Counsel’s Corner

“Will the Court Enforce your Agreement?”

Note: This article is not intended as legal advice. In all instances the reader is cautioned to consult with legal counsel when utilizing this information. A.B.F.

I. We are finally in Court

It was Monday morning, and the courtroom was crowded with the usual assortment of litigators waiting their turn to get to the judge to argue their motions with the fervor of a Clarence Darrow, or in the alternative to set their trial date. One young lawyer sitting in the back row was trying to absorb what was happening as each lawyer approached the bench and addressed the judge, some in low tones, while others spoke in a loud, effusive manner. All the while he wondered what should be his approach in trying his first jury trial. He had come early to watch the judge to see if he could learn something about him before the trial began and to get comfortable in the courtroom. It would be at least an hour before his case was called. So he continued to listen and review his notes.

The case he was to try this day on behalf of his client, a contingency recruiter, involved a fee of $50,000 for the placement of a corporate executive for a public company that was paying the executive a yearly salary of $250,000. The fee was 25% of the first year’s computed income. He began to review his notes, thinking of how he would present a prima facie case

II. Plaintiff’s Facts

As he reviewed his notes he remembered the first time his client had called him and told him about the trouble he was having collecting his fee. The client was so angry at the outset of the conversation that he had to calm him down so that he could hear the “facts.” But now on this day of trial he had to think in legal terms of how to present his witnesses so he was able to lay out in a logical sequence the “facts” upon which he hoped to prove the client’s claim.

First, he needed to demonstrate that his client had a commitment from the defendant to pay a fee if they hired any candidate he referred. He planned on doing this by having the client, as the first witness testify that: he had received a resume from a candidate who stated that he was seeking to leave his present employment; that he then had called the candidate and told him about an anonymous bank and asked permission to submit the resume; that the candidate agreed; he then sent the resume together with a fee schedule to the defendant bank.

He would then have his client testify to how he had called the defendant to question him about the resume; how the defendant asked to interview the candidate; that he then told the candidate to call the defendant; that the client had then called the defendant to tell him that the candidate would call; that he thereafter checked and learned that the call had been made; and that at a point thereafter he learned from the defendant that the candidate had been hired at a computed annual salary of $250,000 and that the fee was 25% of that sum equaling $50,000.

In support of the plaintiff’s testimony, he would offer the records of the plaintiff that had entries made by the plaintiff reflecting telephone calls made by plaintiff and defendant, be accepted into evidence on the basis that they were records that were kept in the ordinary course of business. While not evidence of the facts they reflected, they did offer support of the facts.

His other witness would be a contingency recruiter competitor with long experience in the industry and a leader in the trade association of contingency recruiters who was knowledgeable about custom and usages in the industry. He would have him testify that oral contracts were the norm and that it was understood that once a candidate was presented, if later hired, the recruiter was entitled to its fee and expected to take no further action unless requested to do so.

III. Defendant’s Facts

At the other side of the courtroom, the attorney for the defendant was likewise reviewing the evidence he was going to present to rebut the plaintiff’s claims for a fee. He would rely on the defendant as a witness who would testify that long before he had accepted the referral from the plaintiff he had signed a 60-day exclusive search agreement with a retainer recruiter and never told the plaintiff about it; that the retainer recruiter also had the resume of the candidate and submitted it to the defendant; that the retained recruiter told him that he had contacted the candidate who told him that he knew about the job opening through the plaintiff but had not yet been interviewed for the job; that when he realized that both recruiters were dealing with the same candidate he stopped taking calls from the plaintiff.

The attorney then planned on having the retainer recruiter testify how he set up interviews for the candidate with the defendant and how he had convinced the candidate and his wife of the merits of moving to the town where the defendant had its main office and where the job would be located, and that the candidate had accepted the position.

The trial proceeded as planned. Both sides presented their evidence, the judge denied defendant’s motion to dismiss on the claim that plaintiff failed to prove that it had entered into a valid contract with the defendant for it to pay a fee for a placement. Defendant also objected to plaintiff introducing into evidence certain records that it had reflecting the telephone calls and conversation between the parties in support of the facts testified to orally. The judge denied this motion as well. Defendant then requested that the judge charge the jury, that in order for the plaintiff to collect its fee, it had to be the predominant efficient procuring cause of bringing about the candidate’s employment. The judge refused to so charge the jury.

IV. Summations and Verdict

After both sides rested, the attorney for the defendant addressed the jury and tried to persuade it that the plaintiff had not really been the efficient, procuring cause of the placement; that it had not made the appointment for the interview that resulted in the hire; that it had not done anything to help persuade the candidate and his wife to move to the town where the defendant was located; that, in fact, another recruiter had done all of this, and that this recruiter had been paid a fee for its efforts, and that the defendant should not be obligated to pay two fees.

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Then the attorney for the plaintiff addressed the jury. He reminded them that the plaintiff had been asked by the candidate to find him a job; that the plaintiff had then asked the defendant if it would be interested in a candidate with his qualifications and when told yes, it had then sent the resume to the defendant for consideration. He then set forth the testimony that showed that it was the defendant who had prevented the plaintiff from completing the normal recruitment process by not returning any of the plaintiff’s telephone calls when it attempted to set up the interview for the candidate. And at the end of his presentation, he reminded them of the testimony of the expert witness who had testified that the practice in the industry favored giving the placement fee to the recruiter who had first introduced the candidate and that the recruiter was not obligated to do anything else in order to earn its fee.

The jury then retired to consider a verdict and upon their return advised the court that it had found in favor of the plaintiff for the amount of $25,000.

V. Defendant Appeals

The Appellate Court sustained the verdict in favor of the plaintiff and made a number of interesting observations that impact on the everyday presentation of candidates to potential employers by a contingency recruiter where other recruiters are simultaneously working on the same job order, and particularly where a retainer recruiter is also involved.

Defendant argued that the interview was never scheduled through the plaintiff; that defendant did all of the work to bring the parties together; that mere negotiations by the contingency recruiter that did not result in bringing the parties together do not entitle the contingency recruiter to a fee. Defendant also argued that as a matter of law only one “employment agency” can be the efficient procuring cause of an employment transaction and the defendant can only owe one fee. The Court also found that the plaintiff had entered into a contingency fee contract long before any efforts by the retainer recruiter

The defendant’s claim that the plaintiff had to be the “predominant” efficient procuring cause of the employment of the candidate was also rejected by the court and that it had only to be the efficient procuring cause of the employment. And it further pointed out that the defendant’s actions of not returning the plaintiff’s telephone calls prevented it from being the efficient procuring cause of the employment as defendant did this in an effort to avoid its fee obligation, even though plaintiff had made the initial contact of the candidate with the defendant.

VI.Conclusion

Thorough preparation of witnesses and the assembling of the records and other writings for presentation of the essential evidence to prove a case is essential for success at trial.

Having expert testimony introduced to explain the practices and customs of the industry go a long way to giving perspective to the evidence about what occurs during the recruitment and placement process. Having some understanding of what happens at trial can be helpful in a recruiter’s conducting day-to-day activities. The better the records, the clearer the contract obligations (preferably in writing and signed by the prospective employer), and having a paper trail of all of those activities will always help a recruiter prevail in a trial for a fee.

A.Bernard Frechtman, Esq. is the author of Staffing Industry Law, A Guide for the Personnel Professional. He may be reached at (212) 580 7402 or via his web page: http://www.frech tman.com.

A. Bernard Frechtman, Esq. is the author of Staffing Industry Law, A Guide for the Personnel Professional. He may be reached at (212) 580-7402 or via e-mail at abflaw@att.net or on his web page: www.frechtman.com.

This article, the many others that he has written and the contents of his book, are based on his 50 plus years as an active litigator and transactional lawyer, predominately practicing nationwide in the staffing industry. Bernie maintains an active office in New York City while residing in Indianapolis, Indiana, from where he commutes whenever court appearances require it. His representation has included public companies, nationally franchised staffing companies, both state and national staffing industry trade associations, and litigation from the basic fee controversy to the more sophisticated and complicated trade secret, restrictive covenant and contract litigation. He has also served as an expert witness.

Among his many accomplishments is being named by NAPS as its first Hall of Fame Honoree. A graduate of Brown University and St. John's University Law School, where he was a member of the Law Review, Bernie is admitted to practice in the States of New York and Indiana, various Federal District and Circuit Courts and the U.S. Supreme Court.

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