"A good one," you reply. "I've created a reasonable plan, and for what we are doing for the client, that is a high-end fee."
The partner, however, does not buy your arguments. "You make this contract $200,000," she orders you, "and find a way in your engagement plan to back up that price."- What action will you take?
- What process and guidelines will you use to determine what is the right thing to do in this context?
- If you decide that $100,000 is the correct contract price, how do you resist the partner's request to make you bill the client for $200,000?
- Will you take a different action if you know that a year from now the firm's partners will vote on whether you should be made a partner, and you believe the engagement partner's recommendation will be critical to your becoming a partner?
- Will you take a different action if you are the engagement partner and have been ordered to bill the client $200,000 by a managing partner? Note that as a partner, your share of firm profits is determined by the number of "units" you have, which is largely a function of the amount the firm bills clients for whom you are the engagement partner.
- What action will you take if you discover that the managing partner's request to bill more is a relatively isolated incident in a firm that generally bills clients accurately? You don't know the managing partner's motivation for asking you to overbill the client.
- What action will you take if you discover that the firm has a culture that encourages overbilling clients? The overbilling culture evolved within the last decade from a desire of managing partners to enjoy a financial status more nearly equal to the corporate executives of their clients, many of whom receive annual compensation in the millions of dollars.