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Published Tuesday, May 31, 2016
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Client Intake: Keeping Consultants Out of Court

Client and Engagement Screening
As a consultant, you provide advice and recommendations to clients so they may act accordingly to produce results. These services present various risks for you and your firm, as clients may not always agree with, correctly implement, or may experience negative outcomes from your consultation.  Total client satisfaction may be impossible to achieve, but consultants can take certain steps in the client intake process to help reduce the risk of being sued.

Your firm and prospective clients can often solicit and share background information about one another prior to your submission of a written proposal. Thus, the screening process begins with the first contact and ultimately results in a written agreement. As you progress through this screening process, the following elements should not be overlooked as they can help to strengthen a defense in the event of future litigation. 
 
Business Analysis  
Business analysis represents the first step in client and engagement screening. For a thorough business analysis, the following three questions should be addressed:
  

  1. Can you provide what the prospective client needs? You must determine the consulting needs of the prospective client and whether your firm has the necessary resources, background, qualifications and experience to render the services required.
      
  2. Can the prospective client provide what you need? You also must determine if the potential client has the internal staff and commitment required to participate in your consultation and provide the information you need, especially for long-term projects.
      
  3. Can the prospective client afford your services? Is the cost for the proposed project within the potential client’s budget – and within the approval authority of the client representative? Will the consulting project conclude within the current year’s budget or extend into the following fiscal year?
      

Ethical Analysis 
The next step is to determine if working with this client will in any way harm your reputation, result in a conflict of interest or cause you to jeopardize your business principles and ethics. Examples of some issues to consider include:
   

  • The reputation of the potential client: An internet search will permit you to access public information about the prospective client, including education, experience, reviews and any criminal charges.
       
  • Conflict of interest: Do any of your owners and employees or their immediate family members share ownership in the client’s business or perform management responsibilities for the client?
       
  • Laws and regulations: Depending upon governing state laws and regulations, does the potential client have the appropriate licenses or certifications to engage in its activities? Similarly, does your firm have all of the appropriate licenses or certifications to perform consultative services? If consulting for a client in a different state, seek legal advice in order to determine compliance obligations with the laws of another jurisdiction.
       

Professional Liability Analysis 
Professional liability risks to consultants tend to relate to the financial cost to the client if the consulting project does not lead to expected results. So, establishing realistic expectations is a key element in this equation. First, ask yourself, are the client’s assumptions reasonable and projections achievable within the time frames established? Next, evaluate the financial risk:
  

  • If there is significant financial risk to the client if anticipated results are not achieved, the engagement should be viewed as presenting a heightened level of risk to the consultant.
       
  • If the financial risk to the client is low, but expected results are not achieved, fee disputes and loss of future revenue to your firm may result.
      

In marketing your services, you may actively promote your capabilities and the improved business results that a prospective client can realize. As a result, you and a prospective client may ultimately solicit and share background information about one another prior to the submission of a written proposal by the consultant. But before officially providing your consulting services to a prospective client, the screening process is a critical step to better understand the client and prepare yourself for vulnerabilities that may lead to lawsuits.

One or more of the CNA companies provide the products and/or services described. The information is intended to present a general overview for illustrative purposes only. Read CNA’s General Disclaimer.
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One or more of the CNA companies provide the products and/or services described. The information is intended to present a general overview for illustrative purposes only. Read CNA’s General Disclaimer.
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