[consulting] Proper Collections Procedure

[Henri Poole]

On Sat, 2006-08-19 at 15:34 -0400, Eric Goldhagen wrote:
> At 11:31 AM -0700 8/19/06, Henri Poole wrote:
> >As professionals, we need
> >to have methods for determining whether a client is low risk.
> 
> the issue is fact checking and how to determine credibility of the complaint.

I agree completely.

> 
> >  > > Any potential client that approached us that hadn't settled up with
> >>  > someone in our community would get a cold shoulder from us.
> >>
> >>  Personally, I like this idea, but it's not very professional :)
> >
> >I would argue that it is professional. There are very few professional
> >organizations that knowingly take on risks. When I buy a book online, I
> >can read reviews from peers. I am supportive of this level of
> >transparency and community feedback and find it very important to make
> >informed decisions.
> >
> >If a firm is having difficulty with Haggerty, whom I know and respect,
> >it would make a big difference as to whether or not I would consider the
> >risk worth the benefit.
> >
> >Perhaps this is just a personal value that I hold around transparency
> >that has influenced our business practices but generally, I think that
> >transparency is the best policy.
> 
> I see both sides of this.

I can see both sides as well, or as you have written below, multiple
sides. For each individual, there is a perceived reality. In my utopian
view, all individuals would have a right to right to share their
perspective of what happened, and there would be transparency to see
such views of fact.

> 
> On one hand, I think that this is a fine idea. Being able to act like 
> a union or guild and isolate problem clients, and in effect have the 
> power of a coalition of development firms when negotiating for 
> payment seems great on its surface.
> 
> However, I see a dark side as well. To draw from a real life experience:
> 
> Years ago, we had a project that required working with an outside 
> project manager geographically close to the client. This project 
> manager was paid from our part of the contract and was in direct 
> contact with the client and development team.
> 
> When the project was done, and we went to pay all the development 
> contractors, we realized that there was over $20,000 in labor for 
> out-of-scope work that the project manager instructed the developers 
> to do.

I've had similar experiences (in my previous life before time and
materials) and understand the complexities of fixed price work as well
as the importance of very tight tracking of work, not to mention the
importance of a change-order in this type of arrangement.

>From what you've described, I can certainly see the multiple
perspectives. This is exactly the type of conversation that could be
opened up so that people can learn from it.

> 
> When I contacted the client, they asked to see the change orders or 
> anything in writing that made it clear that this work was beyond 
> scope. The project manager had nothing, only a few phonecalls with no 
> written summary where she claimed that the client's project manager 
> agreed to cover the work as out of scope. The client's project 
> manager of course had a different memory of the conversations.

Law firms have dealing with similar problems for quite some time, and
many have had the benefit of spending resources to figure out best
practices. After years of trying to learn all of this crap myself trough
trial and expensive errors, my CFO at Vivid Studios gave me a great book
that was written by his Harvard professor. The book is called "Managing
the Professional Services Firm" by "David Maister" Here is a link:
http://www.bookswelike.net/isbn/0684834316

This book was the best investment that I ever made and I'd strongly
recommend it to anyone who is serious about professional services. If I
had read this earlier in my career, I would have far fewer gray hairs
today;)

> 
> After long and heated debate with the client, I got them to agree to 
> pay for 50% of the out of scope labor. This still left me in a bad 
> spot. Even if I paid myself 0 for the months of effort, after I paid 
> the development team/contractors I had only 50% of what we had agreed 
> to pay for project management.
> 
> I refused to pay out of my own pocket for the project manager that 
> caused the problem to begin with. Paid myself nothing at all and gave 
> the project manager all that was left after paying the dev team.

Boy...that would piss me off too!

> 
>  From her perspective, I am a deadbeat client. From my perspective I 
> was more generous than I should have been to someone that refused to 
> follow any standard practice for project management and failed to get 
> anything from the client in writing, despite being told that was 
> important numerous times.

I bet your project manager learned an important lesson;)

> 
> So, would she be allowed to list me on this private forum as a 
> deadbeat and unfairly damage my reputation? Would I be given the 
> chance to give my side of the story?

It's obviously very important to have an open forum for exactly these
situations.

> 
> It would take a lot of effort for a list/group like this to be both 
> fair and effective.
> 
> I'm not sure I think it is a bad idea, but I think that an official 
> guild (for lack of a better term) with formal dispute resolution 
> procedures would be necessary as a part of this. I'm not sure any of 
> us have the time to do this right.

I could spare some time each week for such a guild. Although I think
dispute resolution is probably a small part of what should be done. At
vivid, we had a quality assurance manager that told me that I should fix
the faucet before mopping up the floor more often.

The guild could certainly help with that and the trusted relationships
that would come out of it would enable private conversations of a
sensitive nature (like this one) to happen with more ease.

> 
> --Eric
> 
>