Resolving Disputes with Clients

by WOHe

Like it or not, we’re living in a time when people
have become harder to satisfy and there seems to be a general
propensity to look for someone else to blame if things do not turn
out as we hoped. In this type of atmosphere, kitchen and bath
dealers are attempting to perform remodeling projects that are,
inherently, ill-defined, and that tend to require improvisation and
compromise as part of the process. Add to this a work force that
feels a sense of entitlement, and the opportunity for
misunderstanding and disputes is great.’

In this month’s column, I will look for ways to avoid getting
into situations that will ultimately result in disputes with
clients or employees, as well as how to set up mechanisms to deal
with and resolve disputes if they do arise.

Avoiding the pitfalls
As a starting point,
it’s important to recognize that clients today are much more
knowledgeable about our business than they ever have been before.
Among other things, the emergence of the Internet has empowered
people, giving them the ability to research any subject. This, in
turn, causes them to verify (or second-guess) what we, as their
contractors, are telling them. It’s important, therefore, that we
are sure of our facts and work at clearly and accurately
communicating them to our clients.’

The process of communicating with our clients begins with our
advertising and marketing efforts and extends through to the
completion of the project, and even beyond.

Our marketing efforts are designed to stimulate expectations and
desires and attract potential clients to our business. We must be
careful that this campaign does not make claims or raise
expectations beyond what we are prepared to deliver. Our marketing
continues when a potential client visits our showroom and a
description of our services is given. Here again, we are forming a
set of expectations for these clients to which they will ultimately
compare their actual experience.’

The proper training of your staff in the process of
communicating with clients during the design and specification
process will allow you to control what promises are made and make
sure that all aspects of your agreement with a client are included
in your contract documents. It’s also important that your client
understands the meaning and importance of the contract
documents.

The contract documents should consist of drawings that depict
the work to be done, along with a set of specifications that
accurately convey materials and products that will be used in
executing the project. There must also be a contract that ties the
plans and specifications together and lays out the responsibilities
and financial relationship between you and your client.

The best way to avoid disputes is to maintain a dialogue with
your client throughout the entire process. Most serious disputes
start as relatively minor misunderstandings that go unaddressed and
fester into bigger problems, with other minor irritations piling on
until letters are exchanged, lawyers are hired and you have a major
problem on your hands.

Dealing with disputes
As soon as you
become aware of a problem with a client, the best possible course
of action is to contact the client personally and request a face to
face meeting to clarify the details of the problem and determine a
course of action to diffuse and/or correct it. At this meeting, you
should first listen carefully to your clients, making sure you
really understand what they are upset about and what they expect
you to do to deal with it.

You will often find yourself in a situation where you’re
convinced that your firm’s position is correct and your client is
wrong. It’s important, in this situation, to evaluate whether the
cost of proving your point is worth the money, time and grief.
Often, you will find it more cost effective, to say nothing of
client goodwill, to make some concessions to achieve a
resolution.

As mentioned, the best way to avoid this situation is to keep
communication flowing with your client. It’s important, however, to
control what direction a dispute goes if it does escalate. The best
way to do this is to provide language in your contract to agree in
advance that both parties will use some form of alternative dispute
resolution. A process that has proved effective in diffusing such
situations is mediation and arbitration.

Mediation is a process that brings the two parties together,
with a mediator attempting to find a middle ground that will allow
the parties to settle their dispute. Though it is not a binding
process, a good mediator can often achieve a settlement.
Arbitration, on the other hand, is more like a court proceeding,
except that it is normally much less formal and therefore usually
quicker and less expensive.

Resolving issues
If a dispute has
escalated to the point where positions have hardened and the client
is refusing to negotiate, you will need to decide what to do to
reach a resolution. The key here is time. The best possibility of
resolving any dispute is to keep the process moving and not let
time pass and positions harden.

First, call for a meeting as described above and press for it to
take place as soon as possible. If the problem seems to be over
facts and details of what has happened on a project, you may want
to have your designer and field personnel involved in the meeting
to make sure that misunderstandings can be cleared up. In such a
meeting, you may be able to act as a “mediator” to achieve better
understanding and get the project moving toward completion. If the
problem is one of personalities, a meeting of just you and your
client may be called for to let them know that you are hearing
their side of the situation without them being on the
defensive.

If the face-to-face meeting does not produce results, then you
should initiate the mediation process while both parties still have
some flexibility to their positions. Again, the more time that
passes, the less chance there is for a solution.

Occasionally, there will be clients that you just are not going
to satisfy. You should not consider the use of mediation or
arbitration as a failure of your system of communicating with
clients. Make sure you’ve done your best to make that communication
work, and if it doesn’t, review the entire situation to see if
there are lessons to be learned. Then move on.

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