The Real Cost of a Problem Client

attorney-client-fee-bad-client-retainer

When opening a solo practice, attorneys usually make two big mistakes.

One, because they are new to running a business, they minimize expenses without considering the upside of certain “unnecessary” expenses.

Two, they are so desperate for clients that they take any client and any case that walks in the door.

But the hidden costs of problem client can easily negate their fee. The sooner you understand that concept, the better.

Money is money right?

Yes and no. If you turn down a client, you have just turned down a fee. Hopefully another client will come along and replace that lost fee. But that can be a dangerous proposition, especially if you are going through a slow period, or if you are just starting out. Every experienced attorney has been there—you have to keep the lights on.

At the same time, problem clients have an amazing way of sapping your time and energy in ways that you cannot bill for. For example, you can’t bill a problem client because their case (or representation) is really stressful. You probably can’t bill a client extra for only being able to talk or meet in the evenings or the weekends. You definitely cannot bill a client extra because you have a personality conflict.

Perhaps the ultimate disaster is a problem client who then bails on a bill. Try this one on for size: problem client on retainer. Problem client stops paying. You cannot withdraw because it would cause undue prejudice to problem client. You now continue to do work with little to no hope of getting paid. That retainer you got up front suddenly doesn’t seem so great.

Usually problems get worse, rather than better

Like most attorneys, I have had a handful of clients that I would consider problem clients. Generally, they became more problematic as the representation progressed. I can only think of one client that appeared problematic and actually became very easy to work with (disclaimer: the client was before I wrote this piece).

In other words: you are doing yourself a disservice if you tell yourself “it can only get better” or “it has to get better from here.” Sure, you can cross your fingers and hope they suddenly start responding to phone calls or e-mails. Maybe the first three appointments they missed were truly emergencies. But I doubt it.

Hopefully your retainer has a provision related to these scenarios. Hopefully you are not afraid to invoke it and terminate your representation. I’m not suggesting you become cut-throat and cut loose every client that is five minutes late to a meeting. But if they no-show, or are two hours late, that is a serious red flag.

The warning signs are usually clear

There will always be clients that turn into problem clients halfway through a case, with no advance warning. Usually, in my experience, that is the result of something happening in the case that you did not, or could not, possibly foresee. You should not waste your time trying to play Nostradamus and trying to see the future.

What you should do is watch for obvious signs of trouble:

That’s not an exhaustive list by any means. Those are just some of the red alerts that I have encountered. I’m also a firm believe in trusting my gut. If your gut says something is not right—something is probably amiss. That is the perfect opportunity to bounce the case off another attorney and get some feedback.

But never try and convince yourself that a client is a client. It’s not that simple.

(photo: http://www.flickr.com/photos/59937401@N07/5930043516/)

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  • http://jannace.com Charles Jannace

    Add this to your bullet list: Discusses the possibility or desire to file a claim, lawsuit, or grievance against another attorney(s).

    • Chris

      That’s a bit tricky when you’re a lawyer practicing claimant (plaintiff for the non-English!) professional negligence litigation!

      A very serious consideration though, as is being the third or fourth lawyer they are looking to retain – why did they fire/get fired by the previous.

  • http://www.thesearchninjas.com George Murphy

    Great post. One thing I’ve learned over the years is that, no matter what business you’re in (law, web, etc.), finding the perfect client (the one who doesn’t call/e-mail you every day, doesn’t take up too much of your time when it comes to following up or managing questions/concerns, pays you well and on time, and won’t overreact to every little detail or issue) is always going to be an obstacle.

  • http://www.towerofivory.net Lukasz Gos

    Good subject, Randall. I’d add, don’t allow problem clients to drive you into paranoia. That’d be a victory for the problems, sort of a capitulation on your part. I’d say some of the positions on the list can be stand-alone, not necessarily bundled with all sorts of other coexisting trouble. For example penny pinchers can be pretty unproblematic otherwise, as long as they aren’t too negative when negotiating the rates and their proposals don’t lead to unethically low rates.

    In my legal translation practice, I’ve learnt to skip any sort of job with an ambigous briefing (room for complaints based on failure to meet expectations), generally skip a job where the instructions are ungrammatical (communication going to be difficult/any DYI proofing is gonna be a nightmare), rates low because the total will be big (corner-cutters are unsafe in general), anything dishonest or shady pops up (why would I suppose I’m not gonna be next?), ads or RFQs sound disrespectful (not going to improve; higher risk of one-sided or underhanded measures). With time, as you gain experience, the language begins to be telling. You can also spot patterns and known negotiation tactics, NLP tricks, (self-)destructive behaviours, sociopathic tedencies or whatever else it is.

    I wouldn’t act on hunches alone, as I consider the benefit of the doubt to be a binding ethical rule, but if a deal already looks bad, then a hunch can tip the scale with projections of potential trouble along the way, and if you notice a potential beginning of something bigger, you can call the client on it and give him an opportunity to explain. Perhaps, after all, it’s harmless. Or perhaps there will be an accelerated clash in a controlled environment, much better that a job fail or post-sale problem.

    In some cases, a problem client needs only really to be shown that he needs to get his act together. (People who want whatever they’ll get, those who push until they meet resistance, sloppy people etc.) I’d keep such clients for no-problem jobs they can’t possibly make awful, such as those with clear specifications and no room for subjectivity. At least as as long as they are reliable payers. I’ve been experimenting with a no holds barred approach to serious transgressions and if they don’t like it, they’ll go away, problem solved. On the other hand, if they actually accept my reaction and conduct themselves accordingly, then who knows, they might even act like functional clients yet.