The wording of an Alternative Disputes Resolution clause in an engagement letter has been discussed on various occasions in the past. Schools of thought have vacillated between a formal arbitration clause to a voluntary mediation clause.
Ralph Picardi, Esq., the risk management consultant to the CPAGold program recommends the following language for a Mediation Clause:
You agree that any dispute that may arise regarding the meaning, performance or enforcement of this engagement will, prior to resorting to litigation, be submitted to mediation, and that the parties will engage in the mediation process in good faith once a written request to mediate has been given by any party to the engagement. Any mediation initiated as a result of this engagement shall be administered within the county of [County and State], by [Name of Mediation Organization], according to its mediation rules, and any ensuing litigation shall be conducted within said county, according to [State] law. The results of any such mediation shall be binding only upon agreement of each party to be bound. The costs of any mediation proceeding shall be shared equally by the participating parties.
Although no agreement can perfectly avoid a lawsuit, the foregoing will give you a place to start negotiations with a client in the event of dissatisfaction in your work product.
Pre-engagement it will also indicate to the client that you are willing to discuss, in a relatively low cost and simple, non-binding forum, any issues that may arise during the assignment.
Also, in the event of a failure to agree the evidence presented and the outcome of the Mediation may have a bearing upon a Judges opinion should you later be forced to litigate.