The Practitioner: Client purge could prompt profitability

by Kevin Reed

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30 Aug 2012

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FED UP WITH JUST THINKING, I have decided to take action.

The client rating list that I have dreamt about for well over a year has become a reality. I locked myself away in a hotel room in Scotland and went through the client list with a fine-toothed comb, a ruler, four highlighter pens and a pair of scissors.

The results were varied – some clients performed worse than expected on the rating chart, others better than expected.

I have since spent the last two weeks travelling around the country visiting the clients on the list who fell below the cut-off line, advising them that their fees are doubling, and they have to go on an immediate standing order payment. I have even told a few clients that we no longer want to act for them. Full stop.

It's not been an easy decision and I have come up against strong opposition from my fellow partners. I will live or die by this course of action, but any action is better than no action at all.

It is expected – if not hoped – that we will lose the majority of the ‘bad' clients, but at least this now means that we can focus on delivering value to the good clients.

Next week's job is to deliver the axe to certain members of staff in order to realign the costs with the reduced fees. I almost wrote ‘reduced fee income' but realised that getting rid of clients who never pay is not really getting rid of income at all. The reduced top line should actually result in an increased bottom line and an increased bank balance.

The issue I can already see arising is that I am really going to resent sharing this increased profitability with the partners who have been so against the idea in the first place. That will be a good problem to have, however.

The Practitioner's uncensored thoughts come from the coalface of a regional firm in the heart of England

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