Qualities of a good (modern) letter of agreement

Over the years I’ve written a lot of letters of agreement.

I’ve used the legally recommended lengthy document that approaches business from a ‘protect yourself, CYA’ perspective. I’ve tried the version that lists in detail the scope of work and exactly what will happen when the client goes out of scope. I’ve whittled it all down to just a few bullet points that clearly outlines the terms so my client and I don’t get cross-ways about money. And I’ve done the verbal agreements followed up with an email to confirm what we discussed.

In every instance they have served my need at the time. Each version marked my development as a business owner, and marked where I was on my journey of self-development.

My latest version of a letter of agreement is quite different and has been the product of the last five years of growing my business in personal and spiritual consciousness.

Why have a letter of agreement?

When you engage with a client you are forming a relationship with them. It helps for you to be crystal clear about what’s important to you in that relationship. And once you are clear then you are able to gauge how well you are honoring your relationship to yourself, as well as to the client.

Taking the time to write a good letter of agreement will help you immensely because doing so makes you be concrete about what’s important. And then sharing that letter with your client helps you create a clear and visible engagement that can be honored by both parties in the relationship.

For me, the most important element of a letter of agreement is that it sets the ‘energy’ of the relationship or engagement. By energy, I mean that it sets the tone to the agreement beyond the technical, practical terms of our work together.

But first, let’s get the standard, traditional elements covered.

The traditional elements of an agreement

A traditional letter of agreement generally contains the following elements:

  • Parties: Specifies exactly who is a party to the agreement by naming them by their official name
  • Term: The term of the agreement is specified; specifically, how long you will work together is defined and what will happen when the term ends, including renewals
  • Responsibilities: The responsibilities of all parties are spelled out
  • Compensation: What you will be paid, how you will be paid, when you will be paid and what will happen if payment is late or services are not delivered as listed in Responsibilities
  • Confidentiality: There is usually a statement of how confidentiality is honored
  • Ownership: In many instances it’s important to clarify who owns the work produced
  • Disagreement: Most agreements will contain some provision for what to do if parties get into a disagreement; like where lawsuits will happen, or if mediation is required first
  • Standard legalese: By this I mean the components of the agreement that cover all the things that attorneys want to make sure are said just in case like severability, force majeure, whole agreement, and other items like that

Important note: Your letter of agreement will depend on the work you offer. Generally the larger and more complex your business the more attention is spent on the technical, practical terms of engagement.

A special note to solo-practitioners, especially in the service industry: Chances are that you do not have an agreement that covers all of these elements. It’s up to you to decide if you want to use one. What is most important is that you get very clear about where you stand on each of these elements, especially about how to handle disagreements.

What else is there to a good agreement?

In business, we give high importance and value to perfecting the technical and practical aspects of a relationship or engagement. As a result we have traditional agreements like I describe above. But they do not serve my need for who I am or completely reflect the true nature of my engagement with my clients.

When I began to realize that branding, marketing and integrated communications was not my highest purpose or expression in this life, I began to explore what I wanted to develop and how I was drawn to express my gifts and talents. During that exploration I made choices to work with people that felt right even thought I often was unable to express what I was doing or how I was helping. I didn’t have a path for how to develop myself and didn’t have anyone to follow for what and how I served my clients.

As a result, traditional agreements failed me. Not because they were inadequate. They did in fact cover all the bases: compensation, terms, services offered (even if all I stated was consulting or coaching).

Traditional agreements failed me because they did not require me to be clear about what made an agreement feel right.

When I engage in a business agreement there is so. much. more. that goes into that relationship than money exchanged, terms and services offered. I have to be in integrity with my values, with my gifts and with the essence of my Soul. These very things are what make an agreement important and are often the most unexplored and un-honored.

What are the elements of a modern agreement?

My first point of adjustment is to consider it a letter of engagement rather than a letter of agreement. When a client pays you and you deliver your services or product you have already made implicit and explicit agreements. I prefer that when I do, that I be clear on how we are going to engage with each other.

The three most important elements of a modern agreement are engagement, value of exchange and terms. When you define these elements for yourself not only will you have a greater understanding of yourself and your work but you will also have a more solid foundation for a successful, fulfilling business relationship.

Here’s what you need to consider to develop these three components:

Engagement – Describe how you engage with your client. Consider what you do, how you do it and under what conditions. Think about what you do (or like to do) for the pure pleasure of doing it and tease out the core themes, feelings, activities or values. If your answers tend toward services, deliverables or tangible things then you are not on the right track.

As an example, here’s the first paragraph in my letter of engagement:

When I work with a business owner and their company, I engage my energy and attention to their greatest potential development. Through coaching and consulting, I work with you to help you advance your desires for your company. To do this we will work on items related to business. However, we will not work exclusively within the realm of business. Most of what you are creating within or around your business is directly related to beliefs, emotions, aspects, issues, past lives and other unseen elements in your life.

Value of exchange – There is so much more that is exchanged in a business relationship than money. Consider what has to be present for you to do work with someone. Is it a belief, a quality, a perspective, or an emotion? These are elements that you bring to the exchange but you also seek from the other person or business.

Here are a few that are in my letter of agreement:

  • I value your commitment to personal development and increased personal and soul consciousness.
  • I value your desire and interest in growth, stretching boundaries and openness to new ideas.
  • I value your trust, faith and willingness to engage in your life and business

Terms – Define exactly the cost for services/product, how long you will deliver the services, how payment is expected, when it is expected and how you will handle making changes if there are changes that need to be made.

What makes a letter of engagement challenging?

A letter of engagement, as I’m describing, completely turns business as usual on it’s head. It says “I’m coming to the table with these assumptions and expectations AND I’m anticipating not only money in this exchange but other intangibles.”

You aren’t hiding these things from yourself or your client. You’re being upfront and clear about what’s important to you.

To be honest, the hardest part of doing it this way is often your fear of judgement, failure and scaring off business or clients. When you get clear about your terms of engagement and value exchange you probably will be leaving behind someone who might have been a client previously.

Yet the gains are great. The value exchange between you and your clients will be richer, deeper and more expansive. The engagement between you and your clients will be in your strengths and they will benefit all the more because of it.

I’d love to know… how do you formalize your engagements with your clients?

4 Responses to “Qualities of a good (modern) letter of agreement”

  1. I really like the term “Engagement Agreement” as this is document that actually says “We are going to work on this project together and this is how we are going to do it”. In my business as well the details are outlined in a separate document.

    It would be great to see an example of your basic engagement agreement to see how you bring all of these points together.

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