The question of why I started Engage is really three questions: what is the problem; why Engage solves the problem; and why I decided to start the company and build the app.

Below, I talk about the problems I was having in my practice and how I approached finding a solution.

Solo Tax Practice

I am a dual practitioner with licenses as a certified public accountant and a lawyer.  The rules of law practice require me to use written fee agreements with my clients.  Accounting rules require that the accountant ‘clearly communicate the terms of the engagement’ but don’t require it to be in writing.

Prior to starting my practice, I worked on contract with a law firm that specializes in accountant’s professional negligence. The firm was panel counsel for accountant’s malpractice insurance companies. The insurance companies hired the firm to defend claims against the company’s customers.

What I learned was that most of the claims against accountants could have been avoided if the accountant had used any engagement letter at all; while almost all the claims could be eliminated if the accountant used the right engagement letter.

And yet, many CPAs – more than half – do not use engagement letters in their practice.

I was therefore diligent about using written fee agreements, regardless of whether it was legal or accounting and tax work.  At first, I needed to think about each client’s issues to figure out the appropriate rules of practice for each case.  Is this state law?  Federal tax law?  Am I representing a married couple as a single tax payer but two clients?

Based on each case’s complexity, this exercise might have take several hours and included some preliminary legal research before I could confidently write out an agreement.  I felt it was important to have an engagement letter so I wouldn’t start work until it was signed and in my office.  As a result, I lost a few potential clients because I couldn’t get a proposed fee agreement to them in time.  I made myself feel better by thinking that if I couldn’t make time to sign up a new client, then I probably didn’t have the time to take on a new case.  But in fact it was disappointing and frustrating.

I also had a reverse problem. I may have had a successful client meeting that ended with a handshake agreement. I’d then invest the time and expense on preliminary case review, setting up a client file and sending the letter to the potential client and never hear from them again. This was also frustrating.

Finally, I was having collections issues about two years after I started my practice.  I was billing a lot of time and doing good work, but my accounts receivable were slowly accumulating, aging up to 60 or even 90 days.  I spent hours ‘dialing for dollars’, as a friend calls it, and hearing many excuses.  During one call that I remember clearly, my client told me he couldn’t pay me right now – money was tight – but he’d send me a check when he got back from vacationing with his family in Spain.

I realized that I didn’t have a collections problem.  I had a client-intake problem.  This gave me new a perspective and I rewrote my firm’s standard engagement letter to explain my firm’s billing practices and payment expectations.  I also increased my hourly rate and required significant advance fee deposits.

Within a few months, I was making a lot more money and working less with fewer – but better – clients than before.  I had less admin time and more billable time so I could deliver a higher level of client service.  Best of all, I had hardly any accounts receivable.

Engagement letters were now getting done in time but it was still taking too long to sign new clients. This became a bigger problem during tax season when I needed to send letters to all of my tax prep clients.  The usual drill was that my assistant would edit the annual engagement letters for each tax client, print them as pdf letters and email them to the client as an attachment.  It sometimes took two or three days to get all the letters sent out; sometimes longer.  Some of my clients would immediately return the letters with a digital signature; others would print the letter and sign with a pen before scanning and emailing it back.

Most of the clients, however, would need several reminders to return the letter to my office.  We might be chasing down letters for weeks.

I have the benefit of being both an accountant and a lawyer.  Accountants do some things that lawyers don’t, like using compliance checklists, and lawyers collect advance fee deposits and use automated document drafting software.  It seemed like I could create a check-the-box and fill-in-the-blank software program that would allow accountants to automatically publish engagement letters for their clients.

So I did.  The first time I used Engage in my practice was amazing.  I sent all my engagement letters – all of them – within a few minutes and spent the rest of the day watching the advance fees rolling in every time I got an alert telling me I had a new signed engagement letter.


Next – Why I Started Engage: Part II, The Solution

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