Ask Jeff: Simple Fee Agreements

Dear Jeff,

What are your thoughts on using a really simple agreement for clients? One that simply states the parties involved in the transaction, the fee percentage to be paid based on compensation and payment terms if the company hire my referral. The end.

No guaranteed, no what-if scenarios.

Then the new client can make the requests, which I can accept, negotiate, or turn down.

Larry Barlow
Tax Advantage Personnel, Inc.
866-279-2386
www.4caliber.com

Dear Larry:

This is a terrific idea! It may surprise our readers to know that many recruiters do exactly that. The fee letter or schedule is accepted – signed and returned by the client without exception. No guarantee, no discounts, no reductions for temporary assignments.

The key is to cover yourself for a specific referral period (one year from the date of last communication with the client regarding the candidate), second-party referrals (from the candidate to others), attorneys’ fees, costs for collection, interest, choice of law (yours), and jurisdiction of courts (your state).

Just be sure there are no patent or latent ambiguities. As a general rule, any ambiguities in a contract are construed against the maker.

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California has a typical codification of the common law (common-sense, judge-made law before we had statutes) rule of construction that reads:

In cases of uncertainty . . . the language of a contract should be interpreted most strongly against the party who caused the uncertainty to exist.

This is why we sometimes advise clients to sign an otherwise goofy placement service agreement. Let’s say the PSA reads, “You agree to indemnify and hold us harmless from one of our employees injuring your candidate.” A court is unlikely to construe that as reimbursement to the client if some manager punches your candidate in the nose because he works for a competitor.

It’s also why your earlier suggestion to have the client prepare a fee agreement (with the recruiter providing the language) was so valuable. That way, the rule of construction favors construing the agreement in your favor.

Please consult a lawyer if you want professional assurance that any information available on this website, and your interpretation of it, is appropriate to your particular situation. Under no circumstance is ERE Media, Inc., its agents, affiliates, or customers, providing legal advice or representation. Nothing herein is intended as a substitute for legal advice from an attorney.

More than thirty-five years ago, Jeffrey G. Allen, J.D., C.P.C. turned a decade of recruiting and human resources management into the legal specialty of placement law. Since 1975, Jeff has collected more placement fees, litigated more trade secrets cases, and assisted more placement practitioners than anyone else. From individuals to multinational corporations in every phase of staffing, his name is synonymous with competent legal representation. Jeff holds four certifications in placement and is the author of 24 popular books in the career field, including bestsellers How to Turn an Interview into a Job, The Complete Q&A Job Interview Book and the revolutionary Instant Interviews. As the world?s leading placement lawyer, Jeff?s experience includes: Thirty-five years of law practice specializing in representation of staffing businesses and practitioners; Author of ?The Allen Law?--the only placement information trade secrets law in the United States; Expert witness on employment and placement matters; Recruiter and staffing service office manager; Human resources manager for major employers; Certified Personnel Consultant, Certified Placement Counselor, Certified Employment Specialist and Certified Search Specialist designations; Cofounder of the national Certified Search Specialist program; Special Advisor to the American Employment Association; General Counsel to the California Association of Personnel Consultants (honorary lifetime membership conferred); Founder and Director of the National Placement Law Center; Recipient of the Staffing Industry Lifetime Achievement Award; Advisor to national, regional and state trade associations on legal, ethics and legislative matters; Author of The Placement Strategy Handbook, Placement Management, The National Placement Law Center Fee Collection Guide and The Best of Jeff Allen, published by Search Research Institute exclusively for the staffing industry; and Producer of the EMPLAW Audio Series on employment law matters. Email him at jeff@placementlaw.com.

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