Fee Cheaters: The Basics for Trumping These Dirty Dealers

“Fee? I never agreed to pay a fee to hire anyone!”

“We never signed anything with your company!”

“You can say or do anything you want…we aren’t paying you!”

Anyone who stays in this business long enough will eventually hear those dreaded statements. Usually, these are people who know they owe you, but are liars. Lying fee avoiders are easier to deal with than the ones who really believe what they claim.

Either way, thankfully, you will not have to deal with these folks very often. In over 25 years in this business, I have been required to go to court to get paid only four times (and won all four cases) out of a total of only about ten serious fee disputes. The remaining six cases resulted in my getting paid before things got litigious because the fee avoider felt the pain of avoiding payment exceeded the pain of paying.

Most fee avoiders are unethical people by their very nature, in all aspects of their lives. You are wasting your time trying to reason with them. You need to beat them at their own game. That does not mean compromising ethics or becoming as evil as they are. It means having your ducks in order.

Savvy Safeguards

In hundreds of placements, I have never used signed agreements. Many have told me that by not using written agreements, I am playing with fire. To some degree, they are correct, but I have found that most business leaders are ethical, upstanding people who keep their word, even in states where signed agreements are the law.

Nonetheless, I have safeguards built into my process:

First, in my initial conversation with a candidate, I get his word that he must back me in the event fee arguments arise, and I gain that commitment before I send him on his first interview. (Some have told me that to mention a fee with candidates is tacky…I disagree. All candidates know they have a fee associated with them and that most employers are not going to be thrilled to pay it.)

Second, after I arrange an interview, I email the resume to the interviewer who verbally agreed to the fee. In the email, I restate the fee amount if a hire occurs.

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Third, I coach the candidate to ask the interviewer upon arrival if he received the resume from the recruiter. An affirmative answer is usually blurted out, confirming receipt of the email, which restated the fee. This alone has trumped several potential fee avoiders when I informed them that I will call the candidate (now employee) to testify that the interviewer received the resume before the interview. The words, “You can explain to the judge that you didn’t read the email and see what he thinks” got us paid.

Fourth, if the preceding does not work, use the Internet to research fee avoiders in-depth. Anyone who attempts to cheat us probably has a track-record of cheating others. Also, in our industry, we deal with company presidents and business owners…high-profile people. Fee avoidance plus a high-profile works more to our advantage than disadvantage.

You may find some golden nuggets. As one example, a business-owning fee-avoider claimed he never agreed to pay any fee, when it was done both verbally and supported through email exchanges between this person and the recruiter, prior to the first interview. In essence, he was lying, but he used “no written contract” as his argument. Good Internet research revealed how this person had been the graduation speaker a few years earlier at the local university in the town where his company was located. In the text of his speech, which was on the Internet in its entirety, were the usual lofty statements such as “always dealing with the highest ethical standards,” “seeking to understand more than to be understood,” “always doing the right thing, no matter how difficult,” and “always meeting your obligations.”

When it was noted to this person what a great speech he had given, he suddenly rethought his position about going to court. It is doubtful that a compliment created goodwill. What probably occurred is the risk of making such grandiose public statements and then having one’s name in the public record for a judgment of nonpayment of funds owed was too unsettling.

(Be certain that all information found is always used in a lawful manner. Consult your attorney first.)

Hypocrisy exposed is far more costly than a placement fee.

This article is from the April 2009 print Fordyce Letter. To subscribe and receive a monthly print issue, please go to our Subscription Services page.


4 Comments on “Fee Cheaters: The Basics for Trumping These Dirty Dealers

  1. Okay Neil, but my process only has one safeguard – and it’s foolproof.

    1. Never start working on a search until you have received the signed contract – signed it yourself – and email it back using registered email. No fuss, no muss and no “he said, she said” in the courtroom.

    You seem to take some sort of weird pride in not requiring a contract. Business people aren’t taken aback. They sign contracts all the time. If they won’t sign an agreement; those are alarm bells you’re hearing NOT the Ka-ching of the cash register.

    Tom Keoughan

  2. Tom,
    Whatever works well for you is good. I do a lot of placement, not search, where I introduce a candidate, arrange the interview, state the fee, all on one call. That has resulted in many placmeents for me where an opening did not exist, especially over the past three years. If I finish that type of call be saying “Oh by the way, I’ll email my contract to you. Sign it and send it back to me before meeting this candidate” 85% of the time the next noise I would hear would not be a bell ringing…but a dial tone.

  3. Neil,

    I totally agree with Tom. I have had only one bad experience in the ten years I’ve been in recruiting, and that was dealing with a friend who was a VP. who signed my Agreement. After the placement, he forwarded the invoice to the Owner, who would only agree to pay 25%, claiming I didn’t work hard enough for full fee.
    I now will only proceed with an agreement signed by the officer of the Corporation or their approved executive.
    I cannot think of a single company I work with that does not sign contracts every week which would typically exceed my fees. They expect it.
    And, if I need to reduce my normal fee, I tell the client that I’m removing the guarantee. Has worked every time.

    Bob Campbell

  4. Bob,
    What works for you is also great. I’m sorry to read that your bad experience ivolved a friend. Any business leader who uses the excuse after the fact that you didn’t work hard enough for the fee, a fee agreed to by a subordinate who he (probably) knew was your friend, is exactly the dirty dealer my article is about. And I hope your friend did the right thing by you after observing his boss take bread off his friend’s table–immediately found a new job and new boss.

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