A proactive attitude that treats disengaging as a practice management tool means, in part, putting into place a system that allows you to re-evaluate your client base on a regular basis, be it annually or semi-annually. Incorporating such a plan into your business practice enables you to monitor your client base and note any changes that could have an impact on your professional relationship.

The following checklist of warning signs is intended to help you identify clients who are candidates for disengagement:
• Difficult, manipulative or uncooperative client behavior
• Unresolved client complaints about the service provided
• Client complaints about fees being too high
• Consistently delinquent payment
• Clients suffering business or personal hardships
• Personality conflicts between the client and the firm
• Unseemly, unethical or fraudulent activity
• Changes in the client’s business
• Changes in your firm’s partners, staff or goals
• Conflicts of interest

Dealing right away with problems might save the relationship and help you avoid disengagement, or it may confirm your thought that it is time to sever the relationship. Only you can decide whether it is in the best interest of your firm to continue a relationship with a client.

You should carefully consider any changes in a client’s business. Changes in management or in the direction of the business can create problems for you if you are not professionally staffed to perform the new, additional, or different services the client’s business requires. When you are unqualified to accommodate a client’s new needs, yet choose to accommodate the client rather than disengage, you make yourself vulnerable to litigation.

Not only are you inviting a potential lawsuit, but the firm is losing the opportunity to provide additional services to the existing client base and to build a stronger client base in the firm’s area of expertise – a far more productive and profitable activity for the firm. Look at different options to best serve the client. Consider a friendly joint venture with another accounting firm that specializes in a different area of expertise.

CAMICO has found, over time, that CPAs often try to adjust to a client’s changing behavior or needs, especially for those with whom they have long-term professional relationships. However, making adjustments can cause you to overlook risk factors and eventually transform you into a prime candidate for a lawsuit.
How to Disengage

When you decide to disengage, you should seek to terminate the relationship professionally and formally, in writing. At a minimum, your disengagement letter should always contain clear statements, a description of your work, and a list of any due dates or filings. While it might not be possible in urgent situations, try to provide ample lead time before a client’s deadlines to better protect yourself.

Your client needn’t feel antagonized in any way, and when done effectively, disengagement can leave your client feeling that you have acted in the best interest of both parties.

Review and edit your disengagement letter carefully to ensure that it is professional, objective, and rational. Often, situations that provoke disengagements are emotionally charged. Don’t let your letter reflect your personal feelings.

In the past, the majority of CPAs did not proactively disengage. CPAs who wanted to terminate a relationship with a client took the route of simply raising fees until the client could no longer afford their services. But times have changed, and in most situations today it is not wise to play a waiting game and just continue to raise fees with the hope that the client will volunteer to leave. First, it’s not proactive. Secondly, the client may accept the higher fees. A high-paying problem client is still a problem.

Even the most proactive evaluation plans will sometimes be thwarted and there will be a need to disengage immediately due to a critical situation, such as the discovery of fraudulent activity. However, by using a procedure that enables you to regularly monitor your clients, you can better protect yourself and your business from having situations escalate into crises calling for disengagement.

Another benefit that comes to you by regularly evaluating your clients is that you place yourself in an excellent position to gauge their changing business needs and therefore sell them new or different services that complement their growth or change.