This week’s inquiry comes from Rhonda Miller:
Hi Jeff,
I really appreciate your contribution of time and expertise in the Jeff’s On Call! column. Since I started reading it, I find that I have broader thinking on day-to-day scenarios and give more thought to the legalities of potential pitfalls. It is a much more enlightened perspective than before.
I have a placement in Illinois where the client has offered a 5K fee rather than the 25K required on my fee schedule because supposedly an in-house contract recruiter had the candidate in the pipeline (unbeknownst to the candidate) and had referred the candidate to some manager six months earlier – although not for any particular job.
This company is looking for employees with my candidate’s experience all the time. The manager didn’t act on the referral and then left the company. Therefore, nobody acted on the referral at all. (Since the candidate worked for a subsidiary of the client, it is possible that is how the contract recruiter got the resume. She is very aggressive, so it may have been on LinkedIn also.)
My fee schedule was signed before the client started using contract recruiters, and there is nothing about them in it. It provides that I have a 12-month referral period, but they say they had the candidate’s name in their system before my referral. There is no doubt that “but for” my efforts for four months, the candidate would not have been hired.
The internal recruiter explained the situation to the RVP for this division and came back with 5K in recognition of my efforts. She maintains that had this gone to her boss (who doesn’t want to pay outside recruiters) there would be no fee at all. I really worked long and hard on this deal.
What should I do? I don’t want to lose the 5K, but I also don’t want to give up half the fee in attorney’s fees and possibly even lose the 5K offered.
Okay, Rhonda.
Before we begin, I’d like you to lead our recruiter rooters in Rhonda’s Rah Rah. Help me Rhonda.
Ready? One — Two — Three:
I DID WHAT I DO;
THE DEAL IS DONE;
THE DUES ARE DUE.
Yay for Rhonda!
Now let’s get down to business:
First — sincere appreciation for expressing yours! I do what I do because it helps so many. Hearing “Go Jeff!” along the way let’s me know I’m doing my destiny.
Now about what you do – or rather — did.
Your inquiry is exceptionally valuable to our recruiter readers for several reasons:
- It articulately lays out facts to warrant a full fee. You’re a pro and it shows.
- It expresses the way so many contingency-fee recruiters are bullied by so many so-called “clients.”
- It gives insight into why those recruiters willingly forego well-earned fees.
Your inquiry is also exceptionally valuable because it shows two things not to do:
- Don’t use the “but for” rule.
It’s not a “rule,” it’s an exception. You’re inviting the reply that “but for” something else (anything you didn’t do), the hire wouldn’t have occurred. “But for” is the fastest way to “unpayment” of a placement fee ever devised. - Don’t accept a 20% tip for great service while the patron slips past the cashier without paying the bill.
Here’s the exception: “But for” walking away with 20% of what you’re owed, you could be paid in full (maybe even more).
$5,000? I don’t think so!
Would this “client” have hired 20% of this candidate’s self? Would it accept 20% of his or her performance? Is it profiting only 20% of what it expected? Did you bring the buyer and seller together? Did it take four months? Did you “cause” the hire to occur? Did you cause 20% of the hire or 100%? Don’t get me started.
Compromising this fully earned placement fee not only compromises you – it compromises every recruiter. The dues are due when you do what you do. You did what you do. Diligently.
Because of what you did, that candidate is working at that “client.” As you’re reading this, that “client” is increasing its profit as a result of your efforts.
When I read an employer’s PSA (placement service agreement), I see an entirely different set of rights and liabilities than I did when I took Contracts 101 in law school. That’s because the courts (and even the state statutes) apply rules of construction to “construe” contract terms in accordance with “public policy,” equity (fairness), or consistency within the terms themselves.
Employer lawyers draft draconian, one-sided PSA’s to impress company management. Few even know the difference between a job order and a fee schedule. So PSA’s often read like an eye chart to someone with a good eye.
Of course, thorough legal analysis would include a review of the facts, the fee agreement (apparently employer-generated – ve-r-r-ry good for you – they’re construed against the employer), and the law in all jurisdictions involved. Until this is done by a competent attorney, you shouldn’t make any moves.
I mean that literally – do nothing more until you know the rules, the plays, and the end-game. I don’t, so I’m not predicting the outcome – but you deserve more than a 20% tip. Try to find a way to properly file the action in Texas. You’re there, so it makes sense for at least five reasons:
- Home field advantage.
- Convenience.
- Cost-effectiveness, and
- Much better control over your lawyer.
- Texas is one of the few enlightened states that will award you attorney’s fees if you prevail. You’ll get your court costs back too.
. . . and the BIG TEXAS BONUS:
So many thanks for a great JOC inquiry, for letting me be myself (again), and for a reply that I hope will convince every recruiter reading it to pursue their well-earned fees.
Placements are tough to make. That’s why I got into something easy.
Oh, yes. Ready recrooters? Let’s hear it for Rhonda!
YOU DID WHAT YOU DO;
THE DEAL IS DONE;
THE DUES ARE DUE.
Best wishes for success!
Jeff
If you have a legal question you’d like to have Jeff answer here on The Fordyce Letter, check out Jeff’s On Call! and submit your question.