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May 08, 2013

Sample assumptions for defining scope (Part 1 of 2)

This post was adapted from the new Third Edition of the Legal Project Management Quick Reference Guide. It was written by Steve Barrett, Mike Egnatchik, and Jim Hassett.


These posts provide sample wording for various assumptions and exclusions that may be used as a reference to define, qualify, or limit the scope of work in an engagement letter or to plan for any legal matter.

Law firms need to protect themselves by being careful about phrasing assumptions. But if the list of carve-outs gets too long or too specific, it can annoy the client and lead to lost business.

Unfortunately, there is no simple general way to create assumptions that balance client needs and firm needs. The details must be worked out case by case. This can be especially difficult in a highly competitive environment, if clients take advantage of the awkwardness of this negotiation to pressure firms to agree to budgets and fixed prices without adequate protections.

These samples may be especially appropriate when providing budget estimates to clients where key details are not known, such as:

  • Number of deponents, expert witnesses, consultants, etc.
  • Number of document turnarounds
  • Volume of document production requests from investigative agencies
  • Quantity and physical condition of discovery materials (electronic, hard-copy, or poorly preserved documents)

For these and similar situations, law firms should develop general standards for use of the sample wording. Firms must constantly balance the level of written detail needed for self-protection vs. the business demands of good client relations.

Lawyers sometimes tend to err on the side of including assumptions and exclusions that protect themselves too well, and could wind up losing the business as a consequence. Excessively protective language in a highly competitive marketplace might result in the client saying, “Never mind. I’ll hire a different lawyer.”

The samples below are designed to give you some ideas about how to word assumptions, exclusions, and carve-outs for your clients.


Catch-all statement for material changes

This statement of work, together with the assumptions and tasks provided, is the basis for our budget estimate.  If there are material changes, it may be necessary to negotiate appropriate budget adjustments.


General assumptions/carve-outs

  • Matters not covered above in the “Activities” column of the attached spreadsheet are excluded from the budget 
  • Reimbursed costs and expenses are excluded from the fixed fee
  • Local and foreign counsel fees and expenses are excluded from the fixed fee
  • Any material change to the transaction structure will be handled at the firm’s prevailing hourly rates
  • If the closing date of the transaction occurs after [insert date], work conducted past that date will be handled at the firm’s prevailing hourly rates
  • An electronic “deal room/litigation room” will be created for the use of all client personnel and relevant counsel and related entities, in which electronic datasets will house all documents produced, including segregation of privileged materials
  • Documents sought for discovery and/or due diligence purposes will be readily available in electronic format
  • All critical deal/litigation documents will be reviewed and revised in no more than three “turns” of drafts
  • The agreed budget does not include risk factors such as extended negotiations on the bank commitment or requirements to increase the level of due diligence as a result of issues uncovered during the due diligence process
  • The agreed budget does not include due diligence beyond one week, due diligence in specialized areas (such as employment, IP, IT, environmental, insurance, litigation, competition, real estate), a formal written due diligence memorandum or exceptions summary
  • We anticipate that three experts will be needed for researching, vetting and selection, and deposition preparation and/or report analysis


Additional examples will appear next week in Part Two of this post.


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