By `n by Brer Rabbit – gets where he want to be.

Even adding interest or “finance” charges can be risky unless you do it with other employers. You want it to appear that you expect payment, and are just being patient. Otherwise when your other records are subpoenaed, you’ll blow your cover.

Since you should be referring past due accounts to your lawyer after 30 days from the start (invoice) date, keep “stating” that “account” with monthly “statements.” The more months that pass, the better. Let him do his thing — just keep those invoices comin’.

Here’s how the trained legal mind of your judge thinks:

a. A five-figure bill for something I didn’t buy, would get my attention.

b. If I didn’t respond and “accepted the benefit conferred” (continued services of the candidate), I could be accepting by silence.

c. I would respond in writing, since I’d want to build evidence in my defense.

d. If something were wrong with the service provided, I would immediately notify the provider in writing.

e. If I paid another source, I would require that it “hold me harmless” and indemnify (protect) me by paying all expenses (defense costs, judgment, etc.).

So with every month that passes (and there are many before trial), the account stated theory “seasons.” It becomes more and more credible.

Of course, there are dozens of reasons why you won’t hear about your invoice from a large (fee-paying) employer. Among them:

a. Inertia.

The invoice just sits in some human resourcer’s “in basket” because he’s busy with major corporate moves (ordering door signs, etc.).

b. Confusion.

Nobody knows who is authorized to approve the fee, so the invoice bounces around aimlessly.

c. No budget.

Either before or after the placement. You’re an unsecured, unnecessary, unimportant creditor now. Avoidance is the result.

d. Fear.

The “unauthorized hiring authority” didn’t realize he was binding the employer, overstepped his bounds, has a more strict supervisor, etc.

e. Creation of a new guarantee.

By delaying payment, the hirer is attempting to shift the “risk of loss” to you. He knows you’ll be more likely to reduce or waive the fee if the candidate leaves. Some even angle for a replacement before paying!

f. Sandbagging.

The hirer is secretly planning to leave, and doesn’t mention your fee because he:

i. Wants a reference letter.

ii. Wants the candidate to join him at another employer.

iii. Wants to leave his successor holding the bag.

Account stated is always our second cause of action in fee-collection complaints. It cures the technical defects in proving a breach of contract (our first cause of action), and turns bureaucratic weaknesses into collection strengths.

2. QUASI-CONTRACT

This isn’t a contract theory at all — merely an “equitable” (conscience) one that allows the judge to scratch his itch by compensating you.

That’s why the theory is called quasi-contract. The reason is unjust enrichment — the employer would be “unjustly enriched” by having obtained the candidate’s (or your) services without paying for them.

According to lawyers Gordon Schaber and Claude Rohwer in Contracts:

The modern rationale for quasi-contractual recovery is the prevention of unjust enrichment. As the words themselves indicate, there are two equally important facets to the doctrine:

[First] there must be enrichment of the defendant. In other words, the defendant must have somehow benefitted. His assets must be increased in value, or he must somehow be better off . . .

[Second] the plaintiff must have actually expected compensation at the time the services were rendered, or the services will be seen as a gift rendered by a mere volunteer.

The measure of recovery in quasi-contract is wide open. Your objective should be at least a full fee. For this reason, it is imperative to document:

a. The amount of time the job was open prior to your involvement.

b. The other efforts of the employer to find candidates (ads, Internet, other recruiters, etc.).

c. The employer’s knowledge of your fee.

d. The availability of qualified candidates.

e. The amount of time and effort you expended to find and qualify candidates.

If you can, it also helps to document:

f. The amount the employer has gained by filling the position quickly and properly.

These items can all be ascertained if your timing is right. The job order should reflect items “a” through “d,” and the rest should be added as the search is undertaken. Letters, notes, resume comments and other items from the employer are great to state your case. Encourage faxes or Emails — they’re accepted readily by courts.

At the time of trial, be prepared with competitors’ fee schedules (to show “customary and usual” charges, the “reasonableness” of a five-figure fee for a phone call, etc.).

If you’re not prepared properly, you’ll have a “failure of proof.” Even a “wild and quasi” judge will worry about being reversed on appeal.

But if you give him the backup, your lawyer doesn’t have to be a CPC to double or even triple your fee!

We tripled one recently when a Japanese company successfully defeated the contract cause of action based upon a hire more than one year from the date of referral. The recruiter’s fee schedule foreclosed the fee, but the employer hired the international controller 18 months later.

That case demonstrates what Schaber and Rohwer pointed out:

[T]he measure of recovery in quasi-contract can be a difficult problem, especially in situations where there is an unenforceable contract. Presumably, in that situation the parties have already agreed upon a price. However, the reason that the plaintiff seeks quasi-contract is because the court cannot enforce the agreement.

This could at least theoretically allow a plaintiff to recover more than the agreed upon amount . . .

Because the foundation of quasi-contract is prevention of unjust enrichment (whether so labeled or not), courts have looked to the dollar value of the benefit conferred upon the defendant as one measure of recovery.

That’s why quasi-contract is the third theory in all of our complaints.

Quasi-contractual recovery cleans up a variety of other technical defects as well. Among them are:

a. The daily defense that no fee schedule was received (and therefore impliedly accepted by acceptance of referrals).

b. A “forward pass” where there’s no deal with the eventual employer.

c. Recontacting the candidate after a limitation period in a fee schedule or employer placement service agreement (PSA). Too often it’s one year.

d. A variety of “good faith” employer mistakes (thought candidate would pay fee, thought you were from unemployment office, thought there was free trial period, etc.).

e. Getting paid when a candidate:

i. Refuses to accept an interview through the recruiter, but goes out on his own.

ii. Refers a non-candidate who is hired.

iii. Is hired, then hires another candidate.

3. FRAUD

A fraud allegation really gets a feefighter’s attention. For our purposes, fraud is the employer’s intentional overstatement, misstatement or concealment of something regarding the search that induces the recruiter to work for nothing.

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You don’t have to look beyond your job order to find something like that. For example:

a. Were the “exciting” job duties inflated?

b. Was “occasional travel” synonymous with “office in car?”

c. Were things like “must change boss’ bedpan” omitted?

I know — duties in all jobs are overstated, misstated or concealed. It’s the way the game is played. Every job since Job’s has been created because someone else didn’t want to do it. That’s why it became known universally as “work.” People are paid to get them to accept. Further, that’s why people are paid to recruit them! And the difficulty of doing so is why they’re paid so well.

The fact that employers lie to candidates and that candidates lie back isn’t what you’re suing about, though. You’re suing about misrepresentations to you when you took that job order. Each of them relate to that little “fee confirmed” box or similar verification that it’s been cleared. There’s a big difference between working on a “contingency-fee basis” and working “for nothing.” That difference is the amount of your net income.

So if you’re spending your precious time, talent and treasury looking for someone, the least the (sometimes) hirer can do is be straight with you. And the most he has to do is pay you when you place someone in spite of his specious specs.

You justifiably rely on the misrepresentation that he’ll pay the fee (or the omission to tell you he won’t). Then it’s just a matter of proving your damages. Time records, fax and Email logs, phone bills, correspondence, candidate background sheets, resumes, send-out sheets, introduction slips, debriefing notes and other documents establish your case.

Fraud is not a contract principle — it’s a civil (and criminal) wrong. As an intentional tort, the court has the power to punish the employer and set an example of it. These punitive and exemplary damages are in excess of the compensatory (to compensate) ones available.

So your fee is just the beginning. The big issue in fraud cases is whether the employer intended to:

a. Write its own no-points, no-interest, liberal repayment loan in the amount of your fee, or

b. Lead you into placing someone for nothing.

Courts use words like “malice,”? “ill will” and “scienter” (unscientifically defined as “knowledge of the falsity”) to describe that certain “hatefulness” that goes beyond shrewd business practices. But like many words in the legal lexicon, it’s a judgment call by the judge (or jury).

Evidence that has helped us win fee avoidance cases on a fraud cause of action includes:

a. A letter from the hiring authority confirming the search, but rejecting the candidate who was hired a week later.

b. An application form with the same date as the one produced by the employer, indicating the recruiter was the source of the hire.

c. The testimony of an employee that he was introduced to the candidate he “referred” by the HR manager.

These (and many others), when connected up with feefighting fiction by the employer, prove the material misrepresentation (even by silence) that drives damages right through the roof.

Any paralegal can frame a pleading that can weave fee-avoiding facts into the elements of fraud. You’ll think that’s all you need to get the employer’s attention so it will pay the fee.

This reasoning is half right.? It gets the employer’s attention. However, instead of paying the fee, it vigorously defends the case (and is around twice as likely to file a cross-complaint against you). Based upon what theory? What else? Fraud! An oversell here, a candidate con there. — Always something a paralegal can paragraph.

This is known in law lore as a “psychological cross-complaint.” It makes you wonder whose lawsuit it is. It ups the ante. It evens the score. Your lawyer’s sorry he listened to you. Now he’s staring down the barrel of a contingency-fee defense case.

So be sure your facts are straight — from the starting gate. If they are – and your lawyer’s up to the task -? your barrel’s on a bazooka.

Fraud is a crime too. However, most police won’t even take a report on a feefight. After 93 seconds of obligatory listening they’ll tell you it’s a civil matter. Four seconds later, they’ll refer an ex-cop who’s an attorney.

4. UNFAIR TRADE PRACTICES

The common (judge-made) law of fraud has been codified into statutory regulation in many states. This is because the legislatures wanted to specifically prohibit “unfair,”? “deceptive” or “fraudulent” activities by taking the discretion away from the courts. The most popular punishment is “treble damages” (three times the amount of your fee).

The burden of proof is often the same as fraud, but once it has been met the damages are automatic. So if you:

a. Prove your fee is due on the breach of contract theory, and

b. Prove the employer’s conduct is prohibited by the statute,

c. You get whatever multiple damages it says.

But be careful about inviting a cross-complaint, as with the fraud cause of action (Item 3). There are two reported cases against placers using these statutes. (Winston Realty Co., Inc. v. G.H.CG., Inc. t/a Snelling and Snelling, 331 SE2d 677 and Diversified Human Resources Group, Inc. v. PB-KBB, Inc., 671 SW2d 634). These weren’t cross-complaints, but legally it makes no difference.

Unfortunately, there are no unfair trade practice cases against feefighters. They’re won at the trial level, and aren’t appealed. So they aren’t published and can’t be cited as precedents.

As with fraud, unfair trade practices can also be a crime. If so, you can file criminal charges at no charge (except for the one you get). Don’t be disappointed if that’s all you get, though. It’s unlikely the vice squad will storm the employer’s HR office.

5. CONSPIRACY

The fraud (Item 3) or unfair trade practices (Item 4) causes of action can easily be leveraged into conspiracy.

Simply stated, the tort of conspiracy is “two or more people doing something neither can do separately.” Like defraud or unfairly trade.

Conspiracy invokes punitive and exemplary damages, so it’s an important theory. It’s also a crime, making it a persuasive one.

In some jurisdictions, a corporation can’t “conspire with itself,” since technically its a single “person.” But conspiracy can include people not otherwise liable (like the candidate, another recruiter, your ex-employee who billed from home, etc.). This makes it the ultimate bazooka machine gun.

Be careful where you aim it. But it causes enough ducking, finger-pointing, and cross-complaining among the “co-defendants” to get you paid fast. And if you’re not, the co-conspirators can be “jointly and severally liable” in an unlimited amount.

These five routes go around and above your contract rights to reach the fee.

With them, almost every fee collection case is worth something.

Go for it — you earned it!

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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