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On good terms

I already issue terms of business letters. What possible benefit would issuing a separate engagement letter offer my business?

The difference between terms of business and a letter of engagement is that your terms of business will set out the parameters within which you conduct your business towards clients generally and further explain the rights of clients and your obligations to clients arising from the PIA rules.

By contrast, an engagement letter is specific to each particular client and can be used to set precise terms of your engagement by the client, provided that these are within the rules of the PIA.

A letter of engagement can, therefore, stipulate the exact nature of the work you are expected to carry out on behalf of your client and the remuneration structure for the particular transaction and will inform the client of exactly what service he or she can expect. As such, an engagement letter provides clear evidence of the terms of your retainer and if it is signed and returned by the client, it shows that the client has accepted these terms.

When a task list of the original engagement letter is increased, do I need to issue a revised one and, if yes, why?

In this case, issuing a revised engagement letter will become necessary only if there is a material change to the terms of your engagement or the role you are to carry out on behalf of the client which is clearly not covered by the terms of your existing letter.

You should issue a supplementary letter confirming the changes so that they are clearly agreed and are brought within the terms of the original engagement, otherwise the client might dispute them or claim that the original engagement letter no longer applies.

I do not charge fees as I prefer to be remunerated by commission. How can I recover time spent when a client does not proceed?

It is possible to account for this eventuality by including appropriate provisions in the engagement letter informing the client that you will charge for your fees (for example, on a time-spent basis) unless a sale or purchase of a product is completed, in which case you will recover your fees by commission.

It is important to ensure that such a statement complies with PIA rule 4.5.2 and in particular table four, which sets out what is required to be included in the terms of business. In particular, part (four) (a) of table four provides appropriate wording for inclusion in an engagement letter to cover such an eventuality.

What are the remedies open to me if a client refuses to pay his fees?

To the extent that the terms of business or engagement letter specify, it is possible to retain investments or other assets of the client until fees have been paid.

To the extent that this is not possible either because it is not provided for in the terms of business or engagement letter or because no appropriate assets are held, there are three options.

First, negotiate with the client. If you are successful, this has the benefit of maintaining the client relationship and enabling the client to express his concerns or complaints so that these can be addressed.

Unfortunately, negotiation will usually also require a reduction in the level of fees in order to placate the client and retain his future business.

Second, enter into litigation with the client. This could take the form of communicating through a solicitor, issuing a statutory demand or serving a client with a claim. The most appropriate form of action to take in this regard would depend on the circumstances at the time and specific advice should be sought if litigation is chosen.

In general, a solicitor&#39s letter can be seen as a form of negotiation, potentially leading towards the issue of a statutory demand or a claim form.

A statutory demand is effectively a precursor to bankruptcy proceedings while a claim form is the start of court proceedings for the recovery of the debt.

Third, do nothing. This course of action may be appropriate wherever disputed fees are small and the client is highly valued.

How can I recover fees which were offset by commission that I am now having to repay as an investment/ insurance plan has been cancelled by the client either intentionally or due to the non-payment of premiums?

You should include appropriate provisions in your terms of business or the engagement letter. Even with such provisions in the engagement letter, it is unlikely that such amounts could be recovered in practice but in law the amounts would then be recoverable in the same way as any other debt.

I have completed a substantial amount of work, which was requested by the client but without the knowledge of the spouse. Just as I started to invoice him, I am informed he has died. His spouse refuses to pay the invoice or pass it on to his executors. How should I proceed?

This depends on the nature of your contract. If you are entitled to payment from the client, his estate will be liable to pay you. If the client would not be liable, for example, because your payment is commission, the transaction has not been effected and your terms of business or engagement letter do not entitle you to payment, his estate will not be liable.

It is generally irrelevant whether the spouse knew of your engagement. If you know the full name and date of death, it will be possible to carry out a search at the Pro-bate Registry to obtain a copy of the grant of probate.This will contain details of the dec-eased&#39s executors and the invoice can then be sent dir-ect to them.

Can I be held to an earlier estimate if all my time has been logged and relates to the agreed list of tasks?

This will depend on how the estimate has been expressed. If the estimate has the appearance of a quotation, then it will be binding and you cannot recover the excess.

If, however, it is clearly expressed to be only an estimate, then it may be possible to charge according to the time spent.

In such circumstances, it is advisable to state expressly in the engagement letter that the figure given is only an estimate and that the actual fees invoiced may be more if, for example, the matter is unduly complicated.

The most effective way of preventing any problems will, of course, be to advise the client in advance that the matter is likely to be more expensive than initially anticipated once this has become apparent.

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