Delivered my audit report to a strip mall owner in Tucson showing a rate class error on TEP worth about $16,000 in refunds. The client then showed my report to another auditor who offered to file the claim at 25% contingency instead of my 40%. The other auditor didn't do any analysis — he's just using my work product to file the claim cheaper. Can they do this?
Client shared my findings with a competitor auditor who is now claiming the work
This is infuriating but it happens. Your protection is your engagement agreement. If it says the client cannot share your work product with third parties and that your fee is due upon identification of findings regardless of who files the claim, you have a contractual right to your fee. If your agreement doesn't have those protections, you're in a weak position. I learned this the hard way in Phoenix and now my agreement explicitly states: all audit findings, reports, and work product are proprietary and may not be shared with competing service providers.
Sarah identifies the two critical contract provisions every auditor needs. First, a work product confidentiality clause preventing the client from sharing your findings with competitors. Second, a clause stating your fee is earned when findings are identified and communicated to the client, not when the claim is filed or the refund received. These provisions protect you from exactly this scenario. Patricia, if your current agreement lacks these terms, you may still have a claim based on unjust enrichment — the client is benefiting from your work without compensating you. Consult a local attorney about your options.
Talked to an attorney who sent a demand letter citing my engagement agreement and unjust enrichment. The client settled — paid my full 40% fee. The other auditor backed off once he realized there was a prior engagement. Added both the work product confidentiality clause and the 'fee earned upon identification' language to my template. Expensive lesson but it won't happen again.