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Jeff’s On Call!: Split Fee Owed?

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Jun 27, 2011

This week’s inquiry comes from Sue Yager:

Jeff, I really need your help. As an avid reader of The Fordyce Letter for 10 years now, I have always appreciated your insight and knowledge of the recruiting industry, and find myself needing your help for the first time.

I believe I have more of a moral dilemma than a legal dilemma. Here’s the story: 4 years ago I worked with another recruiter, who was with another agency, and we sometimes did splits. This other recruiter emailed a resume to me and told me this candidate was fantastic, and asked whether she would be a good fit with any of my clients. I called the candidate and did a full interview with her even though I didn’t have any job opportunities for her at the time. I kept in touch with this candidate over the past 4 years, and she is now actively interviewing with one of my clients. I have not spoken to the recruiter who sent me her resume for about 2 years, and the candidate hasn’t spoken to her for several years.

Here’s my dilemma: Do I still owe that recruiter part of the fee? I want to do the right thing, but I don’t want to give away money unnecessarily either. (P.S., there was never a formal split fee agreement in place between us.)

Thank you for all of your help.

Respectfully,

Sue

Hi Sue,

I haven’t heard from you for a while, so it was nice to receive the JOC inquiry. So glad you’ve been benefiting from The Fordyce Letter — for ten years!

Yours is both a moral and a legal question. Moral because four years have passed. Legal because it was an oral agreement – an enforceable contract with your associate four years ago.

For analysis purposes, the contact information on the candidate was a trade secret. This was part of your associate’s proprietary database, and it was given to you with the agreement that you would split the fee if you placed the candidate. Knowing you, there was no moral or legal challenge with this four years ago.

Technically, information doesn’t lose its trade secrets status with the passage of time. But it can lose its protection.

Here’s my trick to “objectifying” this dilemma, so you have (1) peace of mind, and (2) legal cover:

Google the statute of limitations (SOL) in your state. Since I know you’re in Nebraska, I just Googled “Nebraska statute of limitations oral contract.” and Poof! There it is! Four years. Fair enough. This means that once the statutory period has elapsed, the contract can no longer be enforced. “It’s legally “old and cold.”

If you had a written split-fee agreement (which you should), you’d Google “Nebraska statute of limitations written contract.” That would pop up as five years.

So if it’s been four years since that oral split-fee deal with the other recruiter, I’d say that candidate is yours.

Why did I pick your state? Why not? There’s no federal SOL on an oral contract. With no written contract containing a jurisdiction clause, the other recruiter would probably need to file a lawsuit in Nebraska. Unless she’s a Nebraskan, that’s unlikely because of the cost, your home-field advantage, and the difficulty of finding, using, and enthusing a lawyer near you.

Just for fun, Google her state’s SOL. Four years is a long SOL for an oral contract, so it’s likely the one in her state is even shorter.

Only ethical recruiters ask ethical questions, and I’m delighted to answer yours with a “Yes!”

Now I have a question. Did that help every split-fee’er out there to resolve these everyday disputes fairly? If your answer is “Yes!” too, we’ve done our job.

So happily place, and best wishes for continued 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.

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