Note: Over the years, Jeff Allen has answered hundreds of placement law questions from recruiters, owners and others. One that comes up regularly is about the “but for” argument when a fee is in question. This Q&A is a classic, but it is so important an issue that we’re republishing it here. If you have a legal question, email Jeff Allen directly. We only publish questions with permission.
Hi Jeff,
Jeff I really enjoy your column and I am learning a great deal about the in?s and out?s of the recruiting world. You are an invaluable asset for me!
Here is my situation: a recruiter sent a candidate’s resume to my client back in December. My client did not move on her (this was 2 1/2-3 months ago). She subsequently took another job. I called her not knowing that she had already been presented to my client . She is willing to talk about leaving the job she has only been at for a couple of months, and my client is now interested in talking to her. She did not interview with my client back when the other recruiter presented her, and she would not be talking with my client but for my efforts in tracking her down and convincing her to leave her current job.
Q: Does the fact that she took this other job in the interim negate the first recruiter’s claim?
Q: Is the fact that I dug her out of the existing company and represented her and set up the first interview make me the recruiter who deserves the fee? Before you answer, know that I am sure the other recruiter surely has a one year claim on her in his contract.
Thanks for your help,
Craig Nicolson American Construction Recruiters Inc.“Substantial Cause” Never to Say “But For”
Hi Clint,
It’s great to hear from you, and I’m delighted that you’re among the multitudes benefiting from the JOC column!
Before we get into the collection issues you raised, let’s get everyone in the mood for a fee-fight.
Here’s how:
- Say, “But for, WHAT FOR?”
- Go to www.placementlaw.com.
- Click the Placement Fee Collection Quiz at the beginning of the bottom row.
- Take the PFCQ.
- Click the Answers to Placement Law Quizzes at the end of the bottom row.
- Grade yourself.
Okay, we’re ready to rumble in the jungle. A few bars of Jungle Boogie, and let’s war dance!
Clint – You analyzed this tricky “causation” matrix by locking yourself into the linear “but for” probe. It’s linear because you are drawing an imaginary straight line between your referral (the “cause”) and the hire (the “effect”). The legal phrase for that straight line (between cause and effect) is efficient procuring cause.
Recruiting Is Not A Straight Line
But recruiting reality rarely presents a linear fact pattern. Very few linear ones happen on the practical placement planet. Recruiters lock into that “but for” scenario in an attempt to persuade fee-avoiding employers to pay. Then their lawyers find reported cases that invoke the so-called “but for rule.”
The question isn’t whether the “but for rule” is “good law.” It is. The question is, “Good for whom?” If the answer is “The employer,” ask yourself, “Why am I using it?”
Limited facts are known by the recruiter, since these cases usually arise after they’ve stopped working on the search. The so-called “client” refuses to pay. The “turncoat candidate” doesn’t even return calls. Now the abandoned, betrayed headhunter gets furious. He can’t even get anyone’s attention, so he whips out his blowgun and pumps the employer wildly with limited factual darts to “prove” that “but for” his involvement, a placement wouldn’t have occurred.
. . . and he simultaneously blows the fee.
Here’s your basic employer lawyer reply to a “but for” demand:
Your letter references the “well-settled” law that applies to this situation. As you know, New Jersey [where the employer is located] has only one reported decision in this area. In Michele Matthews, Inc. v. Kroll & Tract, 645 A2d 798, the court utilized the “efficient procuring cause” test to determine whether an employment agency has earned a fee.
In other words, to prevail [the recruiter] must be able to establish by a preponderance of the evidence [the plaintiff’s burden of proof] that it caused [the candidate and the employer] to negotiate, and that [the candidate] was hired by [the employer] as a result of its efforts. As you know, Illinois law [where the recruiter is located] would provide for the same result. . .
The “But For” Defense
He just set up the legal trap. Now he’ll spring it with a factual “Snap!” Crouch down with me, Clint. We’re not pre-placers. We’ve got headhunter hearing. Now, good ear to the ground. Here it comes. One . . . two . . . three … and . . . Snap!:
[T]he correspondence between our clients does not clearly support the allegations that [the recruiter] or his office were the efficient procuring cause of [the candidate’s] employment.
Can you hear what just happened in this very typical case? The “but for rule” isn’t getting a recruiter paid. It’s being used as a defense to payment. The employer lawyer figured out how to scribble that straight line going from the referral (cause) to the hire (effect). A one-sentence defense works when company employees (including the candidate) depend on the employer for survival.
If you’ve never made a placement, a “but for” cause-and-effect sounds reasonable enough. That’s why pre-placers think making placements is like bowling. All you have to do is pick up the ball (candidate), roll it down the alley, and make a strike (a hire). It may bend slightly, but essentially it’s an uninterrupted straight line.
Pinball Placements
But once you’ve worked long enough to cash that first draw check, you figure out that making placements is far more like pinball. You pull the plunger, shoot the ball, work the flippers, watch as it rolls around and hits the big bumper (and lights up – an interview!), rolls, spins, ricochets, delays, slides, and takes twists and turns like no other play you’ve ever made. You watch from the outside-in as these events take place, and eventually the ball reaches the jackpot (a hire).
Legally, each one of those bumps, rolls, spins, ricochets, delays, slides, twists and turns is called an intervening act. Simple enough. Something that happens after you shoot the ball.
Not so fast. There are two types of intervening acts.
Intervening Acts
A dependent intervening act is one caused by you. Pulling the plunger or working the flippers. Everything between that and the jackpot is a causation question. Was hitting the big bumper (an interview) caused by you? If it was caused by a ricochet (let’s say an employee referral), the client’s argument is that it was an independent intervening act. It had nothing to do with you. The turncoat candidate and client agree. There may even be a document trail that “substantiates” this.
No sale.
So someone tells you about the ol’ “but for rule.” Yeah, that’s it! You say, “‘But for me pulling the plunger, the ball would have never been on the playing field.” It’s an open invitation for a fee-avoiding client to set up a variety of factual defenses. “But for” the candidate meeting someone from the client at a trade show, “but for” the resume already in the client’s data base, “but for” your failure to obtain the candidate’s consent to the referral, “but for” the employee referrer convincing the candidate to interview, and an infinite number of other “but-for bumpers” that will have you flipping your five-figure fee into the forest. It’s the ultimate headhunter’s ambush.
Now let’s look at what you’ve got here, Clint:
1. The First Recruiter
Whatever she did before your involvement was not an intervening act, so has no effect on the causation issue. The first recruiter may be entitled to a full fee contractually due to the one-year referral period. But that’s a contract with the employer. If you also have a contract with the employer, it may well be liable for two fees.
Just don’t get involved in any discussions with the first recruiter, or you risk getting maneuvered into a split-fee deal.
2. The Interim Gig
The interim employment of the candidate has no effect on the causation issue either. But it sure makes it easy to chiropractically adjust the body of proof. The candidate can easily say she was considering pursuing that earlier referral. The employer can easily say it had her resume and contacted her directly or through the first recruiter. The first recruiter can easily say he presented her again.
Any of these things – and an infinite number of others – can be effectively used to trap you when you rely on the “but for rule.” There’s simply no way to extricate yourself when you’re the one who framed the conversation. You cleared away the bushes to make a linear legal path going from the referral to the hire. There’s no turning back. There’s only getting lured into a factual Snap!
You won’t spy a bowling alley in Headhunter’s Jungle. Pl
acements there don’t occur in a straight line. There are many more intervening acts that occurred after your sendout that an employer lawyer will say were independent of that referral!
I cover this in detail in Chapter 23 of The National Placement Law Center Fee Collection Guide entitled “But For, But If, What Then?” It is followed by Chapter 24 entitled “The ‘Substantial Cause’ Test.” (The Fee Collection Guide can be purchased for $125 from www.searchresearchinstitute.com).
Try using my fee-getting legal-sounding, polysyllabic phrase, substantial cause. Just say, “My referral was a substantial cause of the hire!” It keeps favorable facts in placement play because it’s impossible to argue that you didn’t plunge and flip.
Pinball, not bowling.
But for, WHAT FOR?
May you collect this and every other well-earned fee!
Jeff