A Good CAAR Won’t Take You To the Courthouse

Hi Jeff

I appreciate all of the useful information provided in The Fordyce Letter every week. There is always something beneficial to our business in every issue.

I am a partner with a search firm in Canada and would like your help with the following.

We were approached to do a search in Vancouver. Knowing that the company was in financial difficulty we declined. Another search firm placed two candidates there (as we were questioning our decision to pass on the search!). The company did shut down four months later, which leads me to this question. Can a candidate attempt legal action against the recruiter in this instance?

Is there a document that we could get candidates to sign prior to placing them in any role that would protect us from these type of occurrences? I would hope that any recruiter would not take on a search where they knew the client was in difficulty due to the risks to the candidates as well as fees not being paid, however these situations are often unpredictable.

Jeff, I thank you for taking the time to reply and hope that this will benefit others.

With best wishes,

Beth C.

Jeff Responds

Hi Beth,

It’s great to hear from one of our Canadian Fordycers!

We’ll get to your question – and our very powerful candidate control device – in a minute. But first, let’s get placement planet residents everywhere on the subject of candidate control.

Okay everyone:

Go to www.placementlaw.com,
Click the Placement Manager’s Law Quiz button in the middle of the bottom row.
Take the PMLQ.
Click the Placement Law Language Quiz button next on the bottom row.
Take the PLLQ.
Click the Answers to Placement Law Quizzes button at the end of the bottom row.
Grade yourself on the PMLQ and PLLQ.
Come back here.

In answer to your question, anyone can sue anyone else for anything. So the question you are asking is whether there is any basis for a lawsuit. There is. The question then becomes how any liability on the part of a recruiter can be reduced or eliminated entirely. We get there contractually in advance of a problem arising.

Usually the candidate is not bound to do anything in a search. There is no contractual relationship, you are not in privity of contract (parties to an enforceable agreement), and there is no consideration. (Really none sometimes!)

The Candidate Acceptance Agreement

High-billers don’t worry much, and they don’t have candidate control problems. That’s because they have one single attribute that sets them apart – they manage their candidates. They’re in charge of their inventory.

. . . and they show their power by getting our Candidate Acceptance Agreement and Release signed before they spend their precious five-figure-fee-or-famine time.

Now you can do it too.

Go to www.placementlaw.com.
Click the red JEFF’S ON CALL! button.
Type Candidate Acceptance Agreement and Release in the Subject field.
Click Send.
Come back to this screen.

I’ll reply with the CAAR.

Your Candidate ‘Dos’ Guide

As you can see, the CAAR is a “wish list” of candidate “do’s.” It’s a guide for your lawyer to use in drafting one for you, since he wouldn’t be able to find a sample anywhere else. Canadian law is even less uniform than ours in the United States, so consulting with your attorney is important.

The “do’s” are not “shalls,” but are “shoulds,” since the CAAR is not really designed to be enforced in court. It’s designed to establish the course of dealings between the parties, and let the candidate know that yours is a professional value-for-value relationship.

Problems of enforceability exist for several reasons, including:

1. You wrote the CAAR.

Therefore, any latent (hidden) and patent (obvious) ambiguities (unclear words or phrases) will be construed against you. Why? Because you wrote it!

2. You require the CAAR.

Unlike most voluntary agreements, the candidate must execute (sign) the CAAR as a condition precedent (something that must happen first) to you working with him. (Yes – you can get it “signed” by e-mail. Just be sure it’s an unequivocal acceptance by the reply.)

3. You are not paying the candidate for executing the CAAR.

This is a legalistic adequacy versus sufficiency of consideration issue that can arise. However, a court will likely find that sufficient consideration exists by the trading of rights and liabilities. First-year law students learn this as bargain and exchange. There is also the recital of consideration that can usually support (justify) an enforceable agreement.

4. The CAAR is an employment agreement.

Of course, it’s not. At best it’s a pre-employment thing. But don’t try to budge a judge with that one. The court will consider it a disfavored contract just like any employment agreement, since it deals with a candidate’s gig.

5. You are requiring certain conduct in the CAAR.

This is called specific performance, and is something a court simply won’t order. The impossibility of monitoring and enforcing someone accepting an unknown job should be obvious. So the only remedy would be compensatory damages (money to pay you for the loss of a placement fee). Theoretically.

6. The release is contained in the CAAR.

The release portion in Paragraphs 6 (and 7 if California is involved) covers your concerns, Beth. Paragraph 9 (the severability or survival clause) gives the Release CPR, so it stands a better chance of “surviving” if the Agreement portion is stricken.

Just be aware that no release (and no insurance) will insulate you from liability for intentional misrepresentation. You won’t lie, but you’ll be accused of doing so. Fraud is the word, probably conspiracy (with the client) as well, and other allegations of intentional wrongdoing. Deterrent (with the costs, attorney’s fees and local jurisdiction in Paragraph 8), yes. Insulation? Not so much.

This is when you learn why it’s called errors and omissions insurance

But for establishing a professional relationship, do what the superstars do. Use the CAAR well!

Jeff