Conflicts are bound to arise sooner or later. There are several kinds of conflicts:
A financial conflict can be initiated by you, the consultant, for instance because a bill has not been paid. There are several ways to deal with this, it depends very much on your relation with the customer to date and your expectations of your future with this customer.
You really do not want to be in this position to begin with, so the assumption is that something has changed, or there is some genuine oversight.
If this happens early in your relationship with your customer, my advice would be to mark this customer as ‘not trustworthy’ immediately and to find a better place to spend your time. Call them to explain that you are very small, fragile and therefore you can not afford to spend time on running after their bookkeeping department. Offer to work on a pay-as-you-go basis where they pay you ahead of time for the work you do, if that is not possible then let them go.
And call them every day about that unpaid bill. Keep it friendly, but make sure they remember.
If it happens with a company that you have been doing business with for a while you have to be careful. It may be simply an oversight, or it may be that your bill not being paid is an indication of trouble ahead. If at the first call you get paid promptly there is no reason to worry if it does not happen again. But if you do not get paid promptly or if it does happen again then you are now warned that you have to reconsider your relationship, or at a minimum that you will have to change your trust level with this customer.
Usually this is how things go wrong really bad. A customer that has somehow become important to you first does not pay a bill on time, then they make promises, but still they don’t pay, you keep working and you end up with a very large unpaid bill when they go under. This can cause you to go under as well, so you can’t let it get that far.
If you get any sign at all that things are not ok immediately switch to pay-before-work, and make sure you start to shift your dependency (if any, you should not have any but it is very tempting) away from this customer. There is something brewing and if you are not prepared you could end up holding the bag. Not a good idea.
By explaining that you are fragile and can’t afford to have your bills paid late you keep the relationship in one piece and you get your money. And if you do not get your money you have just saved yourself from a very bad fall.
Performance related conflicts are painful. They touch directly on the one issue where you as an independent are very fragile, your reputation. If you think your customer has a point then offer a discount that puts things back in their place and review your price and/or estimation skills for future jobs (if any, with this customer you may have blown it).
If in your opinion the customer is really wrong then tell them to forget about the bill and look elsewhere. I know that sounds really harsh, but some customers you are better off without and this is probably one of those. At least like this you limit your exposure to a single event.
If you find yourself doing this on a regular basis I would recommend you to review your price and/or your estimating skills because even though you think your customer is in the wrong statistically speaking that should be a very rare occurrence and if it happens with some regularity it is more likely that you were in the wrong after all.
Personal conflicts are rare, but they do happen. Maybe somebody doesn’t like you, maybe you don’t like them, maybe you got in to a politically charged situation and you have to figure out how to get out of it.
These are tricky things to negotiate successfully, here, again the relationship with the customer is what should guide you. It is perfectly ok for you to make minimum demands as to the level of professionalism that you expect from the other party and everybody associated wit them. If you have a feeling that is not the case do not hesitate to take it ‘upstairs’, the management of the other party will for sure be interested in knowing how their employees are representing the company to the outside world (of which you are a part).
If a personal conflict can not be resolved to your satisfaction, walk. There is no point in trying to hang on in a situation where you are not comfortable, it saps your energy in ways that could be used more productive and you end up taking it home.
Legal conflicts (anything involving a lawyer or the courts) mean that something has gone dreadfully wrong. Either you have done something that in the eyes of your customer is way out of bounds or in the case that you are the one bringing suit there is something that your customer has done that is so serious that you felt the need to bring out the big guns.
Whichever way it goes, YOU have done something wrong.
The reason for this is simple, a successful consultant does not get sued and does not sue their customers.
Suing your customers is a very bad idea, unless there is an extremely clear-cut reason for doing so. But in general it is a much better idea to avoid these situations completely. You could easily waste the better part of a years income or more on a simple court case, and in the end it rarely happens that you get to recover any of it.
So, unless you are sued you have no business being in court.
Which brings us to the next bit, how to avoid being sued:
Make very clear agreements on what it is that you will do, how much and when you expect to get paid for it, when it will be ready and what will happen if any one of the foreseen contingencies happens. That way you are left with the unforeseen, and if anything unforeseen happens then it is still better for all parties to be reasonable and to find a way out that does not involve the courts.
Remember, the only people that win in a court case - in general - are the lawyers.