Beyond fixed fees, scope and guidelines.

Once fees are fixed, many clients stop there, relieved to have ended the guessing game of hourly billing. But fee certainty is only the beginning. A well-crafted scope of engagement coupled with strong counsel guidelines enhances a fixed-fee engagement with two essential and comprehensive management tools.

Start with scope. Critically, the scope of engagement lives in the engagement letter. Among other things, it has the power of an enforceable contract term between you and your counsel.

And like any key contract term, scope should be defined with precision. For example, define the deliverables with specificity so you and counsel are as to what's included and what isn’t. A “fund formation package” can mean very different things to different firms. The goal isn’t to nickel-and-dime counsel; it’s to prevent surprises and maintain alignment between what you need and what counsel is providing.

Next, address “change orders” or mission creep. Even well-scoped projects evolve. The engagement letter should expressly require written approval for any change in scope and establish a pre-set rate or structure for extras. That eliminates the mid-engagement standoff between “you asked for it” and “we never agreed to that.”

Counsel guidelines are often prepared as a document separate from the engagement letter. They typically cover such issues as staffing and expenses. A casual online search will produce counsel guidelines issued by some of the more significant consumers of legal services. Here, we're going to focus on a few essential elements that your counsel guidelines should address.

Virtually all legal engagements live or die on timing. Deadlines and responsiveness deserve special attention in your guidelines. They should specify expected turnaround times for drafts and revisions, and name who will be responsible for managing them. For larger projects, set milestones tied to business events (e.g., first investor meeting, soft close, final closing) so everyone knows what “on time” means.

Good guidelines also promote coordination among advisers. Your counsel should be expected to work seamlessly with the tax professionals, experts, and other non-lawyer professionals. Simple guideline provisions, such as copying the tax adviser on all relevant contract edits, can prevent days of confusion later.

Then there’s knowledge retention. Institutional memory is valuable, especially for repeat matters. Guidelines should require delivery of all documents and working files in editable form, ensuring that you, the client and not the law firm, owns the accumulated know-how.

Conflict management belongs in the engagement letter or the guidelines. This has become a fraught subject as the US legal profession continues on its merger spree. Some large firms have inserted language in their engagement letters that give them tremendous leeway to end your engagement in the event of a an existing, or worse, future conflict. Clients must review and understand what counsel is proposing for conflict resolution. If it doesn't work for you, find other counsel.

Finally, build in post-closing support and performance review. Specify what assistance is included after closing—minor amendments, investor onboarding, routine filings—and set expectations for responsiveness. A brief annual review of performance keeps the relationship candid and constructive.

In short, a fixed fee solves one problem: price uncertainty. Carefully crafted scope of engagement and strong counsel guidelines solve most of the rest. They define expectations, preserve accountability, and bring sophisticated and attentive clients closer to managing legal relationships with close to the same rigor they apply to every other part of their business.