Sooner or later, no matter how hard you work to run a perfect business, you're going to run into a problem with a client. Maybe one of your carpenters will slip up, maybe a product will malfunction, or maybe you'll run into a particularly troublesome homeowner.

When that happens, you could face a complaint from your state attorney general, a local attorney, or a consumer affairs agency. Here are a few things to keep in mind when handling such complaints — and a few tips for avoiding them altogether:

  • Do good work. It's obvious, but keeping the customer reasonably happy usually keeps you from worrying about complaints.
  • Make sure your contracts are legal and up to date. The federal government and most states require contractors to use very specific disclosures in their contracts. Have yours reviewed at least once every year. Don't use another contractor's documents, as you run the risk of buying into their problems.
  • Be respectful and respond promptly if you are contacted by a state agency regarding a complaint against you. These agencies are often easier to deal with than private attorneys, who consumers may turn to if you refuse to deal with the agency.
  • Do a cost-benefit analysis of how to deal with each complaint. Don't roll over, but understand that fighting a complaint might be less cost effective than simply offering a reasonable refund to the customer to settle the problem. The goal is to make sure that a complaint doesn't turn into a full-blown investigation of your sales or installation practices.
  • Be wary of pro bono lawyers or “legal clinics” that represent consumers. Such lawyers often have no cost incentive to settle a complaint out of court and may actually consider your case to be a training ground for their young lawyers. This type of battle can turn into quicksand under your feet.
  • Settle complaints quickly. If you work in an area with aggressive consumer protection tendencies or high levels of activism (such as Washington, D.C., or California), consider an even more liberal settlement policy.
  • Consider the use of dispute resolution language in your contract. Carefully worded mediation or arbitration clauses may allow you to keep a dispute private, avoid class-action problems, and eliminate the risk of running into a jury that is biased against home improvement contractors. —D.S. Berenson is the Washington, D.C., managing partner of Johanson Berenson LLP (www.johansonberenson.com), a national law firm specializing in the representation of contractors and the home improvement industry. He may be contacted at (703) 759-1055 or info@johansonberenson.com.

  • This article is for informational purposes only and should not be construed as legal advice.