“Breaking Up Is Hard to Do,” Neil Sedaka observed. It'sdifficult for an insurance professional to fire a client, just asit is for any other businessperson, especially in an economicdownturn, when new clients may be scarce. Is it worth it sometimesto sever the relationship? Consider the title of a lesser-knowncountry love ballad, “I'm So Miserable Without You, It's AlmostLike Having You Here,” which expresses that bittersweet feeling ofbeing rid of someone who causes more grief than gladness, more painthan profit

Why do we stay in dysfunctional business relationships? lsuspect that one reason why professionals–and not just insuranceagents and brokers, I might add–find it hard to say farewell totruly difficult clients is that we see ourselves as problemsolvers, so telling them to look elsewhere for solutions feels likeadmitting a failure on our part. But that's not always so.

The reasons to say “sayonara” range from very serious situationsto mere annoyance. Here are some real-life examples:

1. Committing outright insurance fraud might be an obviousexample. Stan, an existing client, comes to you and insists you dosomething that is clearly illegal or violates your state insurancedepartment's ethics rules. You try to dissuade Stan, but withoutsuccess.

2. Fred, a client of yours for a few years, has started sexuallyharassing an employee in your office. He shows up withoutappointments, hangs around her desk and makes lewd comments abouther, implying that if she doesn't play along he'll move his accountelsewhere.

3. Tara repeatedly refuses to follow your advice. You've done agood job of documenting your recommendations to her about herbusiness' insurance program, but she routinely ignores yourprodding to put loss control measures in place and broaden herliability coverage. After an incident occurs that could have beenprevented, and would have been covered by insurance if she hadfollowed your advice, she calls you and explodes in anger over thephone because you “failed to protect” her.

Is it worth it to keep these clients? Stan is asking you to riskyour license. Fred is potentially subjecting you to a sexualharassment lawsuit if you're aware of his unwelcome advances toyour employee and you fail to act to bring a stop to his behavior(this also illustrates the importance of encouraging your officestaff to report to you any misconduct by clients, vendors or otheroffice visitors so you can protect your co-workers). Tara isn'tdoing anything illegal, but she clearly does not takeresponsibility for her own decisions.

Sad but true.

One of my least favorite memories from practicing law for 30years was a case that I'll call Fraudmeister Construction v.Brokerama. Mr. Fraudmeister was a bully, and a cheap one at that.As a subcontractor, he needed to provide certificates of insuranceto his general contractors, supposedly naming them on his liabilityinsurance policies. The problem: his business was in what we'llcall “decline,” and he could barely pay his workforce, let alonehis exorbitant liability insurance premiums, which were probablyless than his monthly payment on his Acura. His insurance broker, abasically good fellow who had delegated the maintenance ofFraudmeister's account to a customer service representative, akind-hearted grandmother who was dying of emphysema (I'm not makingthis up), was a step or two removed from the renewalcommunications.

When gruff Fraudmeister called Grandma and told her in ashouting, abusive voice that he couldn't pay his insurancepremiums, but would sue her and Brokerama unless she falsified someinsurance certificates for him, she reluctantly agreed. Without anypremium payment changing hands, she sent him annual certificates ofinsurance showing his liability coverage being placed with variousmade-up insurers. Everyone was happy: Fraudmeister got to continuein business, providing falsified certificates to his generalcontractors without paying any premiums; Grandma got to avoid theclient's abusive phone calls, and the carriers, who didn't existanyway, incurred no losses.

No losses, that is, until Policy Year 3, when Grandma happenedto choose the name of an actual liability carrier that she hadnever heard of, and put it on the certificate. That was, naturally,the year of the really big claim, of which the general contractorduly gave notice to the “fictitious” comp insurer, using the phonypolicy number on the falsified certificate. Then the compost hitthe aerator.

Brokerama realized that Grandma was near death, and compromisedFraudmeister's claim so as to avoid making Grandma sit in front ofa jury and admit what she had done. It wasn't the most ethicallygratifying case I've ever had, but I thought that Brokerama did theright thing by protecting Grandma, even though she had broken faithwith her employer to avoid an abusive bully.

If only Grandma had been in good bodily and mental health. Itwould have been satisfying to put Mr. Fraudmeister on the witnessstand and make him explain how he bought insurance for 3 yearswithout paying any premiums. Or what if Brokerama's agent hadreviewed the files under his supervision, caught the problem inYear 1, and fired the client? A lot of unnecessary agita andtransfer of funds could have been avoided. Still, we lawyers don'tmake the facts, we just do the right thing with the facts that weare given.

Alternatives to “You're fired”

Separating from a difficult client tests a professional'smettle. Fortunately, unless the situation requires a quickseverance of ties, the immediate solution need not always be theultimate sanction, a curt, Trump-esque, “You're fired!” (Thoughthat might provide you some gratifying, albeit brief, emotionalrelief.) As when dealing with employee disciplinary or complianceissues, an escalating series of communications is usuallyadvisable.

Typically, a private, spoken warning is the best way to start.“Tara, there's something that we need to recognize. All I can do ismake recommendations about managing your risks. I can't makedecisions for your business. When you make a decision I have torespect it, and if it doesn't work out the way you'd like, we needto move on to the next recommendation and decision. If that's nothow you see it, we'll need to redefine how we work together.”

This subtle approach expresses a desire to continue to worktogether, but also lays out the essential ground rules of theprofessional adviser/businessperson relationship. Of course, somepeople don't take subtle hints, and the next discussion may need tobe more direct. The idea is not to unnecessarily poison the well bymaking the discussion personal. The approach above is worded on aheads-held-high basis, without any invective. With a littlecoaching about how adviser/client relationships work best, Tara mayturn out to be an ideal client.

These types of discussions don't occur in a vacuum; they'reoften triggered by a claim or loss, or by the coverage renewalprocess. It's particularly important–and not only from a legalstandpoint–to confirm in writing the decisions or commitments thatare made, without creating a paper trail that will make it nearlyimpossible for the client to find a new broker if you later have tofire the client. You don't want to be accused of “abandoning” theclient, with insufficient time left to find a new broker and effecta renewal. The writings should be calm, short, and aboutrecommendations/decisions, not about hurt feelings orpersonalities. Some examples:

o Businesslike: “Tara, I'm writing to confirmour discussion yesterday for your records. We examined the pros andcons of your company, Tara.com, purchasing trustee and fiduciaryliability insurance, and we looked at a few available markets andtheir likely premium rates. I recommended you select one of thoseoptions, and you decided that this isn't the year for Tara.com tobe taking on new insurance premiums. I understand, and will not besending you any application forms for that kind of coverage thisyear.”

o Personal: “Tara, it's very frustrating to me,as an insurance professional, to continually be told that you'renot willing to protect your business with appropriate insurance.This isn't like buying shoes. You've leaving Tara.com exposed torisks that, if they come to pass, will send you flying off thehandle again. If that's how you treat people who are trying to helpyou, you should consider therapy, then come back and talk aboutinsurance when you're rational.”

That may be a bit over the top, but let's hope it proves thepoint: Which of these letters or e-mails would you prefer to haveblown up to the size of Missouri and shown to a jury at yourE&O trial? That's the question you need to ask yourself beforeclicking “Send” in Outlook or putting the stamp on the envelope.Walk twice around the block, take some deep breaths, then send thefirst e-mail, not the second one.

Please Release Me, Let Me Go

Escalation has not worked. Your client is not getting yoursubtle message and persists in self-destructive behavior. There isone thing left to do: disengage, orally and in writing, from yourclient. It's a simple process. Start with a meeting or phone call,attended by you, the client, and a disclosed witness from youroffice. You explain, calmly and professionally, that your officecan no longer do business with the client, without further detail,and that you will be sending a confirming letter by certified mail.No recriminations, no vengeance, just, to quote Edward R. Murrow,“Goodbye and good luck.”

The certified letter should likewise be devoid of venom:“Further to our telephone discussion of [date], which [witness'name] also attended, I regret to inform you that our office will nolonger be acting as your insurance broker. I strongly urge you todiscuss with a new brokerage firm the renewal of your existingpolicies, listed below with their policy numbers, types ofcoverage, issuing carriers, and renewal dates. Contact your newbroker at least X months before your earliest next renewal date.”You don't need to use this verbatim. This column doesn't offerlegal advice for a given situation. This is just common sense.

Although it's not required by law, it also makes common sense tosend a follow-up letter to the former client, X months before theearliest renewal, reminding him/her that it's time to discussrenewal with a new broker, and if the client responds, “Oh, all isforgiven, please help me with the renewal,” you must make anothertough business decision: send another “sayonara” letter or bite thebullet and accept the client back for another year.

As a wise man said, it's your decision, but if I were you Iwouldn't count on the leopard changing its spots, capisce?