Platt’s Perspective: Times Are Tough, But Client Acceptance Rules Should Be Tough Too

Partners are intent upon attracting new clients, especially during tough economic times. The days of growing a book of business by simply picking up the phone and taking orders are long gone. Firm leaders are demanding an assertive approach to business development – as they should.

Based on my discussions with MPs around the country, it appears that intelligent business development has never been more important. The recession hit many clients hard, prompting them to seek fee reductions or take their business to firms with more competitive offers. Firms have risen to the challenge in many cases by focusing on the value they bring to their clients, and working on ways to improve that service. At the same time, the always-important hunt for new business has taken on even more urgency. But prudence is warranted.

At IPA’s PRIME Symposium in November, a couple of comments from MPs on this issue raised some concerns. One MP expressed worry that another Enron-like implosion may be coming within the next five years. Another said he’s concerned about the quality of the new clients coming in the door.

These worries are based in the realities of the business climate today. All partners are pressured to bring in new business, even if that’s not their forte. Managers are seeing fewer opportunities to move into partnership positions, as tough economic times are keeping partners in their jobs for longer periods.

Managers who want to prove themselves “partner-worthy” may become more aggressive about gaining new clients. In addition, consolidation throughout the industry may create a competitive environment in which up-and-coming professionals may feel the need to bring in new clients, no matter what.

Partners need the right resources and the right motivation to attract new business. Firm leaders should already adhere to a set of guidelines for accepting new clients. Has the business changed auditors frequently? Is the company involved in a somewhat questionable business offering, yet there’s an opportunity to make $20,000 in audit fees? The dollar signs might outweigh the danger signs in that scenario.

All firms need to grow to survive, but all professionals must also remain true to the core values that built the firm to where it is today. Remain vigilant. Don’t cut corners. Taking on questionable clients is not worth the risk; nor is it worthwhile to retain every client.

“Firing” risky clients or turning down potentially risky prospects, while initially appearing negative, will pay off in the long term. High-quality clients combined with high-quality service translates into a profitable long-standing relationship that benefits all. Another Enron, and another round of SOX-like legislation in response, benefits no one.