Isn’t it Time You Learned to Keep 100% of Your Fee… Every Time?

Nina L. Kaufman, Esq.

Nina L. Kaufman, Esq.

Nina L. Kaufman, Esq., owner of Ask The Business Lawyer, is an award-winning business attorney, speaker, and Entrepreneur Magazine online contributor. She saves consulting and professional services companies time, money, and aggravation by serving as their outsourced legal counsel.

Posted on July 6, 2015 in Business Transactions

I used to get so angry when things wouldn’t work out with a client. You know the type: they get themselves into a mess well before they even come to you and then expect you to clean up the mess, set the world aright on its axis, and realign the constellations . . . all for a fee that might merely nab you a dinner at a swanky restaurant. The ones that flew in under the radar were particularly galling, for that very reason – I didn’t see it coming!

I stopped getting angry when I realized there was something I could do about it. . .and when I started to look at each experience not as a problem, but as a learning opportunity. After all, I spend money to attend continuing education seminars, personal growth workshops and cultural lectures – why not this? So, if I decide to decrease a bill by, say, $100, rather than bemoan the reduction, I consider that $100 as a deposit into my “Education Fund”, held in my account at the School of Hard Knocks. I just paid $100 to learn a very valuable lesson. What is that lesson? And how can I get the most out of it?

First, take a good, hard look at what went awry in the relationship. Make – not find – the time to go through this exercise, as it’s a valuable part of your business planning and operational growth. Be honest with yourself. It’s tempting to put all of the blame on the wearisome client, but that may not be fair. As the old Zen saying goes, “there is your truth; there is my truth; and there is The Truth.” What was the client unhappy about? What did he or she actually say to you? What do you think is the underlying reason? Write down all of the reasons that come to mind. Was it that:

  • The price was more than the client expected?
  • The project became far more involved than the client expected?
  • The client didn’t get the results she wanted?
  • You didn’t have the expertise needed for the assignment?
  • There was a snag in communication, such as when you’re dealing with more than one representative of a client?
  • The client was not clear about the payment terms (e.g., if you are working on an hourly rate)?
  • The client kept changing his mind or was not definite about what he wanted?

All of these (and more!) can be reasons that a customer turns sour, complains about a bill, and demands a reduction – or refuses to pay and you take a reduction so as to not lose the entire fee.

But you were counting on your entire fee, weren’t you? After all, the landlord isn’t necessarily willing to take a 25% reduction in the rent just because you took one from a client, right? Nor are the cell phone carrier, electric company, office supply store or other vendors you may hire. So what can you learn from this little deposit into the Education Fund to help you get closer to keeping 100% of your fee – every time?

Dianne, a copywriter, had a similarly unpleasant experience of making a major deposit into her Education Fund. She had been hired to develop the text for Andy’s complicated e-commerce website. Andy had run into lots of problems trying to do it himself, not the least of which was that the site was hardly generating any sales. . .and Andy was running out of money. Dianne gave Andy a fee estimate, but told Andy that she charged based on her hourly rates. Andy agreed. But Andy likes to talk, and he likes to express himself at great length in emails. He also likes to change his mind. And he doesn’t like to remember any of this. So when he got Dianne’s bill – far more than he expected – he choked. And expressed himself, once again at great length, at how Dianne’s services were clearly inferior because they haven’t resulted in more sales, that she totally lacked a grasp of his product and industry and that if she’s so smart she should have the sense to call in someone with more expertise. Not wanting the unpleasantness of having to fight the client in court, Dianne took the hit.

Smarting from that fee-reduction exercise, Dianne developed her own “lesson plan” to avoid having this happen again. Her lesson plan helped her change how she worked with clients in a number of ways, including:

  • Make clear whether I can guarantee a particular result (e.g., more sales), and if not, say so in my agreement.
  • Better screen the clients I take on for warning signs of needing a particular result from my services.
  • Make sure to ask, “What kind of budget have you set aside for this project?” to esnure that the client really does have enough money to pay me.
  • Be more detailed in communicating how I estimate my fees (e.g., this project includes 3 hours of telephone or in-person consultation time and 7 hours of drafting time).
  • Break the project down into smaller milestones and ask for payment in stages.
  • Better estimate how much time it should take me to finish the project (or a milestone of the project) and alert the client if we’re off target or exceeding estimates.
  • Look into my timekeeping software program to see if computer alerts can be set up (so that I don’t go over the time).

Those are just a few of the items Dianne felt could be helpful to her. Your “lesson plan” may differ. And, there may be some lessons you need to learn over and over again (I certainly have!). That’s okay, too. Similar lessons come disguised in different ways and have different nuances to them. Just make sure that the amount you pay into your Education Fund doesn’t become one of your largest expenses!

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