Due diligence isn’t distrust, it’s professionalism

What sits between a promising new client relationship and a reputational or financial crisis? In many cases, it’s due diligence – or the lack of it.

By Alison Gallagher-Hughes

At a recent CIPR Midlands webinar, we brought together a panel to provide different perspectives: an agency leader, independent practitioner representative, a legal adviser and an insurer to explore how PR professionals can better protect themselves through structured client vetting, robust contracts and clearer commercial boundaries. What emerged was a candid, practical and at times sobering discussion about risk, responsibility and professional standards.

When it goes wrong

The session opened with a powerful case study from Jay Jones, of Lahat Creative, recounting his agency’s experience managing marketing for the London Pet Show Live. On paper, the opportunity looked credible. In reality, persistent cash flow issues, poor communication and a relentless “more for less” mentality from the event organiser created mounting pressure behind the scenes.

Red flags appeared early: delayed payments, cost cutting that undermined delivery and limited transparency. Following low ticket sales, exhibitors felt mis-sold and demanded refunds. Without a robust crisis plan from the event owner, Lahat’s team found themselves handling hundreds of complaints. Social media rumbled, media stories began to appear and Jay and his team found themselves becoming part of the story, with the potential to damage Lahat’s reputation by association.

Soon after, the organiser disappeared entirely, leaving suppliers unpaid. Subsequent due diligence revealed a history of failed businesses and a criminal record for fraud.

The financial impact on the agency was significant. But the reputational response was instructive. Lahat Creative proactively clarify their contractor status through the media, positioned themselves as fellow victims and communicated directly with exhibitors to share information and direct them to appropriate authorities.

The core lesson? Due diligence must happen before the work begins.

Vet first, then work

Richard Stone of Stone Junction outlined a structured approach to agency due diligence. For larger organisations, the emphasis should be on vetting the company. For start-ups or individual founders, the focus shifts to the individual behind the brand.

Financial checks are both accessible and affordable. Credit reports can reveal red flags including County Court Judgments (CCJs) or deteriorating financial health. Companies House filings offer insight into turnover, profitability and director history. Even social media can signal ethical alignment issues or patterns of repeated business failure.

Stone also highlighted a strategic commercial consideration: not all revenue carries equal risk. Recurring annual revenue provides more stability than short-term project work. Charging a premium for shorter, higher-risk projects reflects their greater administrative and financial burden - and encourages better client commitment.

The takeaway was clear: optimism is not a strategy. Nor is assumption.

The independent’s instinct

For independent practitioners, Nigel Sarbutts of PR Cavalry reinforced the value of trusting your instinct but not relying on it alone.

Vague briefs, reluctance to meet, resistance to formal contracts or evasive answers to straightforward questions should all be treated as early warning signs. A client who pushes back against standard contractual terms may be signalling future difficulty.

Introducing contracts early sets a professional tone. It reframes the relationship as a commercial partnership rather than a casual arrangement. Essential clauses should define scope clearly, including what is not included, to prevent “can you just…” creep. Acceptance clauses, notice periods, intellectual property ownership, late payment provisions and clear termination rights provide practical protection against common disputes.

Perhaps the most powerful advice was also the simplest: be prepared to walk away.

Contracts as commercial tools

From a legal perspective, Samantha Lansbury of Markel Law reminded attendees that contracts should reflect the practical realities of the deal.

Scope and deliverables must be explicit. Payment terms should include late payment interest and the right to suspend services. Liability caps should limit exposure to a sensible multiple of fees or insurance coverage. Termination provisions should allow exit both for breach and, importantly, “without cause” on notice.

Clarity around intellectual property ownership and licensing rights avoids future misunderstandings. GDPR obligations must be properly reflected. Jurisdiction clauses matter.

Templates are useful starting points but they require tailoring. And resistance to signing a contract? Red flag.

Protecting what you’ve built

Insurance adviser Ashley Baxter of With Jack added another layer: protection does not stop at the contract.

Professional indemnity insurance guards against claims of negligence. Legal expenses cover supports dispute resolution and debt recovery. Public liability addresses physical injury or property damage claims. Payment terms can be adjusted in higher-risk situations through larger upfront deposits or more frequent billing milestones.

As with contracts, insurance should reflect specific concerns and operating models not generic assumptions.

A professional responsibility

The webinar’s most significant theme was cultural. Due diligence can feel awkward. It can feel distrustful. It can feel commercially uncomfortable, particularly for smaller agencies or independent practitioners balancing pipeline pressure with prudence.

Yet the discussion reframed due diligence as a professional responsibility. PR practitioners do not simply deliver activity; they steward reputation, including their own.

Allowing avoidable financial risk, ethical misalignment or poorly defined contractual relationships to develop unchecked is not entrepreneurial agility. It is exposure.

In a profession that rightly champions ethics, transparency and governance externally, we must apply the same rigour internally.

Raising the standard

The strength of the session lay in its honesty. Speakers shared mistakes as readily as methodologies. Participants engaged actively around grey areas: how hard to push on vetting; when to accept calculated risk; how to balance commercial survival with professional principle.

The appetite for governance-focused content suggests that many practitioners recognise similar tensions in their own practice. The collective conclusion was not that we should become risk-averse but that we should become risk-aware.

Due diligence is not about distrust. It is about sustainability. It protects not only individual businesses but the credibility of the wider profession.

In a climate where reputations can unravel quickly, the most powerful risk management tool we have may simply be the questions we are prepared to ask — and the standards we are prepared to uphold - before we say yes.

Watch a recording of the webinar

Alison Gallagher-Hughes is the chair of CIPR Midlands. She is also a chartered PR practitioner and founder of Tillymint PR.