Clients & Contacts: When To Walk Away. Part 1

We counseled him that even if things worked out, this kind of disparaging rhetoric toward other law firms would definitely backfire on him. Again, not only did he ignore our counsel, but he got seriously angry at us.

When I do rainmaking consulting, one of the key principles I teach is "client-cycling". Simply put, this means cycling out the bad clients when you have better clients that can replace them. Most attorneys never understand this. The idea of walking away from a source of revenue - no matter how problematic, is an anathema to their business beliefs. Of course, when an attorney is just starting out, they don't have the luxury of walking away from any client, no matter how much brain damage they cause! This article is for seasoned attorneys with more than a few, precious clients. They may seem obvious but here are the first two reasons to dump a client:

1. If They Lie Once, They’ll Lie Again

Ever had a client lie to you? If the answer is “No” you haven’t been an attorney very long! But as with most things, look at the pattern, not the person.

For example, I had a consulting client who lied to me right out of the gate. The managing partner made a mistake that was definitely going to taint their brand. Honestly, I could have lived with that and doing damage control for them, didn’t prove very difficult.

But then his partner told me that one of the other named partners had lied to me about something else. Then another high-level person lied to me about yet, something else! Within a week, it was obvious that all but one of the partners lied to me and - each other on a regular basis! I should have dumped them right away but I didn’t. Due to unique circumstances, I was determined to make them a shining example of what I could accomplish as a consultant! That’s not quite how things worked out. Instead, I made serious mistakes and eventually I made a complete fool of myself by trying to believe I could make a shining city out of a Potemkin Village. I refunded every penny and learned a very hard and humiliating lesson.

Thus, is life.

It's like I told my daughter when she hit dating age: If they lie once, they’ll lie again. But instead of hurt feelings, you may be the fall guy with the court, regulators, or the public.

2. Transference: They Get Angry Because You Were Right

How about a client ignoring your counsel and then getting angry because you were right? Anger is a natural reaction to the bad news that attorneys must often deliver. But you need to know...

The Difference Between a Person and a Pattern

Every client is going to be a problem occasionally. For example, the Managing Partner of a great client of ours, has treated me horribly a couple times. We’re talking grind your teeth, yell at your phone, stomp your feet, kind of treatment.

But those were isolated incidents over the course of years. I can live with that – especially because overall, they’re a fantastic client and they have paid us well into the seven figures, without ever being a day late or asking for a discount. So yes, he’s allowed to be human, and yes, we are as active with them as we have ever been.

On the other hand, I had a client who we started doing business with, immediately after COVID. Crazy times and partners were moving around en masse.The Managing Partner of our client was sure that a candidate who came to them organically, would bring over $5M in business with him.

Because this Rainmaker was coming from an AmLaw 50, to their little 60 attorney firm, they asked us to do our Client Portability Analysis with the candidate.

After doing so, our evaluation indicated the amount of business that would move with the rainmaker, was probably going to be less than $1M – maybe even substantially less. I was expecting the Managing Partner to react with a “Phew! Glad you helped us dodge that bullet!”.

I was wrong. He got pissed at us. Okay as with our favored client, disappointment is human. He’s a person. We dealt with it.

But it got worse.

Not only did he ignore our counsel, but he also began bragging to all his friends and colleagues at other firms, about the huge rainmaker they were about to onboard. Even worse, he told everyone which firm the rainmaker was coming from and that his departure would be devastating to his rival firm. We counseled him that even if things worked out, this kind of disparaging rhetoric toward other firms would definitely backfire on him. Again, not only did he ignore our counsel, but he got seriously angry at us. To the point that the disparaging comments he made to his other partners, got back to us. Everything happened exactly as we predicted. The "rainmaker's" previous firm was actually planning to let him go for lack of performance. The draw was paid by the Managing Partner's firm for several months until they finally realized the rainmaker’s book was going to be closer to $500K than $5M. They had paid out more than double of what was collected. They let him go. Now the Managing Partner felt like he needed to save face and that for some reason, he seemed to think we “owed him”. He needed another AmLaw Rainmaker with a huge book to help repair the reputational damage that had been done. We explained that getting a $5M rainmaker from an AmLaw to join his firm was not something we could do.

He of course, got angry with us again. And again, we learned of the disparaging remarks that abounded internally.   Now the pattern was clear. In every instance, we offered sound counsel. In every instance, we were proven correct. In every instance, he ignored our counsel. In every instance, when things didn't go his way, he got angry at us and let those closest to him know why things were somehow our fault or that we were the proverbial "bad guys". If at all possible, never tell a client you're firing them. That will just cause more anger.

Fortunately, after his last bout of anger, the Managing Partner ghosted us and saved the trouble of further confrontation.  

But what if that had been a large client with a huge network?

What if the “transference” of their mistakes onto us, made them vindictive? It's always smart to have a prepared exit strategy. Whether it's a conflict or management decision, act as if you're disappointed you have to give up the client.

If you have a client who constantly ignores you, you’re putting your reputation at risk. If you have a client who both ignores and gets angry with you, every interaction is a ticking time bomb, waiting to blow up in your face.

Walk away.

One final note: This goes for employees, as well. If your employee lies once, they’ll do it again. If they ignore your firm’s rules or even unspoken cultural norms, they’ll continue to do so. And if they get angry and blame others for their mistakes, they’ll create a toxic environment in your firm.

Let them go.

Frederick Shelton is a Market Advisor and Consultant to law firms, legal MSO's and funds on subjects which include legal AI, ABS models, MSO's and M&A. He can be reached at fs@sheltonsteele.com