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Follow-Up: Case Study #2 – Do You Fire a Client To Save Your Practice (and Sanity)?

Susan Cartier Liebel — Mon, 01 Nov 2010 11:30:57 +0000

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:

Hi Susan,

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.

Thanks again!

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.

Written by Susan Cartier Liebel

Case Study #2 – Do You Fire A Client To Save Your Practice (and Sanity)?

Susan Cartier Liebel — Mon, 25 Oct 2010 13:30:21 +0000

(UPDATE: I will publish have published the follow-up to this post Monday, November 1st. Responses are still coming in so I'd like to give you more time to think on it!)

A while ago I started a new series called, 'Case Studies'. (follow up links available at bottom of this hyperlink after comment box.) The goal was to present real world business/marketing problems while allowing others to express their opinions about solutions. Then I would follow up with how the situation was actually handled.

Case Study #2 – Do You Fire A Client To Save Your Practice (and Sanity)?

I still work with a couple of consulting clients, ones who've been with me for years. This particular client contacted me last week about whether or not to fire a big client. Here's a little background:

This lawyer is a solo with one paralegal. She has a very good practice but two diverse areas, major personal injury cases and debt collection. No matter how she tries to leave debt collection work her reputation is known even though she's never really enjoyed it. It was bread-and-butter business while she grew her practice. And now the business just comes to her. Last year she settled several major PI cases providing sizable cash flow. Just as all her PI files closed the percentages of her practice shifted from fifty percent PI work and fifty percent debt collection to nearly 90% debt collection. Here's why.

A new client came to her with nearly 100 files and this was just the tip of the iceberg. She had just recently started representing the new client. Within another week there were another 100 files on her desk. The headaches and anxiety started because this was not the direction she wanted her practice to go in – top heavy with debt collection work she no longer enjoyed, especially the litigation, and primarily with only this major new client funneling work to her. With this new major client she would be completely tied up in the sheer volume of their work making it virtually impossible for her to market any other practice area or work with any other clients within debt collection if she so chose.

However, the cash flow had dried up from the PI work and this new client represented quite a bit of money. To make matters worse, her paralegal casually said, 'if you don't take these cases will we survive?'. So she started working the cases for the new client, hesitant and concerned maybe she'd made the wrong decision in accepting this client. She wasn't sleeping.

Then the red flags started.

RED FLAG #1: She and the client negotiated a detailed agreement for fees, a novel agreement as the new client wanted to present a non-traditional approach working on these cases and how to handle attorneys' fees. After the original agreement was signed, there needed to be an amendment which further protected the attorney fees. Between the time of the signing of the original agreement and the signing of the amendment, the client had turned over the first 100 files for suit. These operated under the old agreement. When the lawyer asked the agreements for the 100 files be re-signed, the client balked saying it was too hard to get all the necessary paperwork done and time was of the essence. So the attorney reluctantly filed these suits under the old agreement due to cash flow concerns.

RED FLAG #2 Several files within the first 100 batch of files could have been closed almost immediately with the debtor paying $.75 – $.80 on the dollar. When the lawyer presented with a recommendation the client accept, the client took the position they were not going to settle on any files immediately. This changed the profit per file and risks/benefits analysis of the work based upon the agreement entered into.

RED FLAG #3 Within a few weeks of the original 100 files being presented for suit, the client e-mailed the attorney on a Friday late afternoon saying he had 75 more files coming overnight to be prepared on Saturday.

RED FLAG#4 Within one week of this event the client e-mailed the attorney and said, 'better get some extra help next week as I have 100 more files coming your way on Monday.' This e-mail was also sent on a Friday.

The attorney then called me and said, 'what should I do?'

Learn how this attorney handled this situation this coming Thursday Monday in a follow up blog post.

Now, you tell me. What would you do in this situation? Let's discuss possible solutions.

Written by Susan Cartier Liebel

Case Study #1 – Lessons Learned (Part 1)

Susan Cartier Liebel — Mon, 04 May 2009 10:47:23 +0000

The following reflects my opinions and lessons learned from Case Study #1 posted here. I will highlight the points and respond underneath. Let me know your thoughts.

I recently decided it was time to hire an accountant. Why? I'm spreading myself too thin and just wanted to allocate my time more effectively. I did not know any accountants. And I certainly was not going to go the Yellow Pages or do an arbitrary Google search. My brother and my parents,who are now retired, had businesses so I called them and asked who they used. (Point #1)

62% of your business will be referred from people who already know, like and trust you and these include family, friends and coworkers. These people either have a relationship with the service provider or know of someone who does have a relationship with the service provider – you. Given this extraordinary statistic a significant amount of your energies need to be devoted to making it very easy for your 'evangelists' to refer you. You need to leverage these relationship which you've already cultivated over the years. They will be a significant source of your business.

When I asked my brother who he used he offered no name and simply said, 'he's not for you.'

When I asked my parents they said, "We used (insert name) but he is too expensive and he'll be the first one to tell you he is too expensive. But call him and I know he'll give you a referral. Also, call (a good family friend) and find out who he uses because he's very sharp and you can trust whoever he uses. (Point #2)

People who know you must WANT to refer you as a service provider. And if they don't refer you, you need to know why. Why did my brother say, 'he's not for you? I don't know. I never pursued it because I trusted his assessment. If I was his accountant, I'd want to know what his thought process was that he wasn't promoting me to another family member. But the sad fact is, his accountant will NEVER know. How many other clients are not referring him business?

My parents described their accountant as 'too expensive.' But they trusted him to refer me to someone who would be more within my price range. I happen to know this accountant has carefully targeted his market and anyone who knows him knows he only handles certain types of clients. Yet, he made himself available as a resource for referral based upon his reputation. Does he like to be known as 'too expensive.' I'm not sure.

Notice, however, I went to people I respected and trusted and who had my best interests at heart?

I opted to call our family friend who 'is very sharp' to find out who he uses because I trust him having known him for more than 30 years. He is a shrewd businessman, too. When I got the name of the accountant, I immediately 'googled' to find out something 'more' about him. He had no web presence and there were two people in the town with the same last name but different first names. My friend's wife actually gave me the WRONG first name but the right street address. I had to keep digging to get the right phone number. (Point #2 cont.)

Why did I opt to call the family friend over the expensive accountant who could refer me to a third accountant? Precisely because of that one degree of removal from an actual client experience being the basis for the referral. The referral was to an accountant they trusted (whom I've never met) to get another referral to an accountant removed. This pushed me out of my comfort zone given I feel an accountant is a more personal and intimate relationship. Had there been no other option, I would have still chosen this route over yellow pages or an arbitrary internet search. But I didn't have to.

The referrer of the accountant did not have the correct information or phone number. This is not uncommon. And, naturally, in this day and age we assume we can find what we need to find with an internet search. Repeat: in this day and age we assume we can find what we need to find with an internet search. This is why I didn't press her for specfics. The assumption was the professional had a web presence which would provide me the relevant information I needed to contact them as well as learn a little more about them. This was a reasonable assumption but the accountant did not have a web presence. Although he had a leg up because it was a strong, solid referral, I was upset for two reasons he did not have a web presence.

1) I was unsure I had the right person and it required extra work on my part. He could very easily have made my search painless. This is, in my opinion, an unneccessary hurdle for a potential client to have to jump. It is low cost to do; costly NOT to do in terms of lost business. And it is business we will seldom learn we've lost. Whether someone will continue the search turns on the strength of the referral. The strength of this referral was a 10 on a scale of 1-10.

2) Perception: Not having a web presence represents the professional's commitment to technology. A few years back this may not have made much of a difference. But given pricing structures of professionals (the billable hour) we now know that there is a significant cost to the client for a practitioner not being technology forward thinking and clients are too savvy now to accept these costs. In my opinion, a good, solid web presence tells me the professional is considering many things that impact the client. Everything is about perception. This is a valid thought shared by many. From the customer's perspective the connection between this 'marketing tool' rooted in technology reflects a commitment to technology across the board, even if it is not necessarily factually true.

But, again, in today's world, the absence of this low cost 'marketing tool' can have many ramifications. (Now, please note, I refer to a 'web presence'…not a specific type of platform.)

I called to make an appointment, left my name and who referred me. The receptionist asked where I could be reached and I would receive a return phone call shortly. (Point #3)

When a potential client is on the phone you must appreciate their time and their urgency. I had mixed feelings about not being able to make an appointment. I did not understand why I could not make an appointment while I was on the phone. I got his actual secretary. Maybe I would not be available later to take a return phone call. If you do not set the appointment or provide specific details for follow up, they can move on to the next service provider on their list. Again, the strength of the referral kept me committed to this choice so I provided my phone number. Had the receptionist told me the time frame for the phone call and who would be calling me back and why, this might have changed my impression from one of feeling 'not important' to 'very important.'

When I was called back, however, I got the accountant himself and had a 'pre-screening' phone call. He was at the computer as we spoke, checking out various information I gave him. We chatted about the referral and he let me know he actually knew my dad, was now working with the referrer's kids and was pleased he was bringing on the 'next generation'. We set up an appointment to meet. He told me what paperwork I should bring with me and it was a very nice, comfortable conversation. (Point #4)

This was a pleasant 'surprise'. The question remains, should it have been a surprise? Was this the protocol or because the accountant heard who had referred me he opted to make the return phone call himself? I don't know. Had it been protocol, should the receptionist have told me he would be calling back so I could have felt 'important'? Did this office have a standard protocol for dealing with new potential client calls or was this just shooting from the hip and casual?

As a solo, you should always have a policy and procedure for dealing with new (and current) clients upon which you can rely and the referrer of the clients can rely. It should be effectively communicated and should respect the potential client's sense of urgency.

What do you think?

(I'll continue with the points 5 – 10 in the next post!)

Written by Susan Cartier Liebel

New Series – 'Case Studies'

Susan Cartier Liebel — Thu, 30 Apr 2009 12:00:14 +0000

I'm going to start a new category/series here at BSP for learning purposes and to facilitate discussion. It's called ' Case Studies'. It will primarily focus on 'how one gets and loses clients' which is foundational to marketing – the whole (potential) client experience. I believe this will be especially useful for solos when they have to start focusing their energies and resources. (I also welcome others to contribute their stories through guest posts so we can all discuss and learn together.) I'll highlight the various discussion starters I've identified by noting – Point #1,# 2, etc. and then in a follow up post I will discuss the various points from my perspective. So, let's try this out!

Case Study #1 – How I Found An Accountant and Didn't 'Hire' Him

I recently decided it was time to hire an accountant. Why? I'm spreading myself too thin and just wanted to allocate my time more effectively. I did not know any accountants. And I certainly was not going to go the Yellow Pages or do an arbitrary Google search. My brother and my parents,who are now retired, had businesses so I called them and asked who they used. (Point #1)

When I asked my brother who he used he offered no name and simply said, 'he's not for you.'

When I asked my parents they said, "We used (insert name) but he is too expensive and he'll be the first one to tell you he is too expensive. But call him and I know he'll give you a referral. Also, call (a good family friend) and find out who he uses because he's very sharp and you can trust whoever he uses.

I opted to call our family friend who 'is very sharp' to find out who he uses because I trust him having known him for more than 30 years. He is a shrewd businessman, too. When I got the name of the accountant, I immediately 'googled' to find out something 'more' about him. He had no web presence and there were two people in the town with the same last name but different first names. My friend's wife actually gave me the WRONG first name but the right street address. I had to keep digging to get the right phone number. (Point #2)

I called to make an appointment, left my name and who referred me. The receptionist asked where I could be reached and I would receive a return phone call shortly. (Point #3)

When I was called back, however, I got the accountant himself and had a 'pre-screening' phone call. He was at the computer as we spoke, checking out various information I gave him. We chatted about the referral and he let me know he actually knew my dad, was now working with the referrer's kids and was pleased he was bringing on the 'next generation'. We set up an appointment to meet. He told me what paperwork I should bring with me and it was a very nice, comfortable conversation. (Point #4)

On the day of the appointment I brought everything I needed, was greeted, offered something to drink and we sat down. For some strange reason, the whole potential client experience prior was in my head because two things struck me, no web presence and how the accountant called me directly to set up the appointment, his demeanor and tone of the conversation. I told him so.

He was very pleased when I mentioned personal phone call, a little frustrated by my bringing up the web presence because he said, 'have you been talking to my partner? He is insisting we are losing business by not having a web presence.' I explained my feelings on this point and he just said, 'I know, I know. I'm just not going to maintain it. Someone else will have to.' (Point #5)

Then we got to discussing business. The first thing I said is, 'is this a paid consultation or is it preliminary discussion to see whether we want to work together.' (Point #6)

He told me very clearly, 'how could I charge you for a consultation when we've never met?" He also told me they do not do hourly billing at his firm. They do it by the project and the various rates. (Point #7)

We continued to discuss my situation and he gave me different pieces of advice. While he was talking I was checking out his office, filled with family photos and professional reference books. (Point #8)

By the time the consultation concluded, he had told me the most cost-effective ways to handle what needed handling, most of them legitimately not requiring his services but keeping the door open to freely call him during the year before tax time and he would be happy to answer questions free of charge. (Point #9)

I did not hire him. (Point #10)

I'll post what I believe are lessons from each highlighted point in my next two posts and how they are relevant to you. Please let me know what your reactions are to the various elements.

(Again, this post is an experiment in facilitating an educational discussion based upon real life experiences. Not a trick question. If this works we'll continue to do it. )

Written by Susan Cartier Liebel