Bad Clients Can Derail Your Practice

Early in my career, a senior partner in my firm, who I will call Greg, was arguing with the managing partner of the firm because the managing partner wanted Greg to fire one of Greg’s clients.

The client in question was a real estate developer for whom Greg and other lawyers in the firm did a great deal of work. The managing partner gave several reasons that the client should be fired.  Every matter that the client brought to the firm was “urgent” and lawyers were constantly working nights and weekends to satisfy the client, which might have been acceptable if the client paid well.   However, the client complained about every bill to the point that Greg wrote off a great deal of time prior to billing the client.  After receiving the reduced invoice, the client would invariably treat it as an invitation to negotiate and the account would often have to be further reduced.  Even when an amount was agreed upon, the client would take many months to pay and would conveniently lose invoices or come up with further excuses to delay payment.

What sticks in my mind about the argument was Greg’s frustrated reaction, when he left the meeting screaming “There is no way that I am going to fire my best client.”

Lawyers are sometimes like that.  They can be so focused on building their client base and serving their clients, that they sometimes fail to recognize when they are in an abusive relationship.  I believe that there are two reasons for this.  Sometimes the cause is insecurity about having enough work. Other times, and as in many abusive relationships, the lawyer has a need to validate himself or herself by proving that they can make the client happy.

I learned that this does not have to be the case when I was in my third year of practice. An older lawyer named Luigi joined the firm that I was with, looking to turn over his clients and retire. 

After being introduced to several of Luigi’s clients, I noticed that each of them was an absolute pleasure to deal with.  I asked Luigi how he had assembled such a pleasant group of clients. He explained that he had been one of the first Italian speaking lawyers in Toronto, and as such had never had a problem attracting clients.  He told me that whenever a client was at all difficult to deal with, he would tell the client that they needed a different, or better, lawyer than him.  As a result, he said, when he arrived at the office each morning, he did so looking forward to meeting with friends.

You might think that I would have learned from these examples and avoided getting sucked in to trying to please difficult clients.  Eventually I did, but not nearly soon enough.

My first bad experience came early in my career when I was retained by an accountant named Stanley who had some contracts to draft which were urgent.  I was so pleased that he was taking the work away from a big Toronto firm and giving it to me, that I missed seeing that as a warning sign. 

I asked Stanley to provide a financial retainer and he explained to me that he had been a chartered accountant for 30 years and was most offended that I would even ask for a deposit. Of course, I missed that warning sign as well and waived the deposit.

I remember working on the weekend to get Stanley’s work done quickly and earning Stanley’s praise for a job well done. I sent my invoice, which was never paid. We tried to sue Stanley for the fees, but our process server could never get past the security in Stanley’s condominium building and eventually we gave up.  We later found out that Stanley was only starting a business in Ontario because he had been kicked out of the accounting profession in Alberta.

You would think that I would have learned from my Stanley experience, but of course I did not.  Over the years I did everything that I could to please every client that came my way, whether they were respectful to me or my staff, argued about the accounts or paid their bills on time. 

My seismic shift in attitude did not occur until one particularly terrible experience with a sociopath. This client gave me lots of work over a period of about 7 years.  Although he was very demanding, he was somewhat personable with me.  On the other hand, my staff hated him and described him as “creepy”.

He took me to lunch a few days prior to the expiration of a 6-year limitation period to tell me that his business was going poorly, and he required funds, so he had decided to sue me for an alleged mistake made 6 years earlier and hope for a settlement with my insurer. He then asked me if I would nonetheless continue to act for him because he so valued our relationship.  

I said no.

Some clients desperately need to be fired (or better yet, never hired).   Here are some things to look for:

1. Clients who complain about their prior lawyer.  Sometimes the complaints are valid, but often you will be the next lawyer complained about.
2. Clients who treat you with disrespect.   
3. Clients who treat you well, but treat your staff with disrespect. These are even worse than the clients who treat you with disrespect, because on top of everything else they are duplicitous, and if you continue to work for these clients, your staff will believe that you do not care about them.
4. Clients who resist providing a financial deposit.  I have never once had a problem with a client who volunteered a deposit before I asked for it, and I have almost never had a problem with a client who promptly provided a deposit when asked.
5. Clients for whom every single matter is urgent.  Life is too short.
6. Clients who are willing to pay whatever you charge, but for that they want to own all your personal time.  I was once offered the opportunity to work for a famous Canadian family but told that I would be expected to wear a beeper on the weekends (back in the days before cellphones.) Again, life is too short.

Many young lawyers assume that they must accept every client who comes their way until they have built up a sufficient client base, after which they can be choosier.  That is a difficult assumption to resist when you are sitting in your office with nothing to do.  The problem with this approach is that the difficult clients will suck up so much of your energy and well-being that it will make finding the good clients more difficult.

There is a saying that I think applies, being that you should begin as you want to continue.   This will help you avoid the old “80/20” rule, which in this context is that 20% of your clients will cause 80% of your aggravation.

Finally, there is at least one large Toronto firm which, legend has it, identifies their bottom 10% of their client base every year and fires them.  The story goes that they identify clients who perhaps argue about their bills or pay a bit too slowly, or do not provide a high enough volume of work.  I believe that this is true because over the years I received a few unsolicited referrals from this firm.  Typically, the clients who they referred were good clients for our firm.  They just no longer fit the client profile for the large Toronto firm.  Freed of working for these clients, this Toronto firm presumably used the extra time to find more of the types of clients that they wanted to have.

Assuming that the legend is true, this Toronto firm has taken the concept of firing clients to a whole new level by implementing a process by which they continually improve the alignment of their client base with their firm profile.   One can argue about whether it is “right” to fire clients who have been with you for years just because you think you can get better clients.   However, if this legend is true, it does illustrate the vast chasm of confidence between firms who continually seek out the absolute best clients and firms who accept and then put up with anyone who comes along.