able to prove exactly what you agreed to do. Unambiguous written letters of engagement will help your case.

Scope of professional retainer often at the heart of a dispute

As I put the finishing touches to another settlement of a litigated claim against a professional adviser, it occurred to me how common these claims are – and how difficult they are to defend – when, at the heart of the dispute, is the question of the scope of the professional's retainer.

Many times I have rolled up my sleeves ready to tackle the big issues in the defence of a new claim, seeking to determine if the work performed or advice given was careless, only to be confronted by a more simple issue: the professional says they were not engaged to do the work at the heart of the complaint, but the client says otherwise. For accountants, tax advisers, building professionals, lawyers or financial advisers, the complaint is frustratingly common.

Terms of retainer usually set out in engagement letter

The retainer is a shorthand way of describing what the professional agreed to do for the client. Usually, but not always, the terms of the retainer are set out in an engagement letter that the client signs, or at least acknowledges. The letter generally sets out the contractual terms and conditions by which the professional agrees to act.

A formal letter of engagement is not necessary to establish a contractual relationship between a professional and client – an invoice, a note or the facts alone may establish a contractual relationship. The professional may owe a duty to exercise reasonable care to the client in any event, absent any clear contractual relationship.

Clarity in engagement letter will eliminate one element of ambiguity in litigation

When things go wrong and losses are suffered, recourse to the professional adviser is common. What is important is that when this occurs, the professional adviser must be clear about what they agreed to do. Unambiguous written engagement letters will assist.

Such clarity may not eliminate the claim, but will take out one element of ambiguity in the litigation, and some headaches for your defence team. The more ambiguity there is in what a professional did, or agreed to do, (imprecise engagement terms, poor documentation and file maintenance), the greater the pressure points the claimant has against that professional in litigation. How can you explain to a court what you did, or agreed to do, if you cannot show this by clear documentation, and when the client says otherwise?

Claims often related to work performed long ago

When sued, the professional dusts off the file (sometimes archived years ago), digs down to extract the engagement letter, and assuming one exists (not an assumption that always proves correct), the letter often describes in the most general sense what services are to be provided. Then we get into nasty disputes about who agreed to do what.

It is common for claims against professionals to be commenced many years after the services complained of were provided. Hence, you need to make it clear from the beginning what services were agreed on, before memories fade and documents are lost.

Courts inclined to give the client the benefit of the doubt

A professional will always say they were clear about what work was to be performed, and they are now astounded the client would say otherwise. Yet, where there is imprecise language in an engagement letter, the courts are inclined to give the client the benefit of the doubt, often taking the view that it was the professional's obligation to be clear about the retainer.

To avoid litigation and to adopt good risk management procedures, before you shoot off your standard form engagement letter for your next assignment, warmed by the inner glow of securing a new matter or client, pause for a moment and take some time to think about what services you are to provide, and why.

Here some simple points on the need to be clear about your engagement and some suggestions to avoid that nasty dispute.

Put it in writing and make sure you know what the client wants

It sounds obvious, but put the terms of any engagement in writing from the beginning. You would be surprised how many professionals overlook this basic step.

Understand clearly what your client wants in the way of services: is it a specific task or matter, or a more general, all-encompassing engagement? The latter case requires more attention to describing in your engagement what you will or will not do.

Be as specific as possible in describing the services to be provided

Too often engagement letters are long on detail, with standard terms and conditions regarding billing and costs, but short on an accurate description of what services are to be provided. The description of the services to be provided is usually a short one-liner, inserted by the word processor among the detail of the pro forma terms and conditions.

Use simple but precise language in setting out your engagement. It does not have to be detailed if the task is clear. But be as specific as possible. Language incorporating general expressions is open to different interpretations.

If the engagement modifies or changes, modify the terms of your retainer

It is impossible to foresee the future, but think about where the engagement might go, based on your experience of similar matters or clients. Will it bring other work, different assignments and different projects? If so, remind yourself to review the engagement letter to ensure you update the engagement to describe these new assignments carefully, and what you have agreed to do.

For example, you might initially start to do a client's annual tax return, but did you agree and understand you were advising generally on the client's overall tax affairs, including some specific and somewhat complex tax issues? The client might say you did, or thought you were. Continuing to update you engagement letter as the work changes is important.

Make it clear what is outside the scope of your work

Revising your retainer letter may be a cumbersome process in some circumstances. So make a mental note simply to write a short letter to the client when the occasion arises, and when you find you are doing work not contemplated by the original retainer, to confirm you are not advising them on certain issues, and they must either retain you specifically to do so, or if it is not within your expertise, they must retain someone else.

Lawyers commonly get sued by a client when acting in commercial transactions, with the client thinking they assumed a duty to advise on the financial or commercial aspects of the matter generally. When the complaint is made the lawyer is usually stunned to think they would, or could, provide such services, but a poorly expressed retainer leaves the whole matter open for dispute.

If part of the assignment is not within your expertise, or you do not have the time or resources to do it, say so. It is best be upfront with your client early, rather than face an ugly misunderstanding later.

Projects involving multiple advisers or consultants

When a project involves the coordination of multiple advisers or consultants, think about what your specific role might be, and who should be doing what. Does the client fully understand your role and its limitations? Describe it clearly in writing.

My experience is that in co-ordinated projects, advisors often take a narrow view of their duties (sometimes driven by the client's, or their own, cost/fee considerations), and some matters are overlooked. Such assumptions can be terribly wrong.

Co-ordinated projects often end with some nasty losses when an important, but sometimes seemingly insignificant matter, is overlooked by all on the project. The law may impose a duty on you to do things that you thought should be done by others. Better communication may have avoided the problem.

Take care to avoid conflicts

Is there a chance you may be acting for more than one person or entity with different interests? Will their interests conflict? Should they be encouraged to get independent and separate advice? Say so in writing, or state who you will not act for.

The trouble with conflicts is that they are usually not seen at the beginning of a client relationship, but have a habit of rearing their ugly heads in the middle of the assignment, when it is too late to reverse course. It sometimes takes considerable foresight to identify potential conflicts that may arise in an assignment, so be cautious from the start.

Clear engagement letters strengthen your position in the event of a claim

The suing of professional advisors when losses are sustained is part of the modern business landscape. Litigation is generally an unpleasant and unhappy experience. Money is spent, management time is wasted, relationships are soured. My suggestions will not bulletproof you from all claims, but may eliminate one point of contention and strengthen your defence on other grounds.

This article was first published by Charter magazine in March 2013.

Ross Donaldson
Professional indemnity
Colin Biggers & Paisley

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Mondaq Advice Centre (MACs)
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.