Now that there are a lot more wandering merc groups and noble house patrols, it’s really easy to pull monster groups into them that are tied to your contract (Nachtzehrer/Direwolves, Orc Warlord band in the Warlord contract), and cause collateral damage by getting the merc groups/house patrols mauled while you take little damage.
Yes, you lose xp and loot from the kills, but for Nachtzehrer/Direwolves, their loot is laughable that you get better loot from the mercs/nobles that died and drop their armor for you. One also still gets paid in full for clearing the Nachtzehrers/Direwolves.
Which begs the question: should ally equipment drop into your inventory? It seems quite abusive to get free chain shirts/mail hauberks/heavy crossbows from getting footmen and arbalests killed by orcs/goblins, while you barely take any damage.