In this month’s challenge, we focus on why, when and how to trim the fat and drop those “P.I.T.A.” clients. [Note: PITA in this case is an acronym and does not refer to the tasty Mediterranean flat bread]
A client came to me a few weeks ago complaining about one of her own clients. She was running behind and showed up to our meeting on her iPhone and clearly under stress. “Sorry I’m late. One of my client’s is driving me nuts,” she said as she hung up the phone. “He’s always complaining, he never pays on time and he refuses to acknowledge that I’m helping him.” “Is the work at least interesting?” I asked. “Hardly,” was her response. “So why do you continue to work with him?” I probed. As a small business owner, her answer disturbed me: “I need him to pay the rent.”
Although up for debate, building a strong client base may well be the single most important aspect of running a successful practice. Law firms spend huge amounts of time, money and effort to gain new clients, so why would you consider ever dropping one from our roster? The simple answer: when the client is no longer an asset to the business, but a liability. This may not be an easy determination – and one surely not to be taken lightly. Before actually firing a client, do your homework. See if there are ways to fix the underlying issue that is causing strife. Whatever you do, don’t simply assume the problem will go away on its own.
Firing a client can be counter-intuitive as you build your business and more importantly, it can be a very hard thing for some small business owners to stomach. Identifying when it’s time to part ways can easily be turned into a checklist or a series of red flags to watch out for. The hard part comes when you actually have to face that person and say, “this isn’t working out.”
First, The Why
As we’ve stated, when a client becomes a liability to your practice, you should drop them. But why? There is nothing inherently bad in a liability – debt, for instance, is a liability on your balance sheet, but it may be how you get your practice off the ground. Here are some fundamental reasons why a troublesome client can negatively affect you and your practice…any of them sound familiar?
• Bad clients take you away from working with your good clients
• Bad clients drain you mentally and physically
• Bad clients question everything and rarely pay their bills
• Bad clients infect your team’s culture and motivation
• Bad clients rarely provide referrals
In essence, bad clients are a cancer that, if not dealt with properly, can destroy your practice from the inside out.
Next, The When
The good news is identifying when to fire a client is fairly straightforward. While some of the warning signs are more easily identifiable than others, some may be more gut reactions. Even though none of these red flags alone may warrant dumping a client, keep an eye out for these indicators that it may be time to take action:
• Poor reputation in their industry or with their own customers
• Questionable or unethical business practices
• Consistently arguing over matters, deadlines, bills or logistics
• Three or more invoices paid more than three weeks late
• Consistently unavailable for important check points and behind schedule •Generally poor communication
• Consistently delayed approvals or late delivery of materials or information
• Consistently unrealistic expectations in regards to deadlines and deliverables
• Refusal to accept sound, FREE advice
• Unprofessional behavior
• Criticisms are personal or not constructive in nature
• Going the extra mile is met with disdain or apathy
And Finally, The How
For those of you who dread having these difficult conversations, here are some tips that should make it go a bit smoother:
1) Plan in Advance – planning out a difficult or stressful conversation can be the difference between success and failure. In business, this process can be aided by Game Theory – or the study of strategic decision making. In essence, by mapping out the conversation flow, what your client may say or how he/she may react along the way and ways for you to counter their reaction(s), you can develop a road map of sorts that will help you navigate through the conversation with more confidence.
2) Provide Options – no one likes being cornered and most people become defensive in these situations. Give your soon-to-be-ex-client outs – or options going forward. Consider coming to the table with a few recommendations of other attorneys they could seek out. Perhaps you have not truly quantified the cost of working with this client – consider raising your rates (within reason of course) to account for the additional effort needed to service them. Look around your network and see if there are other resources you could pass their way. They may not thank you, but at least you’ve provided options.
3) Set Up a Meeting – avoiding conflict is natural, but it can also be destructive. At best it usually doesn’t even solve the problem you are facing. Try not to break up over email or even over the phone – unless it is absolutely necessary. Using face-to-face meetings to fire clients does a few things, all of which are in your favor. First, it builds integrity. Standing up for your practice and your morals is imperative. Second, it demonstrates professionalism. You originally started working with this person because you both thought your professional experience could help them. Don’t stop now just because it didn’t work out. Finally, face-to-face meetings involve non-verbal communication and require more personal engagement than emails or phone calls. These make you more human and less of a figure head. What’s more, they are critical when it comes to service. If nothing else, you’ve practiced skills that will serve you in your career as a service provider for years to come.
4) Remain Professional – nothing destroys relationships faster than unprofessional behavior. Even if the client you are thinking of dropping has violated this creed, make sure you don’t stoop to his/her level. Keep to the facts of your arrangement, your scope of work or your ability to serve the client well. Remember to focus on next steps – what actions or steps need to come out of your meeting – even if you can’t represent them, you may not want to burn that bridge altogether.
There’s no way around it - firing a client takes courage. What some people miss is the fact that it also takes planning, commitment to the long-term success of your practice and the ability to spot issues before they cause harm. These are all skills – not all of which are innate in the legal profession. And skills are like muscles…the must be developed and strengthened if they are to produce results.