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Purge Toxic Clients from Your Practice, Part 1

By | Jun.23.16 | Business Development, Client Relations, Daily Dispatch, Law Practice Management, Well Said!

Well said 3_Attorney at Work

To dramatically enhance your productivity, zero in on the biggest source of stress and wasted time: toxic clients.

Some lawyers fight to hold on to business at all costs. After all, it’s an article of faith that it’s easier to retain a client than to win a new one. As a result, many lawyers are loath to fire clients, even when it’s the right move.

All Business Isn’t Good Business

“Fire a client? Are you, nuts? It’s hard to get clients. Why would I fire one?”

That’s a fair question. The important consideration, though, is that you don’t want just any clients, only good ones.

The emotional, physical, and mental drain caused by a bad client can keep you from enjoying your job, impact the work you do for other clients, and eat up time and energy you could devote to getting better clients.

Bad clients usually result from the randomness typical of many lawyers’ books of business. Still, no matter how clear you are about defining and pursuing your Optimal Client Profile, and how disciplined you are about whom you take on, over enough time you’ll end up with some bad clients.

Your challenge is twofold:

  1. Recognizing bad clients, and
  2. Getting rid of them, quickly, artfully and ethically.

Why Are Some Clients So Difficult?

Some are insecure and can’t relinquish control, while others believe they have to be combative to get the best deal. Some don’t trust anyone and fear that they’re being taken advantage of. Understanding clients’ neuroses, however, does not mean tolerating them.

First, try to get the client to modify his or her destructive behavior.

Lawyer: “I need to alert you to some [behaviors, actions, attitudes] that make it hard for us to succeed together.”

Client: “What do you mean?”

Explain the issue simply and specifically.

Lawyer: “I understand that things occasionally pop up at the last minute and require an immediate response. That’s fine, and we’re happy to step in and help in any way you need. However, each of the past five Fridays you’ve called late in the afternoon demanding that we solve a problem over the weekend. When we look closely, it’s clear that you had this information earlier in the week and could have requested our help then, and it wouldn’t have been a last-minute, weekend-consuming emergency. This is inconsiderate of my staff and me. Let’s talk about ways to avoid this going forward.”

The client will either recognize the unfairness of his poor preparation and be receptive to ways to minimize it, or he won’t, in which case you have to decide whether or not you’ll continue to tolerate it, knowing the effect it will likely have on your team’s morale.

Why Can’t Lawyers Let a Nightmare Client Go?

Loss of revenue is the most obvious reason, but there’s also the perceived loss of prestige if the client’s brand is well known. You may think, “It will get better.” It won’t. Whatever you’re experiencing now is the best it will be.

You can’t change a bad client into a good one. It’s better to let that client move on.

Another reason is fear. As previously stated, most lawyers’ books of business are the result of random occurrences rather than strategic intent. If you don’t know how you got the clients you have, it’s hard to be confident that you’ll be able to replace one, and you’ll hold on until you get better ones. That’s understandable; however, bad clients consume the time and energy you’ll need to get better ones. It’s a bit of a chicken-and-egg problem. I encourage you to take the short-term revenue hit in favor of your sanity. Just make sure you use that recovered time to market and sell.

Recognize a Bad Client

Here are signs that a client is wrong for you. I’m not referring to a single episode of any of these symptoms. Anybody can go through a rough stretch or have a bad day. But once it becomes a pattern, it’s time for your relationship to end.

Demands are excessive relative to economic or strategic value. We’ve all heard stories about the nightmare client who calls at 11 p.m. with a new idea. Or the client who acts like you’re their dedicated employee. Or the poor planner who’s always in crisis mode and expects you to save him with last-minute work, week after week.

You’re familiar with the Pareto Principle (often called the “80/20 Rule”), the essence of which is that 20 percent of what you do brings you 80 percent of the results. Experienced salespeople know the “80/20/30 Corollary,” which means that the bottom 30 percent of your clients produce 80 percent of the aggravation and stress. The first candidates for scrutiny are the clients that bring in the least amount of revenue and take up the most amount of time.

Doing work you no longer want to do. In the early days of your practice, almost any new business feels like a win. You have to get started, so you’re willing to accept assignments outside your sweet spot. (It may even be too early to have a sweet spot.) Over time, though, you learn where you excel, and where you’d like to focus. If you have “legacy assignments” that no longer appeal or that don’t make strategic sense for your practice, instead of doing a half-hearted job out of a misguided sense of loyalty or because you want the money, refer them to someone else who’s eager for the work.

Locked into low fees. You may be working with a great client doing interesting projects, but you may have outgrown your existing fee structure. It’s hard to raise prices with longstanding clients, who’ve gotten used to a certain rate and may be unwilling to accept higher fees. As you grow your brand, you may need to move upmarket and work with clients who see great value in your higher rate.

Want everything for nothing. Everyone wants to get the best deal possible. There’s nothing wrong with negotiating. However, if a client is really pushy about prices from the start, consider this a look into your future. These clients will probably challenge every invoice, ask for write-downs and extra work outside your initial agreement, and will never appreciate the value of professional work.

Always slow to pay. In most cases these clients aren’t trying to cheat you; they’re simply too busy or disorganized to pay you timely. Or, they have money problems. It may also mean that they don’t value you, i.e., that it’s not important to them to keep you happy. They’re not afraid of losing you.

Don’t listen to you. You’ll have clients who don’t follow your advice, are resistant to change, or simply think they know better (even though they hired you for your expertise in the first place). Perhaps they nitpick or revise your work beyond recognition. Or, they don’t listen to your advice, then expect you to fix everything when things go wrong — at no additional charge.

Don’t respond to you. This client hires you, then disappears. Whenever you need information, approval, or input, they’re AWOL. This is the “hurry up and wait” scenario, where you sit on the sidelines waiting for feedback.

Rude, or otherwise show a basic lack of respect. They constantly miss meetings or cancel them at the last minute. They’re rude to your staff or you. This is beyond lacking basic professional courtesy. While everyone has to change plans now and then, frequent rescheduling shows a lack of respect.

Even worse, they bully your staff. One school of thought says, “Yeah, he’s a jerk. But at the moment, he’s our jerk,” referring to the fact that he’s paying us, not somebody else. That turns out to be very expensive revenue. According to studies by the Gallup Organization, the American economy loses about $350 billion each year due to a lack of productivity and performance associated with low morale.

A horrible client costs you more than just low employee morale, it contributes to employee absenteeism and turnover. The stress from dealing with a client’s bullying or harshness can make employees physically ill. According to a recent survey by ComPsych, stress is the causative factor of illness underlying more than 70 percent of all visits to the family doctor.

An old joke offers a different perspective. The salesperson’s customer’s complaint escalated to a long, incoherent, screaming rant, going on long past any rational limit. When he’d finally worn himself out and calmed down, he looked sheepishly at the salesperson and said, “Sorry. That was over the top. I guess you wish you didn’t have a customer like me.” The salesperson replied, “Actually, I wish I had five customers like you.” The customer brightened, “Really? Why?” The salesperson said, “Because I have 10.”

Next month in “Well Said,” I’ll talk about the steps to take when you are ready to fire a client.

Mike O’Horo is a serial innovator in lawyer training. Over 25 years he has trained more than 7,000 lawyers in simplified sales processes by which they have generated more than $1.5 billion in new business. His current venture, RainmakerVT, is an interactive virtual business development training tool for lawyers. Earlier, he developed ResultsPath, an integrated sales training program, and TeamPath, a litigation-analogous people-process program. Follow Mike on Twitter @salescoach.

Illustration ©iStockPhoto.com

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One Response to “Purge Toxic Clients from Your Practice, Part 1”

  1. Cathy
    23 June 2016 at 6:25 pm #

    Great info!


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