Hostage Taking

by | Feb 10, 2006 | Cash Flow, Weekly Column

A few months ago I signed a one-year contract with a consultant to provide a certain professional service to my office. This man had been recommended by a couple of colleagues, and my impression of him was favorable when I interviewed him by phone.

As we worked with him, however, it became obvious that things were not going well. He was extremely slow in responding to some of our questions and concerns, and his advice seemed to contradict reliable information I had from other sources. My staff members were becoming increasingly frustrated with their interactions with him. Eventually we decided it made no sense to continue this relationship.

Nothing in the contract we signed with him addressed the issue of canceling the agreement before the one-year term expired or refunding any portion of the retainer we had paid him. I wrote him a letter stating that we were dissatisfied with his services and I wished to terminate the contract. I also asked for a pro-rated refund of the retainer.

I was shocked at the letter I received in response. He did not agree to terminate the contract, ask if there were some way we could resolve our differences, or try to negotiate the amount of the refund. All three might have been professional responses that I would have expected.

Instead, he made threats. He stated specifically that the failure of the professional relationship was my fault because I had contracted for his less extensive service rather than his more comprehensive (and of course more expensive) option. He said that if I insisted on terminating the contract he would bill me at an hourly rate for the services he had provided thus far, an amount that would come to about double the retainer we had paid him. He demanded that I agree to his providing the more comprehensive services.

Was he on firm legal ground? I have had conflicting opinions by two attorneys, one saying he was and the other insisting that he was not. His threats and demands, because they were not contingencies described in the contract, were almost certainly not legally enforceable. Further, they were outrageous.

Yes, we had signed a one-year, legally binding contract. In the “real world,” however, a contract for professional services is not merely a legal document. It also is an agreement based on mutual respect. If one party becomes dissatisfied with the services provided, the two most appropriate options are to negotiate necessary changes or to terminate the contract. Partial refunds of advance fees paid are often made, not out of legal necessity but out of professionalism and good business practices.

One of the things I promise new clients is that they will never be “held hostage” as a result of signing a client agreement. If clients decide my office is not a good fit, it would be foolish of me to do anything other than let them go freely and with my best wishes.

Trying to hang onto clients by threatening them with reprisals if they leave makes about as much sense as trying to teach your children politeness by screaming at them. It is unprofessional, it is abusive, and it is just plain dumb.

Yes, ending a contract or refunding fees to a dissatisfied client may not be a legal obligation, and it may cost something in the short term. Yet the ill-will generated by threatening or harassing an unsatisfied client will cost much more in the long run, in terms of negative publicity and damage to one’s reputation. That’s a cost most professionals are careful to avoid.

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