The ethics question posed in the May EXPLORER brought varied responses from members, although all seemed to agree that some situations should be avoided as quickly as possible.
Here was the question:
A geologist and a client agree to a project for which the geologist will be paid for time and expenses.
At the end of the job, when the final bill is presented, the client acknowledges that the job was well done -- but nevertheless asks the geologist to reduce the bill because it is larger than expected.
Assuming you are the geologist, what would you do?
Has this ever happened to you before? Did the client explain the reasons behind the decision?
Curtis E. Covey, of Derby, Kan., said the best way of handling whether (or not) to reduce a bill with a client is to avoid the situation.
"It is imperative that the geologist establish the ‘ground rules' with the client from the beginning," Covey wrote. "This includes, but not limited to:
- Client expectations.
- Information format.
- Time line.
- Program obligations.
- Client briefing(s) and updates throughout the program.
- Review procedures.
- Anticipated ‘follow-through' program(s), as well as, initial/interim/final billing with expected payment cycle.
" ... Following the spirit of good pre-program planning, both the client/geologist will remain positive about the experience," he continued. "This is easily possible since everybody involved is familiar with 'what' and 'for how much.'
"Once in the situation of whether (or not) to reduce a bill because a client feels is it larger than expected, one has to weight the cumulative facts.
"If the bill is larger than expected and the geologist does not concurrently keep the client informed of the program on-going cost/billing, the bill should be reduced. The geologist learns a lesson and moves on.
"If the bill is larger than expected and the geologist does concurrently keep the client informed of the program on-going cost/final billing, the bill should not be reduced. The geologist should maintain the bill ...(and) should not become worn/ bargained/threatened/intimidated. The geologist learns a lesson and finds a better client."
S.P. (Steve) Halabura, of Saskatoon, Canada, with 15 years experience as a consulting geologist, said he "learned very early that it is ESSENTIAL, from the point of view of good business practice and ethics, to present to a client a written estimate.
"The estimate includes a statement of objectives, required tasks, rate (time and expenses) and provision for cost and/or expense overruns."
"First, in quite a few cases the client is unsure of his or her needs, so writing it down helps the client clarify this.
"Second, clients hate surprises, so giving the client a higher bill is never a good thing.
"Third, it all comes down to communication -- a consultant must talk to the client during the course of the project and keep the client informed of progress and problems.
"In response to the scenario, I place blame upon the consultant," Halabura continued. "This should not have happened if the consultant provided the client with a written quotation.
"If no written quotation was provided, then the consultant had the responsibility to provide to the client interim progress reports and cost estimates during the course of the project. However, if a written quotation was prepared and interim reports presented to the client by the consultant, then a breakdown in communication has occurred, which again is the fault of the consultant.
"The last case is that the client is out to get the consultant. This is a very rare occurrence, and my only experience with it has been when dealing with clients who are in severe financial trouble -- even then, they usually pay.
"What would I do? I would discuss the matter with the client, and if the client was adamant, for whatever reason, I would adjust the bill in favor of the client. After this experience, I would note in my brain NEVER to deal with the client again.
"Furthermore, no ‘slagging off' the client as a deadbeat after the settlement to others -- this is undignified and is bad ethics.
"It's okay to warn other consultants of payment problems with a potential client, but it must be done in a professional and businesslike manner."
"It is the company that does not want to pay the entire fee that is being unethical," wrote Bob Shoup, New Orleans. "It seems to be increasingly more common for companies to renege on commitments when circumstances change. It is an alarming trend.
"If I found myself in that situation, I would ask what is best for my long-term business," Shoup wrote. "If I envision doing business with that company again, then I would work out an arrangement where I accept their lesser fee in exchange for a guarantee of future business.
"If I did not envision working with this company again, I would insist on some sort of payment plan.
"However, at the end of the day, his only recourse may be to sue, which is most likely not worth the trouble.
George Klein, of Houston, offered advice and some personal experiences.
"I have not been in such a situation," Klein wrote, "(but) if it arose, I would re-examine the agreement/contract I signed with the client.
"Usually, in such agreements, fees are specified, and if the contract is closed-end, a cap amount is listed. A binding agreement would cover it, and recourse is a possibility if one wants to continue to do business with a client.
"If the billing was open-ended, then it could be open to negotiation ...
"It is not unusual that a final cap figure for the total work is specified -- and if more time is needed, one goes into a so-called ‘no-cost extension,' which means it is on you.
"A related problem is this: During the current downturn, many consultants are finding their clients fall behind in their payments ... Cash flow (and crunch) becomes a problem.
"Let me describe some scenarios:
- "You call the client, and they tell you the check was mailed on a certain date. Tell them you will speak to the local post office superintendent -- and do so. They can tell you how long it should have taken. If it is more than three days locally, or five days nationally, they will advise calling your client and ask them to cancel the first check and issue a new check.
"Usually the client will issue one immediately, because you didn't accuse anyone of anything ...
- "If they tell you they are waiting for accounts receivables, ask them if they would consider splitting the payments owed to you and pay half this month and the balance in 30 days. This may work ... it reminds them you are willing help them, but can't front-end them totally.
- "Try to work with your client to obtain payments owed them that they need to pay you.
"An example: Before becoming a consultant, I was executive director of a marine science consortium that operated a fleet of boats. These were used for research, but by-laws permitted us to charter them to private environmental companies ...
"One client owed a sizable amount and fell behind five months. I called the president of the environmental firm and asked what they could do. He explained he was owed money for this work from the U.S. Navy, and they held it up.
"I asked if he contacted his congressman, and he explained he had but it got him nowhere. I explained to get a congressman's help you need to go to a key aide, gave him the name of the person I dealt with in that office, suggested he tell them it was a referral from me and that we provided the boats.
"In two weeks he got his check and we got paid.
"The bottom line question in all these dealings is, do you want to continue to work with the client?
"If you do, try to be creative and as flexible as one can, but ... If you feel that you are getting a message from the client you cannot live with, then a more tough-minded approach may be in order -- but it will likely mean in the end you lose a client."