This week’s inquiry comes from Helen Stefan:
I really love the column you are doing for TFL. I have found this a particularly helpful post and have often referred to it for educational purposes.
I could really use your expertise. Recently, I began working with a new company and made certain they endorsed our fee schedule which stated our terms (amount due on candidate start date). The hiring manager endorsed the terms and sent them back. A placement has resulted. Upon receiving the formal offer letter from this hiring manager, I was told that under no certain terms would we be paid on “start date.” In fact she argued that her corporation did not pay recruiting invoices until 90x following start date and that we would have to take this up with corporate. Having never experienced this before, I thought this might be something you would be able to help with. Do I have any recourse other than to send this to collections?
I’m delighted to hear from you! Thanks for your generous words of appreciation.
I’m about to show contingency-fee recruiters everywhere how to stomp on the Allen Action Accelerator! Listen carefully, world. I’ve never taught you this before:
It’s an eternity when you’re waiting for a placement fee after a candidate starts. The longer payment is delayed, the less likely you are to get paid. Just think about the infinite number of things that can go wrong. Here are half a dozen common ones:
- Client and candidate collude.
- Client and candidate collide.
- Candidate changes mind.
- Client changes management.
- Candidate doesn’t love you any more.
- Client decides you weren’t the efficient procuring cause (?) of the hire.
You simply can’t wait 90 days (the customary probationary period) while your fully earned fee is held hostage to factors beyond your knowledge (let alone your control). Nothing – nothing – benefits you by the passage of time.
Although I haven’t reviewed your fee agreement, it sounds like you’re covered by requiring COD – payment upon start. Good job so far.
But this employer is betting you won’t even try to accelerate the payment within 90 days (the customary probationary period for new hires). Since you’ll have to give up from one third to 50% of the fee to a collection attorney or agency, you’ll just anxiously wait.
Even if you’re aggressive and don’t care about the cost, filing a “collection” (lightweight check-the-boxes) lawsuit will delay payment even more. The court system doesn’t move fast enough and the employer lawyer will work the system to extend the time as long as possible. It’s so easy to hold you hostage when it looks like you’re helpless.
But you’re not. The Accelerator incites payment in a very specific way. In fact, the last one that just came through here was for a client in your state (Florida). The employer didn’t even take time to reply with a letter – just a full-five-figure-fee check.
Your lawyer needs to instantly draft the following tough, well-researched letter to the CEO of that employer. It must include:
- The date, name and title of the employer representative who signed the agreement.
- The specific payment term in the agreement.
- The detailed facts surrounding the placement, each relevant date (exact day – even if it’s wrong – they don’t know it either), what occurred, and with whom.
- The statutes and cases in your state relating to breach of contract, fraud, conspiracy, and unfair trade practices.
- A summary of the facts and the amount of any large judgments (judge-ordered) or verdicts (jury-determined) your lawyer obtained on similar cases. (If he or she didn’t obtain any, obtain another lawyer fast.)
- A demand for payment to your attorney’s office within ten calendar days from the date of the letter, or litigation will be commenced in your specified local court seeking compensatory damages (to compensate you), punitive damages (to punish them), exemplary damages (to set an example of them), attorney’s fees, costs of suit, interest, and whatever else your attorney would like to include.
Then the Accelerator must be faxed and mailed. (Don’t use e-mail. If it’s read at all, it’s likely to be laughed off.) Then your lawyer must confirm receipt of the fax by phone, carefully asking the recipient (1) his or her full name, (2) exact title, (3) when it was received and (4) the number of pages received.
Use fax transmission – it’s unusual, annoying, hard-copy that will be read by everyone around the CEO. It’s so powerful, and starts the 10-day countdown instantly. When we fax and confirm receipt of the Accelerator by phone, we’re pumpin’ high-octane fuel into a revved-up V12 twin-turbo truck.
“One-size-fits-all” collection letters don’t work. E-mails don’t work. These silly things just make you look like an amateur. The Accelerator works immediately if done properly. It abruptly changes the entire calculation by the employer. After reading Page 5, the CEO typically e-mails the CFO to pay in full by overnight mail.
The risk is that the shocked employer will file a lawsuit locally within the 10-day period in the letter. It’s rare, but it happens. The lawsuit is usually requesting declaratory relief (a determination of the rights and liabilities of the parties in the agreement). It’s a needless expense for an employer, and you’ll ultimately prevail if the COD payment term is clear. But some employer lawyers think this is a place card that will prevent you from filing in your local area. It doesn’t.
So don’t “send it to collection.” Get your lawyer to work up a letter NOW that reads like the Accelerator. Then be sure it gets faxed, phone-confirmed fully, and mailed.
Now, go get your money.
Best wishes for a fast fee!
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.