Identify the Source

First and foremost, you must assess if there is really a problem.  We can spoil ourselves sometimes with a string of good clients.  Suddenly, one client comes up who doesn’t fit the bill of previous clients and we’re complaining that they aren’t as good to work with.  Your “Client From Hell” might just be a bit more strict or a little more eccentric.  Here’s how to spot a problem:

Empowerment

Is your client empowering you to do your best job?  How clear are they on their expectations?  One of the most frustrating things for most of the consulting and self – employed world is the client who essentially says “I don’t know what I want, but I want you to give it to me.”
Is your client responding to you?  Do they address your concerns with the project?  Being empowered to work does not mean being pandered to, but it does mean being given the time and attention you might need to succeed.

Worth

Are you being paid enough?  This may be a mistake you made in your initial quote, but often we complain about a client mainly because we don’t feel we’re being fairly compensated.  Make sure you address this issue quickly before you find yourself building up more and more resentment toward the project and subsequently lose interest.    The relationship with your client needs to be mutually beneficial.
At the end of the day, most bad client situations are a result of your not responding to the situation as it develops.  When you see signs that the relationship is going south, do what you can ASAP to relieve that.  When you’ve gotten to the point of complaint, you’ve lost your agency.

Analyze Your Resources

Measure the balance of the relationship once you’ve noticed that things aren’t ideal.  Remember, you entered the brave new world of consulting and freelance work to be your own boss, don’t lose that.  A boss has a good eye for where their resources are being spent and knows when to make the tough calls.

Time

For a week, perhaps two, you should keep track of the amount of time you spend on each client.  If most of your projects are of similar size then none should take drastically longer than any other.  If you notice that one of your contracts takes more time than the others, weigh it’s significance and think on that.

Stress

Now, next to that chart of time spent per project, rate the amount of stress you feel for each project day-by-day.  Some contracts may feel more or less stressful – a new client who may refer more clients may cause some stress, a smaller project may not – but if the stress and time ratio is out of order, you need to readjust.  Communicate with your client that you’re noticing the project is becoming more difficult and less rewarding.  Discuss ways the client may be able to help you push the project forward or even request an extension.

Getting Paid

Are you?  A good client might have some lee-way for falling behind but the first lie any consultant learns is “the check’s in the mail.”  Every once in a while you’ll work with someone who will get what they can from you before the first payment or skimp on the last one.  Make sure you set clear standards “Work begins once the first check clears in to my account.  I trust that you’ve put it through, it’s just a rule.”
Once you’ve double checked your resources, you may have found that you are indeed being slighted by your client.  Don’t worry, this happens, but you need to rapidly deploy to the final step before you waste any more of your time or resources.

Pull the Trigger

Assuming you’ve worked to try to remedy any problem and your client has not been responsive, it’s time to close this chapter.  Here is how.

Be Concise

The more time you spend explaining the “Why’s” of the cessation of services, the more room you leave open for argument.  Be quick and polite, your reasons are yours alone and the client doesn’t need more of an explanation than you are willing to give.  Just keep in mind, sometimes we want to give more than we should.  Keep it simple.

Reputation

Remember, if you let this become too personal you will find it bleeding into your other work.  While the client may have been poor, your reputation is still important.  Don’t let your good name get sullied in the mud on the account of a foolish fight.
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9/10 clients will be a joy to work with.  Even some of the ones who are bad wont be this bad.  However, you need to be prepared to defend your career when the time comes.