The decision by a fund manager and its legal counsel to extend the attorney-client privilege to a consultant relationship through a so-called “Kovel arrangement” is only the first step in a complicated process. The next and most important step is ensuring that the entire Kovel engagement is performed correctly so the privilege will be recognized by the SEC, other regulators and the court system. If the arrangement is deemed invalid, the fund manager could be exposed to liability when documents detailing its operational deficiencies are made available to regulators or litigants. This article, the second in a three-part series, provides practical guidance regarding the provisions that need to be included in an engagement letter with a consultant and how the parties must maintain the arrangement on a daily basis in order to ensure it remains Kovel-compliant. The first article in this series detailed the legal requirements of the Kovel doctrine, as well as considerations for fund managers when deciding whether to invoke or waive the privilege. The third article will examine circumstances under which it is and is not appropriate for fund managers to employ Kovel arrangements. For more on the attorney-client privilege, see “Federal Court Decision Narrows the Scope of Attorney-Client Privilege Available to Hedge Fund Managers in Internal Investigations” (Jan. 23, 2014); and “Six Recommendations for Hedge Fund Managers Seeking to Protect Themselves From Waiver of Attorney-Client Privilege When Faced With SEC Document Requests” (Jan. 17, 2013).