Delivered a findings report to a property management company. Found $8,400/month in errors across 12 properties. Before I could file the claims, the client shared my report with another auditor who offered to file the claims for a lower fee. The client wants to use the other auditor to save on contingency fees. Can they do this?
Client shared my report with a competitor — how to prevent this
Check your engagement letter. If it includes language that your fee is earned upon identification of findings — not upon collection — then your fee is owed regardless of who files the claims. If your engagement letter only ties the fee to collected refunds, you may be out of luck. This is exactly why the "fee earned upon identification" clause matters.
Phil N. is right — this comes down to your engagement letter. For the future, include a confidentiality clause stating that your findings report is proprietary work product and may not be shared with third parties without your written consent. Also include language that your fee is earned upon delivery of findings, not upon implementation. Both clauses prevent exactly this scenario. For the current situation, if your engagement letter has the identification-based fee language, send an invoice. If it doesn't, consider this an expensive lesson in contract drafting.
My engagement letter says fee is due "upon recovery of savings." No identification clause. Lesson learned the hard way. Rewriting my engagement letter tonight with both the identification clause and the confidentiality provision. This won't happen again.