Ranking Your Clients: The Good, the Bad and the Ugly
By Mark Powers and Shawn McNalis
Originally published in Lawyers Competitive Edge
One of your most important skills as an attorney is the ability to attract clients.
Unfortunately, though, all clients are not created equal. The client that darkens your door with a page ripped out of the phone book is not quite the same as those sent by your best referral source. Carefully selecting the clients with whom you work not only helps to protect you against malpractice problems, but also has the added benefits of improving office morale, minimizing collection problems and restoring peace in an otherwise crisis-driven practice.
There are four levels of client types. We call them “A”, “B”, “C” and “D” clients. Each level is judged on criteria such as:
- payment habits
- ability to cooperate and trust the attorney
- opinion of attorneys in general
- high or low maintenance level
- ability to be satisfied with services rendered
- likelihood of sending more work or quality referrals.
In this hierarchy, which you can customize to fit your particular practice areas, “C” and “D” clients are downright ugly. And, to be politically correct, there really are no bad or ugly clients, just clients with bad or ugly habits.
Who are your “A” and “B” clients?
Our studies show that, hidden among the other clients you serve, “A” and “B” clients are a small, quiet but vitally important group. How important are they?
Typically, these clients generate a hefty 80 percent of your revenues and only take up 20 to 40 percent of your resources. In addition, they pay their bills on time, appreciate the value of the work you do for them, cooperate with you and send quality referrals. They are the low-maintenance clients who bring you the kind of matters that fit your expertise. They are not crisis-driven and they trust your opinion. These are the clients who tend to get lost in the shuffle as you scramble to handle the constant demands of your “C” and “D” clients.
Get to know the signals
“C” and “D” clients don’t sneak into your practice unannounced. They usually arrive at your door waving several red flags. And you let them in. This is usually because you need the money and you’re hoping that uneasy feeling you felt upon meeting them with heartburn. Begin to trust that uneasy feeling.
Many clients have the habit of not paying for services rendered. This makes them the wrong kind of client. On the surface, they may appear to be responsible. But their inability, or their unwillingness, to pay drops them right down to a “D.” Your accounts receivables report might indicate that you haven’t been the best at judging a client’s ability to pay in the past. How can you tell up front that there may be a problem with payment?
Look first at the referral source, then listen for red flags during an intake meeting, or during their initial call to your office. Craft your interview questions to filter out nonpaying clients. Listen carefully to their responses when you tell them about your fees and/or request a retainer. If they mention the following while on the phone, or in your office, think twice before working with them:
- Do they come from the phone book? A local bar referral service? Or other sources who often send you low quality work?
- Is their first question, “How much is this going to cost?”
- Do they mention that they know another lawyer who is “cheaper.”
- Do they resist paying a consultation fee or a retainer? Or only pay half?
- Are they distant family members with large matter outside of your expertise?
For very large matters, many law offices will conduct a credit check before they take on a new client. Some even accept credit cards, which automatically removes the collection burden from the law office in case of nonpayment.
Other warning signs.
Once the financial risk has been assessed, there may be other, more personality-based warning signals that will indicate future problems. Pay attention to these signs before you admit clients into your practice who will be excessively demanding, time consuming and, in spite of your best efforts, unable to be pleased. We have dubbed these kinds of high-maintenance, crisis-producing clients as “time-bandits” because they take up a disproportionate amount of time and energy. And then they don’t pay you, becoming a significant drain on both your time and your cash flow. To top it all off, these clients are the quickest to file a bar complaint or bring a suit against you. When you encounter any of the following red flags, use your best judgment but you usually need to run the other way from the client:
- Who shows up with an urgent life-or-death matter and demands your full, immediate attention
- Whose level of anger is out of proportion to the matter
- Who is seeking revenge or has a hidden agenda
- Who can’t hear an objective, realistic appraisal of his case
- Who wants you to guarantee a particular outcome
- Who has a negative attitude toward lawyers
- Who cannot be pleased, no matter how well you take care of him
- Who does not take responsibility for his own actions
- Who misses meeting and/or constantly forget to bring documents you’ve requested
If you find you have stocked your practice with “C” and “D” clients, you are not alone. Most attorneys are appalled to discover how many problematic clients with whom they work.
But there is a solution.
Conduct a “housecleaning.” Rank your current clients and consider referring out, closing out or firing all the “D” clients and most of the “C” clients. You can do this in person, over the telephone or by letter. If the issue is nonpayment, you are not ethically bound to continue work for a client who is not paying you, so monitor your trust account carefully. And to avoid working with more “C” and “D” clients you should refine your intake selection so that you don’t admit them into your practice.
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