Resolving Disputes with Clients

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.