Letter of intent (LOI)
also known as LOI
A short document signalling that a client intends to proceed, often used to start work before the full contract is signed.
For example, a client wants the agency to begin urgently while legal finalises the MSA, so they sign a brief LOI confirming intent and agreeing to pay for work done in the meantime. It bridges the gap without leaving the agency exposed.
Why it matters to your firm: an LOI lets an agency start time-sensitive work without waiting on a long contract, while still creating a paper trail and some protection. It is not a full contract, so it should make clear what is binding - especially payment for any work done - to avoid working on a handshake.
Common mistakes
- Treating an LOI as a binding contract, or assuming it never is.
- Starting real work on an LOI with no signed agreement.
- Leaving key terms vague, which fuels disputes later.