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Chip Griffin: Hello and welcome to the Agency Leadership Podcast. I’m Chip Griffin.

Gini Dietrich: And I’m Gini Dietrich.

Chip Griffin: And Gini, we have one of your favorite topics today, but it’s one that, that we haven’t visited in a while, so it’s, it’s probably worth revisiting. Okay. And, and, and that is, how do you handle it when you have a client who wants to end their contract early?

Gini Dietrich: Well. As we all know, I am a stickler for the details when it comes to this, and we have very specific language in our contracts. Our attorney helped me create something beautiful that is a 90 day termination clause. Almost never does somebody sign 90 days. They use, it’s usually a negotiation point, right?

It’s, we get it to 30 or 60, whatever. I use it for negotiation. Sometimes the client signs the full 90 day contract. I have had a situation where a client called me at the end of the month and said, we are terminating the contract as of today. And I said, great. There are two outstanding invoices, and by the way, you have a 90 day termination clause.

And they came back and said, and I said, but if you’ll pay the the outstanding invoices by the 15th of the month, then I will happily waive the 90 day termination clause because I know you’re, it’s cashflow and I know you’re having a tough time right now. They came back and said, no, that I’m not being a good partner.

Chip Griffin: So to clarify, they don’t want to pay for services already rendered?

Gini Dietrich: Correct.

Chip Griffin: That seems unreasonable under any circumstances.

Gini Dietrich: I agree.

Chip Griffin: So I think that from my observations of having had these conversations with you now for what, seven or eight years now on this show, you’re being particularly reasonable.

 Especially for me.

Yes. That’s what I’m saying. You, you personally are being particularly reasonable Uhhuh, because usually you are much more hardcore than I am

Gini Dietrich: Yes.

Chip Griffin: On these things. Yes. I think that’s fair to say it is. But what you’ve described is. Is something that I would typically offer to a client. Settle your debts and we can just part ways amicably.

Gini Dietrich: Yes.

Chip Griffin: And you are also, I think, the only agency owner I know of who has ever sued a client. I’m sure there are others out there, but I don’t know them personally.

Gini Dietrich: It’s the principal.

Chip Griffin: Yeah. Yes. We, we know that you, that you thrive on making the point.

Gini Dietrich: I do.

Chip Griffin: So, so it’s

Gini Dietrich: Fair is fair.

Chip Griffin: So you’re clearly. Going soft.

Gini Dietrich: I’m, I’ve, I’m getting older.

I’m, I’m getting older, and I understand that this is not worth pursuing. I would like our past due invoices to be paid, and I will happily waive the 90 day clause. If, however, you don’t pay us by the middle of the month, then I’m not waiving the clause on the contract you signed.

Chip Griffin: Right. So let’s, I mean, let’s extrapolate or not extrapolate, let’s, let’s step back and look at this at a higher level rather than your particular individual case.

We can use that as an example. Sure. But I think that, that there are a few key points that come out of this that could help other owners. And, and I think the first one is the way that you are using the contract as a tool to get leverage to get a solution that you’re happy with, right? It’s not that you’re abiding by the contract.

Right down to the last crossed T and the last dotted I, you are willing to make concessions, right? But by having a strong contract, it gives you the leverage in that negotiation to be able to trade something, the unpaid invoices for the lengthy notification period. Or not lengthy, but the the 90 day notification period.

Gini Dietrich: Right, right. Yeah. I think that’s right. And I think having that leverage helps And you, you have, you have to find ways to be able to have that leverage. Like, you know, web forms won’t deliver a website until you’ve paid their last invoice. Same thing. Like what do some things, if a client’s not gonna give you any notice and they did not give us any notice, they called us on the last day of the month.

If they’re not going to give you any notice, then what is your leverage to be able to get the invoices paid, in a timely manner? And you know, if they’re saying, well, we can’t pay for 60 or 90 days, or they’re saying We’re not gonna pay it all. There’s things that you need to have. So I think your point about having a contract that has that language in it that they have signed and agreed to, gives you some of that leverage.

Withholding work product gives you some leverage. So there are some things that you can do, but you have to have that all set up. You know, you always talk about sort of the prenup. What happens if you get divorced from a client, right? What are the things that are gonna protect you in that, that situation?

Chip Griffin: Yeah. And, and I think if you, if you look at a contract as a tool rather than a rigid roadmap, I, I think that’s, that’s the most helpful way to think of, of legal agreements, at least in the agency client context. There are obviously other places where it is that rigid roadmap and Sure. And you’re not gonna do anything about it.

I mean, you try having a negotiation with, I don’t know, your car lender, you know, it’s probably not gonna happen. They’re probably just gonna sit there and say, you know, you signed the 27 page agreement.

Gini Dietrich: Right.

Chip Griffin: Pay up.

Gini Dietrich: Yes.

Chip Griffin: So, so you know, but in, in an agency client relationship, the, the cont