Guides · Agreements and policies
What is an engagement letter?
An engagement letter is a short agreement for advice: what you’re advising on, what you aren’t, how you’re paid, and the limit of your responsibility. Accountants, lawyers and consultants send one before the work starts. It’s a letter, not a contract that reads like one.
What goes in it
- Who the client is: a person, or a company and the person acting for it.
- What you’re advising on, in a sentence or two.
- What you aren’t advising on, so the edges are clear.
- How you’re paid: by the hour, a fixed fee or a monthly retainer, and when invoices are due.
- What you rely on: the information the client gives you, and that it’s accurate.
- How either side ends it, and what’s owed when they do.
Letter or statement of work?
A statement of work is for deliverables: a report, a plan, a launch. An engagement letter is for advice, which has no deliverable to sign off. If you’re paid to answer questions as they come, it’s a letter. If you’re paid to produce something, it’s a statement of work.
Limits of responsibility
Some professions cap what an adviser is liable for in the letter. Whether a cap holds, and how high it has to be, depends on the country and the profession, so this is the clause to have a lawyer read.
Checked 2026-10-11.