4 Tips for Handling Client Disputes in Professional Services

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Table of Contents

• 1. Understand Client Disputes
• 2. Take Preventative Measures
• 3. Install Effective Dispute Resolution Strategies
• 4. Implement Practical Measures 
• Key Takeaways
• Frequently Asked Questions

Professional services cover a wide range of areas, including law, accounting, consulting and financial advising. However, all of these require you to engage with your client, which may give rise to disputes. Managing such disputes as efficiently as possible is essential for protecting your firm’s reputation and remaining legally compliant. This article will take you through four tips for handling client disputes in professional services in New Zealand.

1. Understand Client Disputes

Client disputes may arise from a number of issues. Knowing the causes of these disputes is the first part to effectively manage them. Some common causes include:

• miscommunication;
• unmet expectations;
• billing issues;
• quality of service; or
• breach of contract.

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2. Take Preventative Measures

Avoiding potential conflicts is a much more productive and financially better option than solving them. You can take several preventative measures to minimise the risk of client disputes, some of which are outlined below.

Have Clear Contracts

Thorough service agreements are at the core of a solid client relationship. These agreements must outline the: 

• scope of work; 
• deliverables and applicable timelines; 
• fees and payment terms; and 
• dispute resolution procedures. 

In particular, both you and the client must agree on the contract to avoid misunderstandings.

Focus on Regular Communication

Prioritising regular communication with your clients will help you notice and address issues before they escalate. One way to facilitate effective communication, for example, is to provide clients with regular updates and have meetings where necessary. This will help to create a solid relationship built on trust and honesty, allowing you and your client to understand the root cause of your disagreement more efficiently.

Be Realistic

Having realistic expectations as early as possible in your client relationships is important. You should clearly communicate:

• what you can and cannot do for clients;
• anticipated timeframes; and 
• the risks or challenges. 

Managing client expectations can prevent dissatisfaction and disputes later on.

Develop Solid Policies

It is important to have detailed and clear policies on major issues in writing. For example, you may have policies on billing and responding to complaints. Any policies you have must be readily available to your clients. You should also review and update them regularly to ensure they are legally compliant. 

Prioritise Training and Development

Another key tip is to undergo regular training on:

• client management; 
• communication; and
• dispute resolution and conflict management.

This will give you the skills required to handle disputes effectively. Awareness of your legal obligations will ensure you do not enter a dispute due to misunderstandings.

3. Install Effective Dispute Resolution Strategies

Disputes may still arise no matter how hard you try to avoid them. Having strong dispute resolution procedures in place will help you efficiently manage and resolve any conflicts. This includes both internal and external dispute resolution options.

Some common internal conflict resolution strategies and processes include:

• Informal discussions: You should encourage all parties to first try to resolve disputes informally through discussions.
• Mediation: When internal discussions fail or are inappropriate, you may want to consider mediation. In mediation, a neutral third party facilitates discussions to help the parties reach a mutually acceptable resolution.

You may need to consider external options where your internal strategies fail. For example, you may need to pursue legal action for complex legal matters that cannot be resolved in any other way. However, this should be treated as a last resort. 

4. Implement Practical Measures 

As a professional service provider, you should understand your major responsibility in managing a client dispute. The table below lists some key steps you should follow.

Key Takeaways

Managing client disputes as efficiently as possible is essential for both protecting your firm’s reputation and remaining legally compliant. Some key tips for professional services handling client disputes include:

• understanding the nature of client disputes;
• taking preventative measures;
• having effective dispute resolution strategies in place; and
• implanting practical measures.

If you need assistance handling client disputes for your New Zealand business, our experienced disputes and litigation lawyers can assist as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to lawyers to answer your questions and draft and review your documents. Call us today on 0800 005 570 or visit our membership page.

Frequently Asked Questions