What to do if a client dispute occurs

After asking you a series of questions, your client seems confident and you’re both on the same page about the renovation project. Everything seems fine, and you both sign a contract to seal the deal. However, client disputes can occur without warning and can affect the reputation of a business. As we all know, this type of problem must be resolved quickly. 

Each renovation project has its own set of challenges. If a dispute occurs, you’ll want to avoid negative publicity at all costs; you’ll need to find a civil way to resolve the disagreement. That said, sometimes you’ll be forced to resolve the dispute through the legal system.  

Here are some ways to resolve a client dispute. Remember that we’re here to help, so don’t be afraid to reach out to your Account Manager. 

Reasons for client disputes 

According to the Dictionnaire de droit québécois et canadien, a dispute is a disagreement between two or more people leading to a lawsuit. Here are the main causes of disputes in the renovation industry: 

• Quality assurance problems. The client seems dissatisfied with the renovations; the results don’t correspond to what was agreed upon in the initial contract. Problems may have arisen after the renovation work was completed (e.g., water infiltration). 
• Poor customer service. The client may be dissatisfied with regards to the level of customer service provided by employees. Commercial relations themselves can also be the subject of a dispute. 
• Client expectations. There may be a mismatch between the client’s expectations and concerns and your response (e.g., a client believes the work completed doesn’t match the terms of the contract).  
• Client dissatisfaction. For example, the client is unhappy because they feel that they were overcharged for additional renovation work done. 
• Payment defaults. You may default on payments due to a client contesting the completed renovation work or due to negligence/an oversight.

How to manage client complaints and defuse tension 

Let’s say that you’ve fulfilled a contract and now your client is unhappy with the final result. First, you should try to understand the source of the conflict. 

• Does the client feel that the work done matches what was agreed upon in the contract? 
• Is the client dissatisfied with the quality of the work done? 
• Is the client dissatisfied with how long the project took to complete? 
• Does the client feel that your staff behaved inappropriately? 
• Do the materials used in the renovation work meet the client’s expectations?  

Don’t forget that most client complaints can be resolved pretty easily and there are lots of different ways to deal with conflict. Once you’ve determined the source of the conflict, show the client that you understand the situation.  

If you don’t have one already, develop a procedure for handling customer complaints. It’ll help your company handle complaints more effectively and prevent client disputes from arising. Remember that there are many different ways that you can respond to client complaints. The goal is to have a productive dialogue that leads to a civil outcome or resolution; it’ll help protect your company’s reputation. 

Make sure that your client understands that you want to fix the issue at your own expense to maintain their trust. After all, it’s the contractor’s duty to address issues with satisfaction within reason when a client dispute occurs. Most of the time, all that’s needed is a discussion and for the work to be done within a reasonable timeframe. Alternatively, you can also offer discounts to appease the client, as long as they don’t negatively impact your company’s financial standing. 

What to do when an agreement cannot be reached 

If you and your client are struggling to resolve a conflict, there are plenty of options available to help deescalate the situation and reach an agreement. 

Recourse to mediation 

Sometimes it’s best to hire a neutral third party – specifically a mediator – to resolve a dispute between two parties. Mediators help both parties communicate their needs and interests so that they can reach an agreement or compromise. Please note that they don’t arbitrate (or settle) the dispute. 

If the mediation process is successful, the mediator drafts the proposed agreement on paper. You can find mediators through the Ontario Bar Association, the ADR Institute of Canada, and the Law Society of Ontario. Depending on the particular issue, the Ontario Dispute Adjudication for Construction Contracts may also be able to help.

Recourse to conciliation 

Conciliation is an informal and confidential method in which a neutral third party helps two parties reach an agreement to resolve a dispute. Conciliators take a less active role than mediators as they don’t propose solutions. According to the Administrative Labour Tribunal (ALT), they instead help the two parties better understand their dispute, evaluate their interests, and reach an informed decision.  

Conciliation is similar to mediation, and conciliators often work as officers of justice or in public administration. You can find a list of professionals that provide this service at the ADR Institute of Ontario. 

Collaborative law 

Collaborative law is a relatively new dispute resolution method based on participative justice. It’s currently offered by the Groupe de droit collaboratif  du Québec (French only), and you can search for professionals in Ontario through the Law Society of Ontario and the ADR Institute of Ontario. For this process, both parties and their lawyers are present during negotiations. The lawyers act as both legal counselors for their clients and facilitators for the discussion.  

While there are some similarities between mediation and collaborative law, the main differences are that (1) mediators don’t give legal advice and (2) collaborative law requires each party’s lawyer(s) to be present.  

Each party pays its lawyer according to their hourly rates. The overall cost will depend on the complexity of the case and the amount of time devoted to the discussion. 

There are six steps in the collaborative law process. 

1. First consultation between the lawyer and the client. At this time, the lawyer notes the facts and issues to address. 
2. First contact with the other party. The lawyers meet to discuss their clients’ main concerns and any other major or urgent issues. 
3. Client preparation. Each lawyer meets with their client to gather more details on the facts and to inform the client of their rights and obligations. 
4. First meeting. The two parties and their lawyers meet to identify and discuss the issues, prioritizing those in urgent need of a resolution. 
5. Follow-up meetings. The parties and their lawyers meet to resolve subsequent issues. 
6. Settlement agreement, also known as closure. The lawyers draft a settlement agreement, which is then signed by the participants. 

What to do when a client defaults on a payment 

All businesses run the risk of dealing with clients that don’t pay their bills on time. If this happens, try to reach out to the person (e.g., by phone, by email, in person) and find out why they defaulted on the payment.  

There are lots of reasons why clients miss payments, such as forgetting the payment deadline or not receiving an invoice. In most cases, reminding your client that there’s an outstanding bill will settle the issue. Don’t jump the gun and pursue legal action as your first response – it’s aggressive and may upset your client enough that they’ll try to harm your business’s reputation. 

Make sure that your contract contains a clause about payment of money owed. For example, the Canadian Mortgage and Housing Corporation recommends having a clause that outlines consequences for late or missed payments (e.g., interest rate charge per annum). 

If you still don’t hear back from the client, then it’s time to pursue legal action. Start by writing a formal notice (or demand letter); you’ll need to make a copy and send the original by registered mail. According to Justice Québec, it must be written in the form of a letter and include the following:  

• the date it was written 
• the recipient’s name and address 
• the heading “WITHOUT PREJUDICE” (meaning that all facts and statements in the letter are for the purpose of settlement) 
• the words “formal notice” in the body of the letter, to ensure that the recipient is aware of its importance 
• a summary of the dispute 
• your claim 
• a deadline for settling the claim (in general, a period of 10 days is considered reasonable) 
• your contact information and signature 

If the amount owed is less than $15,000, you could also go through small claims court. Be sure to speak to a commercial litigation lawyer first to better understand the possible costs and the likelihood of winning your case. Sometimes it’s just not worth it because the cost of a lawyer can exceed your claim. If you go this route, remember that your success depends as much on your lawyer’s estimate as it does on established jurisprudence. 

If all else fails, you may hire a bailiff if the client doesn’t respect the payment terms agreed upon in your contract. This should only be a last resort, though; even if you’re entitled to the money owed, it’ll still affect your business’s reputation.  

The secret to a successful business? Happy clients 

Successful businesses prioritize client satisfaction above all else. We know that difficult clients and situations are impossible to avoid, so it’s best to have a process in place to deal with them effectively. A little respect and communication can go a long way! 

Remember that happy customers are the best brand advocates. Not only do they recommend companies they like to others, but they also give repeat business and form a major part of a company’s revenue.  

If you have any client disputes, be sure to reach out to your Account Manager at RenoAssistance. Good contractor–client relations are their top priority, and they’re happy to help and provide guidance when needed!

By: Natalie Gauthier

Natalie Gauthier, a blogger since 2004, holds a Bachelor’s degree in Business Administration and a Licence in Law. In addition to her experience in the business world, she also covers the legal, scientific and culinary fields as a writer.