Can over-servicing lose you clients?
Doing more for your client than you first agreed can have serious consequences, including unintended liabilities, fee disputes and possible loss of the client, advises Bluefin.
There is no escaping the fact that we are in an increasingly competitive marketplace. It is therefore all too understandable to want to do more and more for your client in a drive to be seen as going above and beyond to help retain the client.
What is being described here is “scope creep”, which occurs when there are uncontrolled growths in the scope of work you have agreed to do for a client, sometimes without knowing that this is happening.
The fear of losing a client is of course a real one, but there are dangers in providing an unequivocal “yes” in response to a client request without any checks and balances.
Examining the issue…
Devaluing Your Worth
Continuing to do additional work for “free” can lead to a situation where your client may ultimately not value your expertise because they don’t have to pay for it. And, at worst, would bring precisely the outcome you were seeking to avoid – the loss of the client, not to mention the fact that you could easily end up being run ragged!
Assumption of Additional (Unintended) Liability
Conducting work that was not originally envisaged means that not only do you potentially not get paid for it, but you may have unwittingly assumed a duty of care for any adverse consequences of that scope creep.
This can have consequences from your own professional indemnity perspective in terms of an adverse claims experience, which ultimately will lead to increased premiums for subsequent years.
This is a very real issue. A significant proportion of professional indemnity claims against accountants have at their roots an issue arising from a disputed scope of engagement. It can be a challenge to defend a claim if the work that you were doing went well beyond the scope originally envisaged and set out within your engagement letter, no matter how well intentioned.
This “beyond the scope” can even be something as simple as responding to a “can you just” request or “can I bounce something off you”. This can be sufficient to increase the scope of the work, no matter how inadvertent.
The other scenario envisages a situation where you are charging on an hourly rate (as opposed to a fixed fee) and the additional services provided during the life of the retainer mount up and ultimately lead to what the client perceives as an astronomical bill.
It is almost invariably a true reflection of the time cost that you have incurred for this client, but their perception is key here. It can be all too easy for a client to forget about all the “can you justs” over a period of time, especially if not reminded regularly.
In the same way that many claims arise from a disputed scope of engagement, an even larger proportion have at their roots an initial minor grumble in respect of costs. Surprises involving money are almost always unwelcome ones, regardless of the level of service and accuracy of advice provided.
This alone can be sufficient for a client to go on the attack to avoid paying your fees. Even if a formal claim does not materialise, the aggravation caused by any misunderstandings can be sufficient to destroy the relationship and ultimately a professional reputation, not to mention the time lost in seeking to resolve the issue.
So how to prevent these issues? Are we suggesting that you refuse at all costs to do anything beyond the scope originally agreed? Far from it. Thankfully there are some key tips that can help you address this issue head on:
Quite often the issues stem from a lack of awareness (both your own and those of the client). Set your stall out clearly from the very outset.
Spend some time considering the scope of the work required, discussing with your client what their vision is and make sure this is expressly set out within your engagement letter and agreed with your client.
The boundaries of your services should be well-defined, including any limitations. Make sure you set out what isn’t included and make it clear that if additional services are needed, their written approval will be required and additional fees will also need to be agreed in advance.
This initial discussion can only help to get a new client relationship on the right footing and presents an opportunity to get to know your client, which could prove vital in seeking to retain that client and being able to achieve that gold standard of adding value.
Make sure that you review the situation periodically and regularly. If you don’t already, consider billing on a monthly basis. This reduces the likelihood of any costs surprises and allows you to discuss additional work (past and future) with your client.
It also provides additional opportunities to formally touch base with your client to supplement your relationship. Above all, see this as an opportunity to interact with your client and not simply as a request for additional fees.
Know when to say “No”
Don’t be tempted to stray beyond your area of expertise in an effort to please the client. Having agreed to do work that you wouldn’t ordinarily do means you will have assumed the duty to advise in the manner of a reasonably competent adviser in that particular sphere, regardless of whether you possess such skills.
A client will almost always appreciate your candour and conversely see you more as an expert in the field upon which you have taken instructions, as opposed to seeing it as a limitation. No one wants to instruct a jack of all trades and a master of none. It seems to us that this would only serve to devalue your core expertise.
Make sure any discussions (post-issue of the engagement letter) about additional work and/or fees are documented. Ideally this would take the form of a client letter, but at the very least a careful contemporaneous file note should be created and maintained.
Uncontrolled scope creep is the foe. Get this under control through awareness and active management. Put yourself in the best possible place to make scope creep your friend by taking advantage of increased fees and the opportunity to make more regular contact with your clients, thereby cementing your place as their trusted adviser and your ability to go above and beyond.
Bluefin Professions is a specialist insurance broker for professional firms and individuals. It is an ICAEW Member Rewards Partner and the exclusively appointed professional indemnity and office insurance broker for ICAEW members.
For risk advice and guidance or a no obligation quote for professional indemnity insurance, please contact Bluefin Professions on 0345 894 4684 or email email@example.com.
Bluefin Professions is a trading name of Jelf Insurance Brokers Ltd which is authorised and regulated by the Financial Conduct Authority (FCA). Not all products and services offered are regulated by the FCA. Registered in England and Wales number 0837227. Registered Office: Hillside Court, Bowling Hill, Chipping Sodbury, BS37 6JX.
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