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How to identify red flags in potential clients

On Behalf of | May 7, 2024 | Business Disputes

Whether you are starting a new commercial venture or are a seasoned business owner, you must vet potential clients carefully. While the right client can help grow your business, the wrong one can lead to a tangle of legal issues.

Everyone deserves a fair chance, but being aware of common red flags can save you from trouble down the road.

Poor communication

Effective communication is an important aspect of any successful partnership. When a potential client is consistently difficult to reach, unresponsive or vague, it could offer a glimpse of the challenges to come.

Unrealistic expectations

One of the biggest red flags to watch for is expectations that seem too good to be true. If the client expects immediate results or demands extensive services for a minimal fee, you may want to avoid the business relationship.

Refusal to sign a contract

Contracts provide clarity and protection for both parties. Accordingly, any hesitation to commit to them might suggest potential conflicts in the future.

Financial instability

When doing business with a client, it is only natural to expect prompt payment. For clients with a history of late payments or frequent financial struggles, it is unlikely they will meet this expectation. As a result, you should assess a prospective client’s financial health before committing to any agreement.

History of legal disputes

You should also look into a potential client’s litigation history for valuable insights. If they have a track record of legal disputes with previous service providers, you must proceed with caution.

Constant negotiation

While negotiation is a normal part of business, excessive attempts to renegotiate terms are not acceptable. Along with indicating a lack of respect for your expertise, it can also make your working relationship quite contentious.

When it comes to client selection, trust your instincts. A healthy working relationship is built on mutual respect, and indications that a client does not respect your time, effort or authority must not be ignored.