Is now the time to drop problematic clients?

Jun 30, 2020 | Pricing, Strategy

I have long noticed a tension between the desire to stop acting for difficult clients and a conflicting desire to avoid losing a chunk of fees. The higher the fees paid by the difficult client, the more difficult it is to end things with them. This leads to much muddled thinking – whether by sole practitioners or by partners in larger firms.

The lockdown has exacerbated both positive and negative feelings about certain clients. You may also now have more clients who cannot afford to pay your fees. Hopefully you can support many such clients to access funding that will cover your fees too.

Sometimes there is also a confidence issue. Perhaps you have been bullied by clients and made to feel that you are inadequate or incompetent. Or maybe you are simply unsure whether a client’s demands are unreasonable. As a result you are uncertain whether to take action or to ‘let it go’ (again).

Thank goodness too that these days most people are more open about their mental health issues. None of us should feel obliged to keep acting for bullies, abusive or problematic clients. The longer we allow things to go on the greater the risk to our mental health.

Many accountants started out by taking on anyone and everyone as clients. The more experienced you are the easier it becomes to avoid taking on clients who don’t pass the ‘gut’ test. That’s those where your gut tries to warn you off.

Over time you learn to trust your gut.

Another common view is to believe that certain clients have always been a pain to deal with and thus that they will never change.

If EVER there was a time to challenge such perceptions, it’s now. Whilst it hasn’t been easy, since March 2020, everyone has been forced to change the way they do things. So let’s stop thinking that clients will never change the way they do things. When forced to do so, they will.

The onus is on YOU to decide whether to insist that clients respect you and your terms of business. Whether they will abide by their obligations as your client. And whether they will need to pay extra if they insist on doing things differently to your other clients.

Could you re-educate them? Is now the time to make clear that things have to change because of changes forced on us by the lockdown and social distancing? And that this has led to consequential changes to the way you run your practice.

For example, introducing new terms of business to reflect the new business environment. Your new terms might include making clear that: “In future I may need to charge additional fees to resolve any issues that arise as a consequence of you not following my advice.”

A more direct apparent solution favoured by many is to hike up the fees of clients you want to lose – in the expectation they will just leave you rather than pay more.

In practice I routinely hear that such clients who have previously been undercharged admit they were simply waiting for you to increase your fees. In such cases I would still tend to insist that they also authorise new and regular Direct Debit payments – to prove their willingness to pay the new higher fees. You are perfectly entitled to make clear that this an essential term of doing business with your practice.

Of course simply increasing the fees for difficult clients can also exacerbate the problem. If the client agrees to pay the higher fees, they may now become a high fee paying problem client – and one you may feel you really cannot afford to lose.

It’s much better in my view to be honest with yourself. Only give a client the option of paying higher fees if you’d be happy to keep them as a client in such circumstances.

If, however, you really don’t want to act for them any more, you need to make clear that paying higher fees is not an option.

Instead you need to write to explain why you can no longer act for them. You might allude to disagreements in the past, but it’s best to avoid accusing them of anything or inviting a response. Keep the purpose of your email/letter in mind and make the next steps clear.

I would be inclined to explain that the lockdown has forced you to review your client base and operations. You have decided to focus your practice on certain areas and type of clients. Sadly you are therefore explaining to certain clients that they will need to find a new tax adviser.

In your disengagement letter you can spell out the last returns you have worked on and any ongoing work required. Offer to provide all reasonable help to your successor and maybe even spell out what they will need to do and by when so as to ensure the client remain compliant.

You might offer to recommend another local tax adviser who may be willing to take on the client. Or you may simply point them at an online resource (like the Tax Advice Network) where they can find someone new to help them.

Some of the accountants I mentor use me as a sounding board and to help boost their confidence. I can think of a number of occasions they have thanked me for helping them to unpack their thinking and to manage the ‘sacking’ of difficult clients. If you would like to discuss how I might be able to help you here let’s have a chat. You can book a call (without any obligation) here >>>>

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