As a business owner, it's not easy to turn away work.
You have a fiscal responsibility to the growth of your company – certainly one measure of employee well-being.
But if the well-being of your employees could be jeopardized by a potentially toxic work environment, the best-interests equation starts leaning towards saying, "no thanks."
The cost of assuming behavioral risk on a potentially difficult client is really a postponement of risk. The risk doesn't end with contract negotiations – that's where it starts. If a client asks you to assume all of that behavioral risk, that is a values equation you should question.
Risk can be measured up-front with your values – and measuring your own willingness to compromise them. If your business gut (which is nothing more than a collection of experiences) tells you project failure is in the air with factors out of your control, then listen to it.
If the values conflict with the potential client is identifiable, work through that cognitive dissonance to identify where things might go south. If enough of your values have to be compromised to assume the work – then think again. Then listen again.
Company growth is not simply a function of new work. Sustainable company growth is a function of how you align your culture and employee well-being with that work. Don't let the thrill of a sales kill blind you to the postponement of cultural risk.