Don’t let scope creep up on you

Scope creep can be a real headache. Lockton share their top tips to help you avoid it or at the very least prevent work becoming substantially more onerous than planned.

Scope creep can be a real headache for lawyers. We all know the scenario: you issue your letter of engagement, then the transaction grows arms and legs. More work is needed. It’s all related to, but not exactly within, the original scope. Seeking to be as helpful as possible, you plough on and do all the work. At the end of the transaction the client is indignant about the higher fee. This is scope creep. At best, it can lead to awkward conversations with clients. At worst, it can be the catalyst for complaints or Master Policy claims.

Recent case law has highlighted the importance of a detailed scope of work: see the Supreme Court decisions in Manchester Building Society v Grant Thornton LLP (MBS) (discussed in The Journal, May 2022, ‘Risk Management: Scope is the key’) and Khan v Meadows (Khan), later applied by the Inner House in SD (LD’s Legal Representative) v Grampian Health Board (discussed in The Journal, January 2023, ‘SD v Grampian: the “duty nexus” continued’).

These cases demonstrate that a clearly defined scope of work can provide an effective defence against liability, particularly following the decisions in MBS and Khan.

So, how do you spot scope creep in its tracks?

Letter of engagement is key

Insuring against scope creep starts with the letter of engagement. This must never be just a box-ticking exercise. It should include enough detail to provide clarity for both solicitor and client.

Firstly, make sure you have detailed information from the client so that you know exactly what they need. An instruction to draft a Will and a power of attorney and to deal with the signing and storage of the Will is clear. An instruction to deal with ‘all matters in connection with your estate’ is not.

Remember the mandatory information that you must give to a client in writing at the earliest opportunity, as per Rule B4.2 of the Law Society of Scotland’s Rules and Guidance.

Next, your letter of engagement will confirm what you will do for the client, but does it explicitly say what you will not do? This can avoid a client making assumptions about work which they see as related to their instruction, but which, to a solicitor, is an entirely separate piece of work. For example:

• Taking instructions to prepare a Will but not explicitly excluding tax advice. You may know that the client should get separate expert tax advice, but the client may assume that you will deal with any tax implications of their Will.
• Advising on regulatory matters for corporate clients. A topical example is the introduction of the Register of Overseas Entities under the Economic Crime (Transparency and Enforcement) Act 2022 (ECTEA 2022). Your overseas client may assume that you will deal with their annual requirement to register under ECTEA 2022 if you do not explicitly exclude it from a scope of work.

Lockton has produced a comprehensive guide to letters of engagement, which covers:

• bite-size guidance on the purpose of each section of a letter of engagement
• practical tips on what to include and why
• sample content

Good housekeeping

The dangers of scope creep are ever-present, particularly where a transaction is lengthy and there is no file review. If the client asks you to do more work, make sure you explain that this is outside scope. If a further fee will apply, explain this to them and provide a new fee quote. If you are charging on an hourly basis, give them an indication of how much work will be needed. Crucially, record all this in writing.

Regular file reviews are invaluable. They give you a chance to assess whether the original letter of engagement is still fit for purpose. If not, it is much better to find out at an earlier stage rather than at the end when a final fee is issued.

Take a look at Lockton’s guide to file reviews.

Stop and think

It is in our nature to do the best job we can for clients. However, this can lead to agreeing to further work too quickly without an assessment. Is the new work so far outside scope that it is, in effect, a new instruction? If so, you need a new letter of engagement. Do not rely on one letter of engagement to cover several instructions.

The reality of practice can sometimes make it difficult to avoid scope creep, but the sooner you identify it the better.

For the guides referred to in this article and more, see Lockton’s Resource Centre.

Written by Anna Forsyth, Risk Management Association at Lockton