Author Topic: How to respond to this email???  (Read 4900 times)

COlady

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How to respond to this email???
« on: August 13, 2018, 09:38:28 AM »
I am a CPA with 10 years of experience that recently decided to go solo....

A financial planner I know well referred a client to me that is a pediatrician with three rental properties. She requested a 2018 tax estimate for the sale of 2 of the properties and is wondering if she should sell the third.  She wants me to run a few different scenarios. She asked for an estimate of the time necessary to give her an estimate. I told her 3.5 hours.  Her response:

My husband commented to me that he was surprised that an experienced accountant would take that long to come up with ball park estimates of taxes. So that we are on the same page about expectations, realizing that you are embarking on a new business, I want to be clear about what I need. Here goes: One paragraph or less, in separate documents, for each of the properties/sale scenarios. 

Considering this response:  "As I'm sure you're aware tax returns are never as straight forward as we think they should be.  I have already spent 1.5 hours conversing with you via phone and email regarding your rental properties and overall tax situation.  I estimate it will take an additional 2 hours to put together an estimate covering the three sale scenarios we discussed.  Let me know if you would like me to proceed with the estimate."

Too harsh? I'm annoyed. I want to write back and tell her "I am always surprised when I get a bill from my pediatrician for $125 for one office visit but I always pay it without b*itching or questioning because I respect my pediatrician and value the service she provides".

I know that this is just the beginning of PIA clients. Wondering if I should just go back to being a contractor for a firm where I do the work but don't have to deal with this crap.

e34bb098

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Re: How to respond to this email???
« Reply #1 on: August 13, 2018, 09:58:47 AM »
I think your response is fine.  I'd maybe add a last line about "Of course, I encourage you to shop around to find the best value for your situation."  Maybe that will send them packing.

If you cannot resist snark, then you could append "Given my experience," to the "I estimate it will take" sentence.

Lady SA

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Re: How to respond to this email???
« Reply #2 on: August 13, 2018, 10:02:16 AM »
If you send that, this lady will insist she only pay you for 2 hours (if that) -- likely she won't consider the phone/email research time "billable", plus it happened in the past and she (will) object to paying for something that she didn't agree to, or something along those lines.

Honestly, with pushy people, you have to resist the urge to defend/explain yourself. Simply restate the rule and hold firm, otherwise they latch onto all of your supporting arguments and start arguing why those supports are invalid. then you get into a nasty spiral. Think along the lines of "but why should I pay you for email/research time, that isn't real work" and "why does it take you 2 hours to write up a simple report, how can I contort things to take less time?"

Instead, I suggest sending something short and sweet:

"I understand your concerns, however my estimate of 3.5 hours still stands. If that is unacceptable to you, I would be happy to refer you to another financial planner. Have a great day."
« Last Edit: August 13, 2018, 10:04:27 AM by Lady SA »

Retire-Canada

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Re: How to respond to this email???
« Reply #3 on: August 13, 2018, 10:02:32 AM »
OP your response is fine.

Maenad

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Re: How to respond to this email???
« Reply #4 on: August 13, 2018, 10:04:12 AM »
The Ask a Manager blog may have some recommended actions, but this is sounding like a PITA client, so you may not want to work with her regardless.

SaucyAussie

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Re: How to respond to this email???
« Reply #5 on: August 13, 2018, 10:08:34 AM »
I don't think you can ask her to pay for the first 1.5 hours.  I certainly wouldn't tell her you are doing that.

You may need to accept that you will have to do some "unpaid" work while you build up a client base.

COlady

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Re: How to respond to this email???
« Reply #6 on: August 13, 2018, 10:15:38 AM »
I don't think you can ask her to pay for the first 1.5 hours.  I certainly wouldn't tell her you are doing that.

You may need to accept that you will have to do some "unpaid" work while you build up a client base.

Except that I'm not willing to accept any unpaid work. Why would you?  I have $2.2M in investments and this is my part-time gig. My time is precious and I'm not giving it away. I don't "need" clients....I only want to work with good clients that appreciate what I do for them and don't bitch about my bills. Clearly this is not one of them so I will probably need to send her packing.

Retire-Canada

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Re: How to respond to this email???
« Reply #7 on: August 13, 2018, 10:16:55 AM »
Clearly this is not one of them so I will probably need to send her packing.

Some customers are not worth having and nothing turns the tables on someone trying to bargain with you like saying you don't need the work.

YttriumNitrate

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Re: How to respond to this email???
« Reply #8 on: August 13, 2018, 10:20:33 AM »
Except that I'm not willing to accept any unpaid work. Why would you?  I have $2.2M in investments and this is my part-time gig. My time is precious and I'm not giving it away. I don't "need" clients....I only want to work with good clients that appreciate what I do for them and don't bitch about my bills. Clearly this is not one of them so I will probably need to send her packing.
It's always heartwarming to see FU money being properly used.

COlady

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Re: How to respond to this email???
« Reply #9 on: August 13, 2018, 10:23:20 AM »
Except that I'm not willing to accept any unpaid work. Why would you?  I have $2.2M in investments and this is my part-time gig. My time is precious and I'm not giving it away. I don't "need" clients....I only want to work with good clients that appreciate what I do for them and don't bitch about my bills. Clearly this is not one of them so I will probably need to send her packing.
It's always heartwarming to see FU money being properly used.

Ha ha, this really made me crack up.

jlcnuke

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Re: How to respond to this email???
« Reply #10 on: August 13, 2018, 10:27:30 AM »
"In my experience, this is the approximate time it will take to generate a reasonably accurate estimate for each of the scenarios. If you'd like me to proceed, let me know."

Lady SA

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Re: How to respond to this email???
« Reply #11 on: August 13, 2018, 10:38:30 AM »
My time is precious and I'm not giving it away. I don't "need" clients....I only want to work with good clients that appreciate what I do for them and don't bitch about my bills. Clearly this is not one of them so I will probably need to send her packing.

I would say that likely this will end with you sending her off, but I think giving her one pass might be a good idea -- she was pretty pushy/condescending, but essentially she was asking for clarification about what kind of services were included in your estimate. I read some anxiety in her response, not just controlling/condescending. She may have been worried about you going overboard/you didn't quite understand what she wanted and she didn't come across well.

I think if you tell her you heard her request/clarification but the estimate is still 3.5 hours, there is a chance she would accept it gracefully. Maybe not, but you won't know that if you kick her to the curb now. Let her know how firm you are and then let her make the choice to accept or go to a different professional.

If she responds to your re-stated 3.5 hour estimate with more pushback, THEN I would reply with something like "It sounds like my services aren't a good fit for you. Please refer to this list of professionals and perhaps one will be a better fit. Have a great day."
« Last Edit: August 13, 2018, 10:42:38 AM by Lady SA »

SaucyAussie

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Re: How to respond to this email???
« Reply #12 on: August 13, 2018, 11:13:47 AM »
I don't think you can ask her to pay for the first 1.5 hours.  I certainly wouldn't tell her you are doing that.

You may need to accept that you will have to do some "unpaid" work while you build up a client base.

Except that I'm not willing to accept any unpaid work. Why would you?  I have $2.2M in investments and this is my part-time gig. My time is precious and I'm not giving it away. I don't "need" clients....I only want to work with good clients that appreciate what I do for them and don't bitch about my bills. Clearly this is not one of them so I will probably need to send her packing.

You might have included that in your OP. ;)

To clarify, you still plan to bill for the 1.5 hours, even if she does not proceed with the estimates?
« Last Edit: August 13, 2018, 11:18:24 AM by SaucyAussie »

COlady

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Re: How to respond to this email???
« Reply #13 on: August 13, 2018, 11:21:03 AM »
I don't think you can ask her to pay for the first 1.5 hours.  I certainly wouldn't tell her you are doing that.

You may need to accept that you will have to do some "unpaid" work while you build up a client base.

Except that I'm not willing to accept any unpaid work. Why would you?  I have $2.2M in investments and this is my part-time gig. My time is precious and I'm not giving it away. I don't "need" clients....I only want to work with good clients that appreciate what I do for them and don't bitch about my bills. Clearly this is not one of them so I will probably need to send her packing.

You might have included that in your OP. ;)

To clarify, you still plan to bill for the 1.5 hours, even if she does not proceed with the estimates?

Nah...if she goes on her way I'll consider the 1.5 hours a dodged bullet.

Finallyunderstand

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Re: How to respond to this email???
« Reply #14 on: August 13, 2018, 11:41:02 AM »
With FU money don't waste your time on a client like that.  It's just the tip of the iceberg!  You could also add in your response.  "I'm not embarking on a new business.  I have 10+ years of experience.  I'm simply continuing my business at a different location.  - PS, I'm also a millionaire due to being very good at what I do".   Ok, maybe not the PS part but it would be funny.


sokoloff

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Re: How to respond to this email???
« Reply #15 on: August 13, 2018, 11:51:01 AM »
I’d send her packing now. On the very first interaction, she’s complaining about hours. Not a client you need or want.

I wouldn’t even necessarily be overly polite.

“It appears that our working styles are not mutually compatible. I wish you the best in your real estate investments, but regret that I will not be able to offer my professional services in support.”

Altons Bobs

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Re: How to respond to this email???
« Reply #16 on: August 13, 2018, 12:06:16 PM »
I think your original response is fine. I had a PITA prospect about 2 years ago. I finally had to tell her that it was a pleasure giving her all the information she was asking for, but it would be best if she worked with someone else, I could no longer help her. Miraculously, she apologized for all the pushy things she wanted me to do for free and then she begged me to take her, and she's been a model client ever since.

You have to be firm but not let her think that you have money and only part time and don't care about your work.

MoseyingAlong

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Re: How to respond to this email???
« Reply #17 on: August 13, 2018, 12:11:33 PM »
How about asking the referrer, the financial planner?
She should be able to give you some insight into how this client couple works. They may be fabulous once you're established with them or they might always be PITAs.

Your response to the prospects also reflects on the referrer.

Prairie Stash

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Re: How to respond to this email???
« Reply #18 on: August 13, 2018, 12:26:50 PM »
I think you're trying to recoup all the costs prematurely. You should recoup 0.5 hours for the house sales, 0.5 hours at tax time and 0.5 hours in your next tax planning session. I think its silly to do it all at once, of course people are turned off when you bill upfront when you're talking about next years tax situation.

Look at it the other way, over the next year how many hours would a typical pediatrician with 3 rentals provide for you? Why not amortize you're upfront cost over the entire amount and not just the preliminary work. She sounds like a goldmine, all sorts of nice complications that should be fun to work with.

I would offer to amortize the upfront cost over future work, trusting that the quality of your work will have them coming back for more. Or is your work quality so poor that you don't expect them to come back? That's what it sounds like when people tell me they have to bill for preliminary consultations. I'm not trying to offend you, I would walk away from you if you sent me that email. It would have nothing to do with cost, you're sending the signal that you don't think there will be future work and I value people that think long term with me.

P.S. how are you going to explain this to the Financial planner?  You owe them an explanation why you can't work with their long term client that they referred to you. I wouldn't be referring anything more to you, you're hurting the bond the pediatrician and planner have currebntly; poor referrals reflect badly. If you lose the client, please talk to the FP and make sure everything is fine between all parties.

Chrissy

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Re: How to respond to this email???
« Reply #19 on: August 13, 2018, 12:34:32 PM »
Her response:

My husband commented to me that he was surprised that an experienced accountant would take that long to come up with ball park estimates of taxes. So that we are on the same page about expectations, realizing that you are embarking on a new business, I want to be clear about what I need. Here goes: One paragraph or less, in separate documents, for each of the properties/sale scenarios. 

I suggest, "I understand, and can get you this information in the requested format for $X to be delivered on [DATE].  Do we have an agreement?"

Then, she either goes for it or not.  Now that you're on your own, you don't need to explain yourself to anyone.

charis

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Re: How to respond to this email???
« Reply #20 on: August 13, 2018, 12:45:00 PM »

I would say that likely this will end with you sending her off, but I think giving her one pass might be a good idea -- she was pretty pushy/condescending, but essentially she was asking for clarification about what kind of services were included in your estimate. I read some anxiety in her response, not just controlling/condescending. She may have been worried about you going overboard/you didn't quite understand what she wanted and she didn't come across well.

I think if you tell her you heard her request/clarification but the estimate is still 3.5 hours, there is a chance she would accept it gracefully. Maybe not, but you won't know that if you kick her to the curb now. Let her know how firm you are and then let her make the choice to accept or go to a different professional.

This is how I read her response.  It sounds like she wanted to clarify her request and was referencing her husband's comment as the impetus to do so.  It's a little tone-deaf, but I probably won't write her off on the basis of one email unless there's a compelling reason to do so (which you might feel there is).

TheExplorer

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Re: How to respond to this email???
« Reply #21 on: August 13, 2018, 04:13:51 PM »
I am a CPA with 10 years of experience that recently decided to go solo....

A financial planner I know well referred a client to me that is a pediatrician with three rental properties. She requested a 2018 tax estimate for the sale of 2 of the properties and is wondering if she should sell the third.  She wants me to run a few different scenarios. She asked for an estimate of the time necessary to give her an estimate. I told her 3.5 hours.  Her response:

My husband commented to me that he was surprised that an experienced accountant would take that long to come up with ball park estimates of taxes. So that we are on the same page about expectations, realizing that you are embarking on a new business, I want to be clear about what I need. Here goes: One paragraph or less, in separate documents, for each of the properties/sale scenarios. 

Considering this response:  "As I'm sure you're aware tax returns are never as straight forward as we think they should be.  I have already spent 1.5 hours conversing with you via phone and email regarding your rental properties and overall tax situation.  I estimate it will take an additional 2 hours to put together an estimate covering the three sale scenarios we discussed.  Let me know if you would like me to proceed with the estimate."

Too harsh? I'm annoyed. I want to write back and tell her "I am always surprised when I get a bill from my pediatrician for $125 for one office visit but I always pay it without b*itching or questioning because I respect my pediatrician and value the service she provides".

I know that this is just the beginning of PIA clients. Wondering if I should just go back to being a contractor for a firm where I do the work but don't have to deal with this crap.

Based on what you have said, isn't your potential client correct?

She is asking for a quote for future work. Technically you shouldn't be billing for past work she didn't agree a price for (unless you had an agreement she would pay at your going rate for those initial conversations, but given she is asking for a quote seems unlikely).

You have said that the future work will take you 2 hours (approx 45% less than your quote of 3.5 hours).

I totally understand your desire to recoup your previous costs. But don't confuse that with you being technically right to do so.

If you are going to recoup those costs by stealth, I think the previous suggestions of clawing these back over a couple of jobs instead of just this first one might play out better.
« Last Edit: August 13, 2018, 04:30:13 PM by TheExplorer »

sol

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Re: How to respond to this email???
« Reply #22 on: August 13, 2018, 04:40:56 PM »
Suggested edits for you:

  "As I'm sure you're aware tax returns clients are never as straight forward knowledgeable as we think they should be.  I have already spent wasted 1.5 hours conversing with you via phone and email regarding your rental properties and overall tax situation.  I estimate it will would take an additional 2 hours to put together an estimate covering the three sale scenarios we discussed,Let me know if you would like me to proceed with the estimate but I will not be doing so because you appear to be kind of a bitch and I don't need your goddamn negativity in my life."

Cgbg

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Re: How to respond to this email???
« Reply #23 on: August 13, 2018, 04:59:24 PM »
Lol sol

Chrissy

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Re: How to respond to this email???
« Reply #24 on: August 13, 2018, 06:01:46 PM »
+1 to Sol, lol!

snapperdude

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Re: How to respond to this email???
« Reply #25 on: August 13, 2018, 10:35:22 PM »
Suggested edits for you:

  "As I'm sure you're aware tax returns clients are never as straight forward knowledgeable as we think they should be.  I have already spent wasted 1.5 hours conversing with you via phone and email regarding your rental properties and overall tax situation.  I estimate it will would take an additional 2 hours to put together an estimate covering the three sale scenarios we discussed,Let me know if you would like me to proceed with the estimate but I will not be doing so because you appear to be kind of a bitch and I don't need your goddamn negativity in my life."

Imminent retirement seems to have made you even more feisty.

SeaWA

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Re: How to respond to this email???
« Reply #26 on: August 13, 2018, 11:08:06 PM »
I don't think you can ask her to pay for the first 1.5 hours.  I certainly wouldn't tell her you are doing that.

You may need to accept that you will have to do some "unpaid" work while you build up a client base.

Except that I'm not willing to accept any unpaid work. Why would you?  I have $2.2M in investments and this is my part-time gig. My time is precious and I'm not giving it away. I don't "need" clients....I only want to work with good clients that appreciate what I do for them and don't bitch about my bills. Clearly this is not one of them so I will probably need to send her packing.

Wow.

It doesn't matter how much money you have in the bank, billing 3.5 hours for 2 hours of work is fraud. I'm surprised you'd do that, let alone admit doing it.

If you did 1.5 hours of work to on-board this new customer before agreeing to terms, then that is a sunk cost that cannot be passed along to the customer. Not now, not amortized over the next year at 0.5 hours of "padding" every couple of months, not ever. You don't reach back to a time before there was an agreement or contract and commit fraud to try to secretly recoup those on-boarding costs.

I'm a small business owner too. That practice is appalling.

gerardc

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Re: How to respond to this email???
« Reply #27 on: August 13, 2018, 11:13:19 PM »
billing 3.5 hours for 2 hours of work is fraud.

Are you sure of this? Is an employee browsing forums while at work committing fraud also, since they're supposed to be working towards their 40 hours?

Legally, "hours of work" can be spent doing anything, thinking, planning, etc. In the end, if the cost of your services is deemed too high, you won't get return business. If you do, feel free to keep doing what you, and get paid what you're worth at your newly found market rate.


sol

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Re: How to respond to this email???
« Reply #28 on: August 13, 2018, 11:31:44 PM »
Imminent retirement seems to have made you even more feisty.

I've always been a little mouthy, but I've been trying to tone it down for the past decade to fit in better at work. 

SeaWA

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Re: How to respond to this email???
« Reply #29 on: August 13, 2018, 11:58:04 PM »
billing 3.5 hours for 2 hours of work is fraud.

Are you sure of this? Is an employee browsing forums while at work committing fraud also, since they're supposed to be working towards their 40 hours?

Legally, "hours of work" can be spent doing anything, thinking, planning, etc. In the end, if the cost of your services is deemed too high, you won't get return business. If you do, feel free to keep doing what you, and get paid what you're worth at your newly found market rate.

No sir, they are not the same thing. It sounds like you are conflating hourly compensation with salaried compensation.

Yes, "hours of work" may be spent doing many things. And yes, if you spend hours of work inefficiently or wastefully, then you will lose contracts, or need to drop your hourly rate to stay busy.

However, hours spent with a potential customer before there is an contract, written or oral, may not be added to the bill as if they occurred after the contract was made. Falsifying an invoice is fraud. Padding a bill over time to "make up" for on-boarding costs is fraud. Plain as day.

Note that you may specifically state in the contract that on-boarding costs will be included in the bills. However, absent such a clause it is fraud to falsify an invoice to include hours spent before a contract is made, as if the work were done after the contract was in place.

I don't think there is much gray area here. I'm a small business owner, and I deal with billing, but I am not a lawyer. If there is a lawyer here that wants to weigh in, then I'd value your insights and any sharp distinctions you can make.

gerardc

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Re: How to respond to this email???
« Reply #30 on: August 14, 2018, 12:07:40 AM »
billing 3.5 hours for 2 hours of work is fraud.

Are you sure of this? Is an employee browsing forums while at work committing fraud also, since they're supposed to be working towards their 40 hours?

Legally, "hours of work" can be spent doing anything, thinking, planning, etc. In the end, if the cost of your services is deemed too high, you won't get return business. If you do, feel free to keep doing what you, and get paid what you're worth at your newly found market rate.

No sir, they are not the same thing. It sounds like you are conflating hourly compensation with salaried compensation.

Yes, "hours of work" may be spent doing many things. And yes, if you spend hours of work inefficiently or wastefully, then you will lose contracts, or need to drop your hourly rate to stay busy.

However, hours spent with a potential customer before there is an contract, written or oral, may not be added to the bill as if they occurred after the contract was made. Falsifying an invoice is fraud. Padding a bill over time to "make up" for on-boarding costs is fraud. Plain as day.

Note that you may specifically state in the contract that on-boarding costs will be included in the bills. However, absent such a clause it is fraud to falsify an invoice to include hours spent before a contract is made, as if the work were done after the contract was in place.

I don't think there is much gray area here. I'm a small business owner, and I deal with billing, but I am not a lawyer. If there is a lawyer here that wants to weigh in, then I'd value your insights and any sharp distinctions you can make.

I agree if you bill hours spent negotiating with the client that they can argue about it.

But if you did 2 hours of work and you bill 3.5 hours (those hours being post contract) it should be fine, because you can claim that you were thinking about the problem at night or during your commute. Of course you won't go into those details you'll just write 3.5 hours and that's it. Nobody will follow you around to verify what you're doing. If you accomplished a lot during those hours nobody will complain.

SeaWA

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Re: How to respond to this email???
« Reply #31 on: August 14, 2018, 12:37:02 AM »
billing 3.5 hours for 2 hours of work is fraud.

Are you sure of this? Is an employee browsing forums while at work committing fraud also, since they're supposed to be working towards their 40 hours?

Legally, "hours of work" can be spent doing anything, thinking, planning, etc. In the end, if the cost of your services is deemed too high, you won't get return business. If you do, feel free to keep doing what you, and get paid what you're worth at your newly found market rate.

No sir, they are not the same thing. It sounds like you are conflating hourly compensation with salaried compensation.

Yes, "hours of work" may be spent doing many things. And yes, if you spend hours of work inefficiently or wastefully, then you will lose contracts, or need to drop your hourly rate to stay busy.

However, hours spent with a potential customer before there is an contract, written or oral, may not be added to the bill as if they occurred after the contract was made. Falsifying an invoice is fraud. Padding a bill over time to "make up" for on-boarding costs is fraud. Plain as day.

Note that you may specifically state in the contract that on-boarding costs will be included in the bills. However, absent such a clause it is fraud to falsify an invoice to include hours spent before a contract is made, as if the work were done after the contract was in place.

I don't think there is much gray area here. I'm a small business owner, and I deal with billing, but I am not a lawyer. If there is a lawyer here that wants to weigh in, then I'd value your insights and any sharp distinctions you can make.

I agree if you bill hours spent negotiating with the client that they can argue about it.

But if you did 2 hours of work and you bill 3.5 hours (those hours being post contract) it should be fine, because you can claim that you were thinking about the problem at night or during your commute. Of course you won't go into those details you'll just write 3.5 hours and that's it. Nobody will follow you around to verify what you're doing. If you accomplished a lot during those hours nobody will complain.

The fact that nobody follows you, or that you are not caught, is immaterial.

Claiming something is true when you know it is not true is lying. The billing practice you are advocating is lying about work done. It is fraudulent.

You may choose to run your life, or your business, in a fraudulent manner. I will not. And I won't advocate for fraud, even under a pen name, even on the internet.

gerardc

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Re: How to respond to this email???
« Reply #32 on: August 14, 2018, 12:42:28 AM »
billing 3.5 hours for 2 hours of work is fraud.

Are you sure of this? Is an employee browsing forums while at work committing fraud also, since they're supposed to be working towards their 40 hours?

Legally, "hours of work" can be spent doing anything, thinking, planning, etc. In the end, if the cost of your services is deemed too high, you won't get return business. If you do, feel free to keep doing what you, and get paid what you're worth at your newly found market rate.

No sir, they are not the same thing. It sounds like you are conflating hourly compensation with salaried compensation.

Yes, "hours of work" may be spent doing many things. And yes, if you spend hours of work inefficiently or wastefully, then you will lose contracts, or need to drop your hourly rate to stay busy.

However, hours spent with a potential customer before there is an contract, written or oral, may not be added to the bill as if they occurred after the contract was made. Falsifying an invoice is fraud. Padding a bill over time to "make up" for on-boarding costs is fraud. Plain as day.

Note that you may specifically state in the contract that on-boarding costs will be included in the bills. However, absent such a clause it is fraud to falsify an invoice to include hours spent before a contract is made, as if the work were done after the contract was in place.

I don't think there is much gray area here. I'm a small business owner, and I deal with billing, but I am not a lawyer. If there is a lawyer here that wants to weigh in, then I'd value your insights and any sharp distinctions you can make.

I agree if you bill hours spent negotiating with the client that they can argue about it.

But if you did 2 hours of work and you bill 3.5 hours (those hours being post contract) it should be fine, because you can claim that you were thinking about the problem at night or during your commute. Of course you won't go into those details you'll just write 3.5 hours and that's it. Nobody will follow you around to verify what you're doing. If you accomplished a lot during those hours nobody will complain.

The fact that nobody follows you, or that you are not caught, is immaterial.

Claiming something is true when you know it is not true is lying. The billing practice you are advocating is lying about work done. It is fraudulent.

You may choose to run your life, or your business, in a fraudulent manner. I will not. And I won't advocate for fraud, even under a pen name, even on the internet.

I'm not convinced this would be considered fraud in a court of law. Assuming you only do this in an ongoing relationship where the client is ultimately satisfied with the work/cost ratio.

I only care about fraud in the legal sense. You seem to have overzealous morals. The people I know who are like this tend to be poor. I don't consider this practice morally wrong if the client is satisfied with the work/cost ratio in an ongoing relationship.

gerardc

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Re: How to respond to this email???
« Reply #33 on: August 14, 2018, 12:59:04 AM »
From https://www.quora.com/Is-it-common-for-law-associates-to-inflate-their-billable-hours:

Quote
I’ll boldly go non-anonymous…

I’ll hem and haw a little below, but I’ll cut to the chase: it’s not common for law firm associates to inflate their hours. It definitely happens sometimes. Some associates are even instructed to inflate their hours in certain narrow circumstances.

I’ll elaborate on that, but first: the question is actually a little more subtle than it might look at first glance. Why? Two reasons: (1) there’s a continuum of billing practices, ranging from very conservative to very aggressive; and (2) there are practicalities of billing.

As for the continuum, it’s not always clear where “aggressive” billing ends and “inflating” begins. On the aggressive end of the spectrum, some lawyers feel comfortable billing for any stray thought that occurs to them on a particular matter. If they get an idea in the shower, they’ll tack on that .1 or .2 hours to the bill. Some people would consider that inflation. Some people would consider that dickhead-level aggressive billing, but not inflation. Some people would consider that perfectly fine. (Those people are dickheads, but I digress.)

On the conservative end, some associates — particularly young associates — stop the clock when they give a matter anything less than full attention. I used to jokingly accuse them of actually inflating their bills. (“WHAT?! You bill for the time between keystrokes!?!”) Ahhh, so easily trolled. :)

But this gets into the second issue: practicalities. If you try to only bill the time you give a matter your full attention, you’ll drive yourself crazy starting and stopping the clock. From time to time, you’re going to get up from your desk. You’ll go to the bathroom, you’ll get a coffee, etc. On the way, you might run into someone in the hall and chat for five minutes.

Even if the associate didn’t stop the clock for this, I wouldn’t consider any of this inflation, but a particularly cost-sensitive client might.

Finally, there are… shall we say… special circumstances. Here are the two most common:

1. You get an assignment that should take five hours. The client thinks it should take five hours. The partner thinks it should take five hours. But today you’re a genius, and you finish in two hours. And it’s not a rush job either… it’s damn good work. The partner praises you, the client praises you, etc.

In this scenario, some associates feel perfectly justified to give themselves a little “bonus.” Maybe they’ll bill an extra hour or two. The euphemism for this practice is “value billing.” As in, the value of what you produced is worth five hours, regardless of the fact that it took you two hours.

This is pretty unequivocally billing inflation (unless your fee arrangement with the client allows it. Some do.) But it happens from time to time.

2. Some clients suck. They make unnecessary emergencies, and are not respectful of their lawyers’ time. So they might send over something at 4:00 pm on a Friday and need an answer by 9:00 am on Monday. Even when they could have sent it over on Thursday, and don’t really need an answer until Tuesday. Some associates will engage in “punitive billing,” and tack some extra time on the project just because. This sometimes even happens with the partner’s consent. (This is the one scenario I’ve been instructed to inflate my bill by a partner.)

SeaWA

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Re: How to respond to this email???
« Reply #34 on: August 14, 2018, 01:39:04 AM »
From https://www.quora.com/Is-it-common-for-law-associates-to-inflate-their-billable-hours:

Congrats. You've found someone on the internet who admits to committing fraud. Unsurprisingly, the fact some people commit fraud does not make it right.

Fraud:
1 a : deceit, trickery; specifically : intentional perversion of truth in order to induce another to part with something of value or to surrender a legal right

The scenario described, working 2 hours and billing for 3.5, meets the very definition of fraud.

I'll file this under "some people cheat" and consider the discussion closed.

TheExplorer

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Re: How to respond to this email???
« Reply #35 on: August 14, 2018, 04:14:49 AM »
The fact that some people appear to be so comfortable lying to others/are unsure of its morality saddens me. It is one thing to think that you can get away with lying, but quite another thinking that it is morally right/acceptable...

BTW, I think intentionally deceiving someone to take value from them is clearly fraudulent.
« Last Edit: August 14, 2018, 04:18:28 AM by TheExplorer »

Villanelle

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Re: How to respond to this email???
« Reply #36 on: August 14, 2018, 04:20:38 AM »
I'd be extremely put off if someone mentioned billing me for hours spent before we agreed on work and compensation.  Regardless of whether I thought their overall price was fair, if they told me that they got to the number based on time spent prior to me officially engaging their services, I'd walk.  It seems unprofessional and misleading. 

If that's what you want to do, I suppose it's good that you are being upfront. But I'd expect many potential clients to be put off.  Also, if you value the relationship with the financial planner and/or want him to continue to refer people, I would tread very lightly with how you speak to this woman. 

marty998

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Re: How to respond to this email???
« Reply #37 on: August 14, 2018, 05:42:54 AM »
This is where fee for service comes into its own.

For arguments sake...

Basic tax return with only salaries and wages $150
Each taxable investment account +$50
Each rental property +$250
Small family investment Company +$1000

etc etc

I don't doubt the inertia within the industry to not go down this path. It's a brave accountant that sticks their neck out to be different to the pack.

marty998

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Re: How to respond to this email???
« Reply #38 on: August 14, 2018, 05:45:26 AM »
I hasten to add, one of the real difficulties is dealing with the relative value of advice.

One piece of advice that takes one hour to research could save a client $5,000 tax.

Another piece of advice that takes no time to research but is back of mind due to past experience could save a client $250,000 tax.

How does an accountant bill a client for each of those scenarios?

maizeman

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Re: How to respond to this email???
« Reply #39 on: August 14, 2018, 06:02:15 AM »
I agree with Marty, this whole latter part of the discussion is why hourly billing makes no sense (even though it is likely impossible to change in the fields where it is the standard).

-If I'm really on point and get work that would normally take be 4 hours done in 2, I make less money even though the client receives the same amount of value.

-If I'm hungover, sleep deprived, and there's a crew jackhammering the street outside my office window, and it takes me all day to do work that would normally take 4 hours, the client is out way more money even though they receive no extra value.

And that's before you get into situations like the OPs potential client who start double guessing how long everything should take to do based on the assumption that nothing ever goes wrong and unexpected complications never pop up.

Whenever possible I try to steer any business I'm involved in to billing based on outcomes or deliverables rather than how many human hours it took to produce those outcomes or deliverables. Clients also seem to like it since it removes risk/uncertainty from their end, so we can even charge more per project than we'd average if we were billing per hour.*

*And that's before we even get into the benefits of being able to invest in automated processes because we don't have a financial incentive to keep the number of human hours expended per project high.

ender

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Re: How to respond to this email???
« Reply #40 on: August 14, 2018, 06:22:05 AM »
I'm trying to imagine going to an auto repair shop and getting an estimate like what you've quoted.

"The first 1.5 hours of work to diagnose your car are free, unless you become our client, in which case you retroactively pay for them."

The auto industry is an interesting parallel because in many regards, the shop hours billed are fixed (for dealerships this is even fixed by their parent manufacturer in many cases). So if you need repair work, the folks you talk to in person might just have to say, "replacing your brakes will include 2 hours of labor." Whether it takes them 0.5 hours or 5 hours the estimate is billed that way. In some cases you may have diagnostic costs (but nearly always a savvy consumer will ask what it costs to have their vehicle looked at first and nearly always, the shop will give them that estimate in advance - often $0).

Imagine going in for an estimate to have your spark plugs replaced and seeing it will take 3 hours. Most people would react just like your client here, surprised (because that normally is much faster than 3 hours).

I'm not convinced the person who emailed you is overreacting, just confused. Like I would be if I took a car with standard spark plugs into a shop and they told me it'd cost 3 hours of labor.

OP, what I would do is determine what percentage of each client acquisition you will spend "pre-billing" and then adjust your hourly rate accordingly. If you normally charge $100/hour, and will often have 1.5 hours of non-billed work to land a 2 hour contract, bill $175/hr instead. You won't have to fuss with numbers like this, retroactively bill and deal with questions like the person emailed you, and will only deal with customers who find your services valuable at the rates you want to charge.

@maizeman's suggestion for value-based pricing is good, too.

KBecks

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Re: How to respond to this email???
« Reply #41 on: August 14, 2018, 06:23:27 AM »
I would send this client packing, (edited, you need to consider the referral relationship in how you respond) but understand that there is some cost of getting business.  A free initial consultation makes sense, you need to get to know potential clients and they need to get to know you, that is part of being in business, everyone has some unpaid time that they put in.  Make your rate for paid work slightly higher so you feel good about the actual billable hours. 
« Last Edit: August 14, 2018, 06:50:27 AM by KBecks »

KBecks

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Re: How to respond to this email???
« Reply #42 on: August 14, 2018, 06:27:21 AM »
Except that I'm not willing to accept any unpaid work. Why would you?  I have $2.2M in investments and this is my part-time gig. My time is precious and I'm not giving it away. I don't "need" clients....I only want to work with good clients that appreciate what I do for them and don't bitch about my bills. Clearly this is not one of them so I will probably need to send her packing.

I think you need to decide if you want to have a side business or not.  Because it sounds like you don't really want to have a side business the way you are talking.  You can cherry pick your clients, but you also have to provide real value to your customers.  If you don't like the idea of giving amazing service and making your clients extremely satisfied, and working through difficult situations (they will come up) then just retire and avoid all the day to day BS.

If you approach your business with an -- I don't need this work -- point of view, you will end up with hardly any work at all, so decide how hard you are willing to work, and if you can truly be competitive with services who are 100% committed to their clients and in it for the long haul.  It's not fair to a client to half ass your business, especially when you are talking about taxes and financial planning.   Subcontracting may be a better fit, with less responsibility and more flexibility. Work for family and friends, but you don't sound motivated enough to build out a side gig.
« Last Edit: August 14, 2018, 06:38:47 AM by KBecks »

wanderin1

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Re: How to respond to this email???
« Reply #43 on: August 14, 2018, 07:25:04 AM »
OP--

I’m a serial entrepreneur with several successful businesses under my belt, including a professional services firm.

All due respect--but you made a couple of rookie mistakes, and they’ve caused this problem.

Mistake 1: You talked/emailed with a prospect for 1.5 hours without telling her that you had mentally started the meter from the first contact. Typically, the process with a professional service provider is: some free talk/email to get the prospect to a “yes” on buying services, contracting services, and providing paid services.

You, instead, want to start providing paid services from very first contact. Not standard—but you’re welcome to do it—because of course it’s your business. But how was she supposed to know that?

To head this off in the future, you can keep your current approach of “all is billed” but be very clear from the jump that all contact is charged. Or you can develop your skills in managing prospective client communication so you have that short “free” conversation before engagement. There is a science and art to it: creating rapport; comprehending a “technical” issue; establishing your credibility, expertise and ability to handle that issue; and sizing up what the client will be like to work with—all at lightening speed in a first brief talk/email exchange. It can be learned. Read some of the good consulting books out there for suggestions.

Mistake #2: You haven’t understood how to set professional services fees. All professional services have overhead costs, such as marketing, that can’t be client-hourly billed. So you set your hourly fee to include this overhead. Again, read the good consulting books. They’ll take you through the process of setting fees.

Mistake #3: You say that you “want clients who won’t bitch about their bills”--and seem to assume that this type of client is born not made. Sure, some people are horrible to work with—though I’m not sure you’ve run into that type here. But beyond that, satisfied clients are the result of hard work on YOUR part—not only on the accounting itself, but on things large and small through the entire the process of working with you. Again, hit the books for specific techniques.

I could go on, as I also see some other concerning attitudes in your post, but I’ll just finish with this:  if the above three items seem like “too much work” or things you’re not willing to do because they’re not billable, then I’d urge you to ditch solo practice for part time work where you can just focus on the accounting. And that’s not something I say all the time. Normally, I’m the forum’s biggest self employment cheerleader!

wanderin1

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Re: How to respond to this email???
« Reply #44 on: August 14, 2018, 09:00:35 AM »
OP--

I’m a serial entrepreneur with several successful businesses under my belt, including a professional services firm.

All due respect--but you made a couple of rookie mistakes, and they’ve caused this problem.

Mistake 1: You talked/emailed with a prospect for 1.5 hours without telling her that you had mentally started the meter from the first contact. Typically, the process with a professional service provider is: some free talk/email to get the prospect to a “yes” on buying services, contracting services, and providing paid services.

You, instead, want to start providing paid services from very first contact. Not standard—but you’re welcome to do it—because of course it’s your business. But how was she supposed to know that?

To head this off in the future, you can keep your current approach of “all is billed” but be very clear from the jump that all contact is charged. Or you can develop your skills in managing prospective client communication so you have that short “free” conversation before engagement. There is a science and art to it: creating rapport; comprehending a “technical” issue; establishing your credibility, expertise and ability to handle that issue; and sizing up what the client will be like to work with—all at lightening speed in a first brief talk/email exchange. It can be learned. Read some of the good consulting books out there for suggestions.

Mistake #2: You haven’t understood how to set professional services fees. All professional services have overhead costs, such as marketing, that can’t be client-hourly billed. So you set your hourly fee to include this overhead. Again, read the good consulting books. They’ll take you through the process of setting fees.

Mistake #3: You say that you “want clients who won’t bitch about their bills”--and seem to assume that this type of client is born not made. Sure, some people are horrible to work with—though I’m not sure you’ve run into that type here. But beyond that, satisfied clients are the result of hard work on YOUR part—not only on the accounting itself, but on things large and small through the entire the process of working with you. Again, hit the books for specific techniques.

I could go on, as I also see some other concerning attitudes in your post, but I’ll just finish with this:  if the above three items seem like “too much work” or things you’re not willing to do because they’re not billable, then I’d urge you to ditch solo practice for part time work where you can just focus on the accounting. And that’s not something I say all the time. Normally, I’m the forum’s biggest self employment cheerleader!

Oh, and the solution to your “how to reply” problem? That depends on what you want the ultimate outcome to be:

Want to stay a sole provider, and keep the referral source?
1. Write an email to the client saying something like: "Thanks so much for your email. You are right that I’m new to this up front part of on-boarding a client. I looked again at what you’re asking, and I am now confident that I can do a high quality job in 2.15 additional hours, a total of $XXXX. There is no charge for the time we have spent up to this point. If this amount is acceptable to you, let me know, and I’ll proceed. I can have the estimates to you 24 hours after you give me the go-ahead.”

2. Contact the financial planner who referred you and simply but clearly explain exactly what happened, emphasizing what you’ve learned and how you’ll handle things in the future. (see my quoted post just above for suggestions)

3. Consider the 1.5 hours the cost of learning how to on-board clients.

Not sure you want to stay a sole provider or keep the referral source?
1. Write and email that politely tells the client you’re not a match.

2. Let the referral source know you’ve done that.

2. Talk with some solo professional service providers about what it really takes to succeed. You’ll find that there are a number of skill sets you need in addition to your accounting skills. If you are not interested in acquiring these skills (without direct billing them to clients) then you need to be working for someone else.
« Last Edit: August 14, 2018, 09:04:08 AM by wanderin1 »

gerardc

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Re: How to respond to this email???
« Reply #45 on: August 14, 2018, 09:34:49 AM »
The auto industry is an interesting parallel because in many regards, the shop hours billed are fixed (for dealerships this is even fixed by their parent manufacturer in many cases). So if you need repair work, the folks you talk to in person might just have to say, "replacing your brakes will include 2 hours of labor." Whether it takes them 0.5 hours or 5 hours the estimate is billed that way. In some cases you may have diagnostic costs (but nearly always a savvy consumer will ask what it costs to have their vehicle looked at first and nearly always, the shop will give them that estimate in advance - often $0).

This. Inflating hours is only fraud if the number of hours isn't set in advance. But if you say "I charge $100/hour and this thing will take 3 hours" then you're basically saying it costs $300 per contract, regardless of how long it would actually take you. Them agreeing to the contract would give you the right to charge 3 hours without committing fraud.


From https://www.quora.com/Is-it-common-for-law-associates-to-inflate-their-billable-hours:

Congrats. You've found someone on the internet who admits to committing fraud. Unsurprisingly, the fact some people commit fraud does not make it right.

Fraud:
1 a : deceit, trickery; specifically : intentional perversion of truth in order to induce another to part with something of value or to surrender a legal right

The scenario described, working 2 hours and billing for 3.5, meets the very definition of fraud.

I'll file this under "some people cheat" and consider the discussion closed.

According to your definition, an employee who spends time browsing forums during their working hours also meets your definition of fraud (deceit for profit). But I don't think a simplistic dictionary definition is sufficient to make it fraud in a court of law.


Unrelated question: If you pay for a 1 hour massage at $60, and the massage only lasts 50 minutes to include time for wrapping, is it fraud? They didn't say "1 hour of massage and changing clothes" they said "1 hour of massage", which is technically wrong. I can't see judges being so anal about that.
« Last Edit: August 14, 2018, 09:39:41 AM by gerardc »

COlady

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Re: How to respond to this email???
« Reply #46 on: August 14, 2018, 10:31:57 AM »
Okay, I quickly read through all of your responses and this clearly turned into a billing discussion.  If anyone cares, below is the email I sent in response to her email regarding her questioning my 3.5 hour estimate.  I also had a 2 hour meeting with her last night to explain every.last.number because she wanted to understand. I earned every 3.5 of those hours billed.  Her last words "wow, this is really complicated and you clearly understand it very well since you were able to explain every calculation to me.  I feel like I understand how this works now". She didn't understand the value of the service I was providing to her until I sat down with her and ran through the numbers and different scenarios.  I won't be able to prepare her 2018 tax returns because she is married to a non-resident alien (has been for the last 10 years) and has been incorrectly filing as single. When she saw the tax implications of filing as married filing separately versus single she said she wanted to continue filing as single. She told me she understood that I wouldn't be able to file her returns in such a manner.  If she wants to go to a different CPA and state that she is single that is her choice....

I understand that you're looking for a quick paragraph, or in other words, a back of the envelope estimate.  As I'm sure you're aware, taxes are never as straight forward as they seem.  In order to give you an accurate estimate that you can rely on I have to look at your entire tax situation not just the sale of the rental properties.  You have a significant amount of depreciation recapture on these properties, up to approx. $150k.  Depreciation recapture is taxed at ordinary income rates not to exceed 25% which requires calculating your taxable income.  In addition, net investment income tax kicks in at higher levels.  Net investment income tax is a surtax on investment income.  I hesitate to provide back of the envelope tax estimates because clients are extremely disappointed when they receive a tax bill that is different than what their estimate states.  With that being said, please let me know if you'd like me to proceed with putting your estimate together in anticipation of our meeting this afternoon. 

wanderin1

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Re: How to respond to this email???
« Reply #47 on: August 14, 2018, 10:56:12 AM »
Glad it worked out well for you OP, but your post just above still shows that you have serious communication problems.

The reason this thread turned into a billing philosophy discussion, was because of this pretty poisonous item you dropped when a couple people started questioning your approach:

“ . . .I'm not willing to accept any unpaid work. Why would you?  I have $2.2M in investments and this is my part-time gig. My time is precious and I'm not giving it away. I don't "need" clients....I only want to work with good clients that appreciate what I do for them and don't bitch about my bills.”

That, plus your previous comments, made it sound like you wanted to bill for the PREVIOUS phone time. NOW, you are saying the proposal was for what you knew were going to be 3.5 ADDITIONAL hours.

Not the same thing at all.

A whole bunch of people gave you some great advice. It’s all still valid. Do more than “quickly read” through it. And beef up your overall communication skills. As a successful serial entrepreneur, I’m telling you, you need to.

Retire-Canada

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Re: How to respond to this email???
« Reply #48 on: August 14, 2018, 10:59:02 AM »
Nice work. Handled well.

sol

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Re: How to respond to this email???
« Reply #49 on: August 14, 2018, 11:01:24 AM »
I find it hilarious that after a whole bunch of forum people accused the OP of being unethical and potentially committing fraud, the client explicitly asked her to commit fraud, and she declined for ethical reasons.

Ease up there, ye sanctimonious ones.