Welcome to our ongoing series of blog posts in the Top Echelon Recruiter Training Center: “Jeff Allen’s Collection Tip of the Week.” Each week, we’ll highlight one collection tip from Allen, JD/CPC, the world’s leading placement lawyer.
Since 1975, Allen has collected more placement fees, litigated more trade secret cases, and assisted more placement practitioners than anyone else. He’s also the author of 24 books and a regular columnist for The Fordyce Letter, one of the leading publications in the recruiting industry.
Below is this week’s collection tip for recruiters, courtesy of Jeff Allen.
What the Client Says:
“The candidate was hired by another division.”
How the Client Pays:
This is a “forward pass” situation—send out to A, hire by B.
The first issue is how the other division learned of the candidate.
Then the legal analysis is usually as follows:
1. You can prove an agreement to pay the fee by the client, but it didn’t hire.
2. You can prove a hire by the other division, but it didn’t agree to pay the fee.
3. You can’t enforce rights against either by fee schedules that say “hired directly or indirectly through the employer or any of its affiliates.”
The most important contractual question is whether the ultimate employer is a separate corporation. If so, it’s a separate legal entity. That means it’s not on the hook unless you can show there was a conspiracy to avoid payment of the fee.
Absent that, you’ll be asking the court for equitable relief based upon the judge or jury’s idea of fairness. The usual words are unjust enrichment—the client will be unjustly enriched by hiring without paying the fee.
You must show that the division knew or should have known you were involved. You do that by staying close to every candidate.
Treat candidates like your “stock in trade,” dusting them off regularly. You’ll routinely pick up all of these fees!
(Know how to collect your well-earned fees? Test yourself! Visit Allen’s Placement Law website and click the “Placement Fee Collection Quiz” button. Allen can be reached via telephone at 310.559.6000 or via email at jeff@placementlaw.com.)