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How to Lose a Client in 10 Days

how-to-lose-clientWe recently heard a story from one of our LawKick users who had a falling out with a law firm and decided to use our service to find a new attorney to work with. Since our mission is to bring about greater transparency in the legal industry, we decided to share the story with our readers. We hope that other attorneys out there can take something away from this incident and learn how not to treat one of your clients.

An Unexpected Bill…

It all started when this person received an email from the attorney that started like this:

“Sorry to spring this on you…”

Generally, that means something bad is about to happen, and in this case it meant unexpected legal fees.

This client had been working with the law firm on some business documents for his startup company and had paid upfront via a flat fee arrangement, which specified that additional work outside the scope of the documents would require additional hourly fees. Typical stuff that you see in every retainer agreement.

This particular bill came over a month after the original work had been completed. It was sent from outside counsel that the firm had employed because they were unable to properly advise on the details of a particular provision in the agreement (an agreement they drafted themselves mind you).

The client proceeded to exchange a series of 5 emails with regard to the matter, in which the outside counsel repeatedly expressed an inability to properly advise the client without further information about the situation. In other words, the question was never answered, but the client was still billed $525 (that’s $105 per email) for the correspondence.

While there was a provision in the retainer agreement allowing for additional fees for additional services, the problem in this case was that the client was never told he was going to be billed for it.  How hard would it have been to send a quick email saying, “We will need to consult with outside counsel to address this problem. You will be billed separately for that time.”?

Needless to say, the client was a little irritated when he was hit with a bill for $525 out of the blue, for something that he probably wouldn’t have even paid for had he known he was being billed for it. But that wasn’t the end of the story…

A Failed Remedy

After expressing the need for transparency and upfront communication about billing with his attorneys, the client also requested that the bill be dropped out of good faith for the lack of communication and to encourage a positive ongoing relationship.

The outside counsel even agreed that the matter was not worth fighting about and that the bill could be dropped. But for whatever reason, the client’s own attorney insisted that he pay the bill, repeatedly pointed out the “additional services beyond the scope” clause in the engagement letter, and basically threatened legal action for failure to pay.

At that point, he had enough and promptly terminated his engagement with that law firm. But it just goes to show the tendency of attorneys to forget about the importance of good customer service. In what other service industry can you get away with this type of treatment to your customer?

Lessons to Be Learned

If you’re an attorney, let this be an important lesson about how to keep your clients satisfied. Here are the most important takeaways from this incident from a client’s perspective:

  • COMMUNICATION IS KEY!!!! This cannot be stressed enough (hence the caps lock). Communication will solve 99% of problems before they come about. Just be transparent and upfront about exactly what you are billing for, and let the client know each time before you decide to add to that bill, and you won’t encounter these types of problems nearly as often.
  • Take your medicine. Regardless of who was right or wrong in this case, the attorneys could have easily avoided losing a client if they had handled the situation with more care. They could have agreed to wipeout the bill, paid the outside counsel themselves, or even simply stated that they had made a mistake, apologized for it, and promised that it wouldn’t happen again. Anything other than threatening legal action and enforcing the bill so strongly would have likely led to a better result.
  • Consider the long term over the short. This firm was representing a young startup company with a big vision. Is it worth losing the potential long term legal fees you could generate by representing the startup for a single $500 matter? Probably not. Not only that, but people talk. And startups really talk. You undoubtedly know the importance of referrals in the process of getting more legal clients. The chances of this client ever referring anyone to that firm again are slim to none.
  • Time is not always money. The legal industry may have been built on the billable hour, but that is changing. The billable hour is dying for a good reason, and that reason is that it encourages inefficient work (plus sometimes shady and corrupt billing practices). Who wants to pay by the hour for someone to work as slowly as humanly possible? Billing by the hour really just doesn’t make sense, and your clients will almost never be satisfied with you when they receive a bill based solely on your “time.” So you may want to think twice the next time you try to bill a matter by the hour. Your clients are generally going to be much more appeasable when they know their bill has a limit. And maybe you don’t always have to bill for every, single, little thing you do that is technically “outside the scope.” Just a thought.
  • Providing good service pays dividends. Again, no matter who was right or wrong in this case, the fact remains that one party was a customer and one party was a service provider. Most people have probably heard the saying “the customer is always right,” and it’s for a very good reason. In every other industry, good service is expected and is the standard. Entire multibillion dollar companies have been built almost entirely on this notion alone (see Zappos). Legal services shouldn’t be different from any other service industry. Forget about the dollars and cents and do whatever it takes to serve your clients well. Doing so will provide vastly greater returns for your business than the day to day income you can make from them.

About Aaron George

Visionary. Entrepreneur. Law school dropout. Working on bringing the legal industry online. And blogging about it.

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