Nov 1, 2010
Follow-Up: Case Study #2 – Do You Fire a Client To Save Your Practice (and Sanity)?
Last Monday I posted this question and received a lot of comments on this blog and privately. It struck a nerve because we’ve all been there. Some of us have a finely honed sense of the ‘right’ client and can decline business easily. Yet others are still feeling their way through this process. And yet more and more, client selection is being driven by fear of not having income to enable us to be around to practice another day.
This particular attorney has several issues which were forced to a head when she took on a well-connected, potentially difficult and controlling client with a voluminous amount of paying business in a practice area she was trying to reduce – debt collection. Now she has to decide how she wants to grow her business as well as how to generate the necessary cash flow to keep her doors open. The stress of keeping the cash flowing combined with growing larger in an area she no longer wants to practice (at least not such a large percentage) plus the fear of her practice being dominated by only one client because of the growing number of files is making her lose sleep and giving her headaches. All this is impacting her quality of life at work and home. That’s a lot on her plate and why she called me. Sometimes an objective voice and sounding board is what’s needed.
Problem 1: Logically, many of you noted it would be simple to take on help to do the more routine and time-consuming functions of the debt collection process giving her the benefit of the cash flow while allowing her to develop the practice area she enjoys yet still overseeing her responsibilities on each file. This includes hiring someone to take the files to litigation as necessary and splitting the fees.
Solution 1: Prior to our conversation and prior to her receiving all the files, she had actually lined up another experienced solo to be ‘of counsel’ precisely for the litigation aspects of the debt collection. Her paralegal has no problem to date handling the process functions and if necessary the attorney is prepared to bring on another paralegal or administrative assistant to address the volume. The logistics of bringing on additional help makes perfect sense. The reality, this really wasn’t the problem. Let’s continue.
The real problems for this particular attorney are more about the quality of her practice in terms of practice area and clientele. She wants to reduce the percentage of time she spends on debt collection; not increase it. More importantly, she does not want it to be dominated by a client who wants her to be in his hip pocket.
Once the lawyer had the signed the retainer from the client all kinds of alarms were set off – disregard for signed retainer agreements, e-mailing on Fridays with work for Saturdays, not taking the attorney’s advice on settling cases (which ultimately reduces the attorney’s profit per file while increasing time spent per file). All these red flags showed lack of regard for the attorney. The client just wanted a lap dog. The attorney investigated this client further and found other (larger) firms had declined his work because of how he dealt with lawyers and the conditions he placed upon settlement of files.
However, when you are concerned for cash flow you may very well derail your practice to chase dollars and rationalize the red flags.
I’m not going to pretend this isn’t a tough call. It is especially difficult in today’s economy to acknowledge red flags when you want to see the green cash. But even in today’s economy you have to think long term about your business and have the ability to make these short term decisions which may be uncomfortable. You have to focus on the long term vision and reward.
When the client ultimately identified her real issue wasn’t the logistics of handling the work or her fear of taking on additional counsel or support staff it was easy to see the problem was the domination of this client in her practice which precludes her from growing her other, more enjoyable practice area, personal injury. Cash flow originally drove her decision to take him on as a client as well as his ‘presence’ in the community. She thought she would be able to manage everything until her body told her otherwise – the headaches, insomnia, dread going into the office. This was not why she developed a practice – to feel dread or live on Advil.
Literally after we hung up the phone, the client called me back because she had received an e-mail telling her there were 100 more files on the way. Originally, she was going to take the weekend to mull over her options. Instead, she decided to the call the client then. We had discussed possible scenarios with the current files and all those options were on the table when we concluded this phone call. Approximately one hour after she called me back I got this e-mail:
Thank you so much for your help!
Call went really well. I fired the client. He was very cool and tried
to talk me out of it.
Feel great/relieved about my decision.
Have a great weekend.
In addition, the client made the following decisions. Concluding she no longer wanted to do volume debt-collection yet understanding she had to ramp up her cash flow (her debt collection practice funds her costs to take on major personal injury cases) she now knows she has to put sizable time and energy into marketing the personal injury aspect of her practice. Cash flow will be tight but after having made an important decision about the direction of her practice and rediscovering her enthusiasm, she is willing to put in the energy to do what she needs to do to develop the practice she wants. Cash flow is a powerful motivation. This attorney, however, still wants to be the dog wagging her tail, not the other way around.
So, more often than not, the answer is ‘yes’. You do fire a client to save your practice (and your sanity.)’
If you have a particular situation you would like discussed/featured on ‘Case Studies’, please e-mail me and we can discuss.