Had a manufacturing client here in Cleveland sign our standard contingency agreement for FirstEnergy service audits. We found $180K in errors going back 3 years on their industrial rate schedules. Now they're claiming our LOA was too vague about scope and they won't pay our 25% contingency fee. Anyone dealt with similar pushback after delivering big savings? Our agreement clearly states "all utility billing errors and overcharges" but their lawyer is parsing language.
Client trying to back out after we found $180K in errors
Frank, this is exactly why I always include specific language about "any and all billing discrepancies, tariff misapplications, rate schedule errors, and demand charge miscalculations" in my TVA territory agreements. Generic language like "billing errors" gives them wiggle room. Did you include a clause about attorney fees if you have to collect?
I learned this lesson the hard way with a PECO client in Philly. Now my LOAs have a detailed exhibit listing every possible type of error we might find. Takes longer to explain upfront but prevents these disputes. Also include language that client acknowledges they reviewed and approved the scope before signing.
Frank - what's your payment terms? I always require payment within 30 days of delivering the final report. Had a Georgia Power client try to stall for 8 months once. Also consider requiring the client to acknowledge receipt of savings in writing before final payment is due.
Derek - our terms are 30 days after report delivery. The problem is they're not disputing the accuracy of our findings, just claiming the scope wasn't clear enough. Terry makes a good point about being more specific. Going to revise our standard template to include an exhaustive list like Phil suggested.
Had Alabama Power try this same tactic with a hospital client. Ended up in small claims court and won, but cost me 6 months of aggravation. Now I require clients to sign off on a detailed scope worksheet before any work begins. Extra step but worth it for protection.
Frank, document everything about your methodology and findings. If this goes legal, you'll need to show your work was thorough and professional. I keep detailed worksheets for every CPS Energy and SAWS audit I do in San Antonio specifically for situations like this.
Update: Client agreed to pay 75% of the fee to avoid litigation. Not ideal but better than nothing. Definitely implementing the detailed scope checklist going forward. Thanks for all the advice everyone.