Who Holds the Pen? Rebuilding the Instruction Map After a Client Reorganisation

Client reorganisations rarely arrive with a clean line drawn under the old arrangements. A group announces a new parent company, a finance director steps down, a subsidiary is folded into a central services team, and the person who has emailed you every month for three years keeps doing so. The tone is familiar. The signature block looks much the same. The only thing that has changed is the part that matters: whether that person can still bind the client to an instruction.

For UK advisory firms, the risk is not hypothetical. Work continues, fees are incurred, advice is acted upon, and only later does someone ask who authorised the step. By then, the answer may be awkward. A practical authority check is therefore not a bureaucratic obstacle. It is a way of protecting the client relationship, the firm's fee position and the integrity of the advice itself.

The gap between a familiar voice and a valid instruction

Most engagement relationships distinguish between the client and its people. The client is the company, LLP or other entity that has signed the terms. The people are directors, officers, employees or advisers who communicate on its behalf. A reorganisation can disturb both sides of that distinction without anyone intending to create confusion.

A new parent company may believe it now controls the subsidiary's professional advisers. A newly appointed finance director may assume authority that the board has not yet conferred. An outgoing director may continue to send instructions during a handover, either because nobody has told them to stop or because the firm has not asked. In each case, the firm is left to decide whether to act.

The safe position is to separate two questions. First, who is the client entity? Second, who within that entity, or under what delegated authority, can instruct the firm on this particular matter? A name on an email is not an answer to either question.

Why the paper trail matters

Authority is not merely a matter of manners. Instructions given without proper authority can create disputes about fees, scope and liability. They can also expose the firm to confidentiality issues if information is shared with a parent company that is not a party to the engagement. In regulated areas, identity verification and client due diligence may need refreshing when the controlling structure changes.

There is a commercial point too. If a firm acts on an instruction that the client later disowns, the firm may find itself arguing about whether it was entitled to rely on the person who gave it. A short authority file, created at the point of change, is far more useful than a long explanation afterwards.

A four-step authority check

1. Confirm the instructing entity

Start with the legal entity, not the individual. Ask the client to confirm in writing which company or LLP remains the contracting party. If a new parent company intends to instruct the firm, decide whether it is joining the engagement, providing a guarantee or simply receiving information. Those are different arrangements and should not be blurred.

Check the client's current constitutional documents where appropriate. For a UK company, the articles of association and any shareholder agreement may set out reserved matters or delegation. Companies House records can confirm director appointments, but they are not a substitute for the client's own confirmation of who may instruct advisers. For an LLP, the members' agreement and any delegation to a management board will be relevant.

2. Obtain the resolution and signatory matrix

Ask for a board resolution, written resolution or equivalent authorisation that identifies who may instruct the firm, for what matters and up to what value. The document does not need to be elaborate. It does need to be clear.

A signatory matrix is often the most practical tool. It should list named individuals, their roles, the matters they can instruct on, any financial limits, and who can deputise in their absence. It should also state when it takes effect and when it will be reviewed. A matrix that says only 'finance director' is less useful than one that names the person and explains what happens during an interim appointment.

If the client cannot produce a resolution quickly, the firm can still acknowledge the reorganisation while holding substantive instructions until authority is confirmed. That is usually better than proceeding on assumption and correcting later.

3. Re-paper the engagement

The engagement letter should reflect the new reality. That may mean a short variation letter rather than a full re-engagement. The variation should identify the client entity, confirm the scope, name the authorised instructing contacts, and deal with any new parent company or group services team. It should also address confidentiality and information flows if reporting lines have changed.

Where a new entity is paying the firm's fees or receiving advice, the firm should consider whether it needs to be added as a party or asked to provide a guarantee. A parent company that is not a client should not be treated as though it were simply because it holds the shares.

4. Set a communication protocol

A simple protocol prevents most confusion. Agree two named contacts for instructions, with a nominated deputy for each. Confirm the email domains from which instructions will be sent. Require material instructions to be confirmed in writing, even if they begin by telephone. For changes to bank details or payment arrangements, use a separate verification channel rather than replying to the email that requested the change.

It is also sensible to say what the firm will not do. Instructions sent by personal messaging applications, from a departing employee's personal email address or by someone who is not on the matrix should be acknowledged but not acted upon until verified. The protocol should be shared with the client's new finance or legal team so that it is understood as a joint control, not a obstacle.

Red flags that justify a pause

Some changes should prompt an immediate review. A new email domain, a sudden change in bank details, a departing director sending urgent instructions, or a parent company representative asking for confidential information are all signals to slow down. Urgency is not authority. Neither is a job title, particularly during a transition when titles may be provisional.

A firm should also be alert to the client who says that 'everyone knows' a particular person is in charge. That may be true internally, but it is not a substitute for a document the firm can rely on. A brief, polite request for confirmation is usually well received when framed as part of the firm's onboarding and risk controls.

Keeping the map current

Authority checks should not be a one-off exercise triggered only by a reorganisation. They can be built into the annual engagement review, the client due diligence refresh and any significant change in scope. A short annual confirmation of the instructing contacts, the client entity and the signatory matrix keeps the file accurate without creating a heavy administrative burden.

When a change does occur, record the steps taken. A note of the documents received, the date authority was confirmed, the people named and the engagement variation sent is enough. If the position is later questioned, that record will do more than memory.

A control that protects the relationship

Clients reorganise for good commercial reasons. They do not usually set out to create ambiguity for their advisers. The firm's role is to make the transition orderly by confirming who holds the pen, documenting the answer and communicating the protocol clearly. Done well, the authority check is not a sign of distrust. It is a sign that the firm takes the client's governance as seriously as its own.