Toxic Client. Garrett Sutton

it can also mean that the person bringing the case was using the court system to gain concessions.

      If the person was a defendant, it’s possible that they were sued because they never paid for the services rendered or products purchased.

      A review of the county clerk’s files to see whether your potential client is litigious, either as a plaintiff or defendant, can be very enlightening. If you are a contractor, a review of mechanics’ lien filings (which can indicate a lack of payment for work performed) may also reveal a potential client’s true colors.

      Second, check the potential client’s credit. You’re probably used to having your credit checked when you apply for credit. But unless you are a landlord, you have probably never checked someone else’s credit. That’s because there are strict limits on who can check your personal credit reports. But those restrictions don’t apply to business credit reports. Not only can you check the credit of someone you are planning on doing business with, it’s a good idea for you to do so. There are several sources for checking business credit:

      • Cortera

      • Nav

      • DNB

      • Experian Small Business

      • Equifax

      You generally don’t need your client’s permission first, unless you are ordering a blend of reports that contain personal information about the owners or principals. The source you choose will depend on how much information you need and how much you want to spend. You can often get a single report for less than $100. It can cost you more than that if you wanted detailed information. But if you are going to spend time or money working with a client, don’t you want to increase the odds you’ll get paid on time and in full?

      If you, as a new business owner, see a pattern (or even one instance) of nonpayment and/or litigation, you should probably think twice about taking the client. Or, perhaps, ask the client to explain the situation. (“I see you were sued by Marvin Washington. What happened?”) How he or she answers the question hopefully will give you plenty of insight into the situation. You’ll have to go with your instincts on the response: A calm, reasoned explanation may sway you one way, again remembering that none of us are all that good at identifying the liars in our midst, while an angry or defensive tirade might sway you in the other direction.

      Another strategy is to develop a retainer program, if you don’t already have one. You can ask for a 25% to 50% deposit on the work to be performed. The client who objects to this may be the client who had no intention of paying you in the first place, in which case you haven’t lost anything by making the request.

      Another strategy is to develop what is called the “imaginary partner.” Many people starting out want to be pleasant and accommodating in the hope of gaining much needed business. In doing so, they will agree too readily to terms and conditions that are not in their best interests.

      To slow this process down, and to give the semblance of experience in the business, create an imaginary partner whose approval you need. Instead of agreeing to everything on the spot, tell the client you need to take it back to your “partner” for his or her acceptance of the terms. You can add that your partner has a great deal of experience in these matters and will have a good sense of how to proceed.

      This offers several advantages. First, it allows you to save face by not directly saying no to the client. Of course, more experienced business owners have no problem saying no, and you will get to that point. But until you do, it may be easier to make your “partner” the bad guy, which can allow you to come back and attempt to negotiate a more reasonable set of terms.

      Another advantage of the imaginary partner is that it takes away the argument many Toxic Clients will use on new business owners: “You’re the president. You can decide.”

      While the truth is that you are the president and can decide, sometimes decisions need a little time. I prefer to sleep on a big decision. Sometimes I need two nights’ sleep. I am much better able to decide after a little time has passed.

      The imaginary partner (or a real one, for that matter) gives you that time. It allows you to go back and consider things, rather than agreeing to them when you are vulnerable and exposed to what perhaps may be a more skilled negotiator.

      To this end, I have worked with a number of clients who are starting their businesses and need to come up with titles for their business cards. We review whether they want to list themselves as “president” or instead list themselves as “vice president” or “manager.” If you are going to use the imaginary partner strategy, having a card listing you as a lower officer fits right in. The card itself announces that there is a higher authority. It can certainly be to your advantage if the clients don’t know that the higher authority is you.

      I have other clients who feel they get more respect by listing themselves as president. And that is fine, as everyone’s strategy is different. I would only caution that if you are young and starting out in business, the kind of Toxic Clients we are discussing here will want to see you listed as president. At least do yourself the favor of thinking twice about things when you hear the words, “You’re the president, you can decide.” In that vein, some of my clients who are the president have two sets of business cards printed up. One lists them as the president and one lists no title at all. They use each card according to the situation.

      Of course, we have to reconcile one issue in this section on lying and deceit: In the imaginary partner strategy, you are lying. There is no other partner. It’s just you.

      Maybe you will have no trouble with it. It’s your business, your baby, and you are trying to protect it from all the other liars and cheats out there. The justification is readily apparent to you.

      Alternatively, you can simply say that it’s “company policy,” which technically is not lying since you establish company policies. But it does establish a higher authority that is immutable.

      But maybe you need more of a foundation to support this strategy. Well, consider the German approach toward business. In Germany, a necessary lie is considered harmless. Here, the lie—that you have another partner and need that person’s approval—is necessary to protect and grow your business. And if the lie is necessary, which it often is, then it is harmless.

      Here’s a final word on Marvin Washington’s case. Early on, Washington had had a funny feeling about the Collingsworths. A little voice said to be careful. That was his instinct. He ignored his gut because he needed the work. The irony, of course, is that by ignoring his instinct he jeopardized his work.

      So learn to develop your “lie sensor,” and don’t ignore it when it starts setting off alarm bells.

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      Lesson #3: Everyone lies. Don’t let a lack of experience make you a target.

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      Often, people will actually tell you they are lying. Not in words, but in movements.

      Think about all the nonverbal cues people throw off. You know them. They include:

      • Fidgeting

      • Avoiding eye contact

      • Rapid blinking

      • Rubbing the nose

      • Swallowing repeatedly

      • Clearing the throat

      • Covering the mouth when speaking

      • Wetting the lips

      • Neck rubbing

      • Scratching the head while talking

      • Putting a hand to the throat

      Many of these movements and mannerisms are crystal clear cues that a lie is being told. The speaker is not clear with their conscience and by fidgeting or the like they are subconsciously telling you so. Employ your lie sensor in such situations. Think twice – or more – about taking on what I call the ‘kinetic client’.

      That