We spend so much of our time, energy and money on attracting and keeping clients that the thought of firing one seems defeatist. But firing clients can be good for business. Here’s why.
- Bad clients waste out time. One of the annoying elements of a bad relationship is that it tends to take more of our time to manage than a good relationship. This, in turn, lowers our productivity which has consequences to our overall financial performance and activity goals for the year. And really, who needs that kind of drag in their life?
- Bad clients almost always dispute their bills. Sure, they aren’t the only ones who complain about their bill, but of all the clients you send a bill to, you can almost guarantee that the most obnoxious clients – the ones you’ve perhaps had to work the hardest to please – are going to demand steep reductions.
- Bad clients can tarnish our reputation. My lawyer clients have told me horror stories about the lies bad clients have tried to spread about them. So sure, it can happen. But fear of being trashed by a jerk isn’t sufficient reason to keep enabling them and simultaneously losing money from them. Dump them already.
- Bad clients don’t listen to us anyway. Too often, these are the clients that treat us like a book instead of a professional – they argue with advice, they take action in half measures because they don’t really believe in it. To be fair, we are advice-givers and we can’t expect our clients to listen to and act on every we tell them. But it shouldn’t be a fight, either.
- Bad clients cost us in opportunity loss. We watch a bad movie and then lament, “well, I’ll never get that hour and a half back again!” But then we’ll deal with a bad client for six months, and let go of the value of all of that time with a shrug. Imagine what you could be doing if you weren’t dealing with that bad client. You could be billing at full rates, for people who care about your advice.
- Bad clients lower our morale and momentum, making it harder to recover and get back our productivity. We’ve all faced times where we needed to get our numbers back up after situations like a mat leave, vacation or illness. But when our stats are depleted due to a bad client, we are in a very different emotional state. I’d go so far as to say it might be a slightly demoralized state (or you would have taken action and fired the client already). So precisely when we need to rally, we may be in the worst possible emotional state to do so.
The obvious action is to fire the client. But what if you could take steps to the limit the number of clients who turn bad? By taking the right action beforehand, you may be able to set up a better client relationship to help avoid deterioration. Here are some suggestions:
- Improve client in-take screening. When I ask lawyers the conditions under which they took on the bad client, I frequently hear that the client had already fired several lawyers. That should be your first clue. Next, I hear how the client trashed the other lawyers, blaming them for the state of the file. There’s another clue. Improve your client in-take process and look for clues that identify the client as difficult.
- Create better ground rules. Take the time at the front end of the relationship to talk about how you and the client will work best together. Talk about communication and come to agreement on frequency; format (when to email, call, meet in person); content (how to structure questions, what information to include to limit back and forth, what constitutes an appropriate legal question when you’re paying someone by the hour); and when to talk with you v. your assistant, etc. Talk about when the retainer amount might need to be replenished. Talk about the kind of advice you’ll be providing and what you need to see occurring on the client side. A good retainer letter helps, but nothing beats an honest face to face discussion. Even if the client still turns bad, you might be able to keep them in a line a bit better if they’ve committed to certain actions.
- Improve your communication throughout. Sometimes, good clients can become bad clients when they feel they are being ignored, or not heard. This can be because you are not meeting their unspoken assumptions. Err on the side of keeping your client informed regularly. It might be a quick email to say that things are still in limbo, but at least it’s ensuring they know that you know they are out there. And if anything changes on the file and a decision needs to be made, or you need to take an action, again send them a quick note (or give them a quick call) to let them know or if appropriate, ask how they would like to proceed. It always helps to back up any oral discussions with an email summarizing the actions to be taken.
- Improve financial management of the file. If you suspect in any way that a client might be difficult, get a larger retainer. And once that retainer has been exhausted, have it replenished. Life is too short to do any work for a difficult client without being pre-paid (or ultimately, paid fully or at all).
- Heed the warnings. If you are on top of a client file, you can tell when something isn’t quite working. They are delayed in getting back to you on a question. They don’t seem to have taken a piece of your advice. They are behind in their payments and are remaining silent about it. Those are all warning signs that they might be turning bad. Don’t ignore the signs. Get on it right away. A small wound can more easily be healed than a large festering gash!
- Take Action. Often a frank conversation can get a bad client back on track to goodness. But if not, you need to make some decisions. Speak with your firm about how it handles bad clients. You’ll also need to be familiar with your Law Society rules about withdrawal. Please read that section of your rule book now, before you have a problem. It should help you to shape the wording of your retainer letter to protect you against this and other potential client issues.
Lawyers are smart people. But they hold onto bad clients for far too long. Here are some of the typical excuses for this:
My Law Society rules make it difficult to fire a client. Have you read your rules lately? There are likely a number of valid reasons for severing the relationship. Loss of confidence between lawyer and client may be one of them. Also as noted above, you can probably adjust your retainer letter (especially reflecting some financial elements) to better protect you in advance of forming a relationship with a client.
My Partners will worry I can’t manage clients if I have to fire one. Your Partners are far more worried about your reputation in the legal community and your ability to meet your financial targets in the firm. Maintaining a client that doesn’t pay their bills, takes too much of your time and potentially trash talks about you in public produces the opposite results that your Partners want to see. In fact, I see the ability to strategically prune to be an important but rare business skill in most law firms.
If I fire this client, my hours will go down and I won’t hit my target. What’s the value of a billable hour that takes five hours to create? What’s the value of an unpaid hour? More importantly, what’s the opportunity loss of all of that time? Any time is not good time. Bad time lowers your effective rate, making it more difficult to reach your financial targets and build credibility in your firm. Ignore the hours, cut your losses and focus on clients who value you.
In summary, there are things you can do to avoid development of bad clients, or try to get bad clients back on track. But ultimately, bad clients are bad for a law firm and bad for a lawyer’s career. Part of partnership is business management, and part of business management is learning when and how to cut bait. So, whether you are a partner or associate, this is an important business skill to learn and practice. Make 2017 the year you have fewer bad clients. You’ll be both happier and more productive!