Avoiding Conflicts with Clients

Tips and advice from Ron Cresswell, J.D., CFE, on ways to avoid or mitigate angry client relations.

Avoiding Conflicts with Clients

By Ron Cresswell, J.D., CFE

November 2015

Jack, a Certified Fraud Examiner (CFE), thought that his latest fraud examination had gone well. Until he received an angry letter from his client. The client refused to pay the bill, claiming that it contained charges for work he did not authorize. Furthermore, the letter accused Jack of failing to return the client’s phone calls, being rude and unprofessional, and giving ineffective testimony at trial. Jack disagrees with all of the allegations in the letter and he believes that he provided excellent service to the client. Nevertheless, Jack is now in a difficult position — he has an unpaid bill and an unhappy client.

The letter described above contains some of the most common complaints made against CFEs. Those complaints include, in no particular order:

Failure to establish the scope of the fraud examination at the outset, which can lead to disagreements over billing and undue delay

Lack of documentation concerning the engagement (e.g., the client and the CFE agree over the phone to broaden the scope of the engagement, but a disagreement occurs because the agreement is not documented)

Lack of professionalism (e.g., not responding to communications, lack of apparent concern for the client’s issues, rude or antagonizing comments)

Testifying as an expert on issues beyond the scope of the CFE’s expertise

Failure or refusal to hand over the client’s documents in a timely manner

Note that the first three items involve miscommunication, the most common source of client disagreements. All of these potential sources of conflict can be avoided by observing the following guidelines.

Clearly Establish the Scope of the Engagement

According to the CFE Code of Professional Standards (CFE Standards), CFEs must “reach an understanding with those retaining them (client or employer) about the scope and limitations of the fraud examination and the responsibilities of all parties involved.” The scope of the engagement should be established early and in writing. A failure to do so can lead to serious disagreements with the client regarding billing, delays and other matters.

In most cases, the scope of the engagement should be detailed in a written engagement letter. An effective engagement letter can help manage the client’s expectations and make disputes easier to resolve. Among other things, the engagement letter should discuss the scope of the services to be provided, the timing of the work, how the client and the examiner will communicate during the engagement, how results will be reported and the payment terms. It’s important to review the terms of the engagement letter with the client, in person or over the phone.

When there is a significant change to the scope of the engagement, the CFE Standards require a new agreement with the client. The change should be documented, either in a new engagement letter or an amendment to the original engagement letter. Some examiners even send non-engagement letters to potential clients with whom they have communicated but decided not to represent.

Document All Client Communications

As stated above, most client conflicts are due to miscommunication. In order to avoid such conflicts, all communications with clients should be documented. Client communications can be documented by taking contemporaneous notes, writing a memo after the event or other means. Some fraud examiners use case management software to document client communications. It isn’t necessary to write down every word a client says. Instead, make note of the date and time, the subject of the communication and the key points.

Keep in Touch

A common complaint against many professionals, including CFEs, is that they don’t answer client calls or emails in a timely manner. To clients, this lack of communication can seem unprofessional and even disrespectful. An angry client can lead to all kinds of negative consequences.

However, this potential conflict is easily avoided. Client communications should happen on a regular basis. Consider scheduling weekly phone calls with the client. Such calls can be used to keep the client up-to-date on recent developments, to discuss strategy and to address any client concerns. They will also give the client confidence that the case is moving forward as planned. In between these regular communications, client calls and emails should be answered within 24 hours, if possible. Support staff should be trained to follow this policy.

Also, remember that the CFE Standards require clients to be informed of any significant findings made during the examination. This information should be communicated to the client as soon as possible.

Be Empathetic

Empathy is a very important characteristic for a fraud examiner. Clients who have been the victims of fraud might be angry, anxious or embarrassed, so they need to be treated with respect and empathy. The most effective fraud examiners are able to show their concern for the well-being of their clients.

For an excellent article about talking to victims of fraud, please see All Is Not Lost: Fraud Victims, Emotional Stress and the CFE by Jamie deBlanc-Knowles, published in the July 2015 issue of The Fraud Examiner.

If You Lack Expertise, Consult or Refer

Obviously, a fraud examiner should not take on an assignment that he is not equipped to handle. Nor should he testify regarding a subject matter in which he is not an expert. However, the CFE Standards state that, “[i]n some circumstances, it may be possible to meet the requirement for professional competence by use of consultation or referral.” Therefore, there are two options when a fraud examiner realizes, after accepting an assignment, that he lacks the expertise to complete it. The first option is to terminate the engagement. The second option is to hire, or consult with, a person who is competent to complete the assignment.

When the Engagement is Over, Return Client Documents

When the engagement is over, the client should be mailed a disengagement letter and the final bill. In addition, remember to return all of the documents and other items that were provided by the client. Generally, such documents must be returned to the client within a reasonable amount of time after they are requested.

Different rules may apply to work product created by the fraud examiner (e.g., the final fraud examination report) if the client has not yet paid his bill. Because those rules are complex, an attorney should be consulted before attempting to withhold such documents.