Jeff on Call: Recruiting From Former Clients?

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Q: How long must I wait before I recruit from a former client?

The underlying question is, “What constitutes a former client?”

Establishing a recruiter-client relationship usually involves five major steps:

  1. Receiving a job order.
  2. Clearing the fee.
  3. Transmitting the fee schedule.
  4. Sending out the candidate for an interview.
  5. Placing the candidate.

Even if you do all of these things, ask any human resourcer whether his company is your “client” and he’ll reflexively answer, “No.” But he’ll change his answer almost as fast if:

  • He’s trying to prevent you from raiding his company.
  • He wants you to be responsible for your candidate who couldn’t, wouldn’t, or shouldn’t have been hired.
  • He wants you to pay for the mistakes, misdeeds, or mishaps of your candidate.
    He wants you to do a little free espionage on his company’s competitors.
  • He wants you to conduct a free survey of industry hiring and pay practices.

Unless you’re accepting retainers or placing temps on site with the business, use your best judgment. You’re under no legal obligation to wait.

Otherwise, waiting one year is more than enough time — and be careful not to be accused of initiating the communication.

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If you do decide to run with a candidate and you’re not sure whether there will be repercussions, tell him you’ll work with him only if he notifies management, and obtains the clients’ consent.

An email or phone call to you from the client is fine. If it’s a call, ask for confirmation by email or do it yourself.

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To participate in future Q&As, email jeff@placementlaw.com. Keep in mind you should always consult with your own attorney. Nothing contained herein should be construed as legal advice. It is for your information only.

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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6 Comments on “Jeff on Call: Recruiting From Former Clients?

  1. Jeff: This is not posted in the spirit of taking issue with what you have said. Heck, for all I know, what I am about to say might end up making me YOUR client at some point.
    From our spot out here doing this daily, we have some (what we consider to be) practical rules and definitions. For us the word ‘client’ is never used unless dollars have changed hands.
    On the rare occasions we have the ‘need’/opportunity to recruit from someone who has been a client we, we first honor any written ‘lookback’ agreements and then simply consider whether the need/opportunity is greater than the value of ever working with them as a client again should everything be known.
    This way we don’t need to go talk with someone at the client which just seems like a good thing to avoid.
    The times we use the “You must get permission” line with the candidate is when we actually have a client relationship and it is something we value.

    This is just what we do…but now I will ask for clarification on two things you said above.
    1)”Otherwise, waiting one year is more than enough time”
    Is there any legal difference between a day and a year if there is not a written contract? What does this mean?

    2)”and be careful not to be accused of initiating the communication.”
    Do you actually mean don’t initiate communication? at age 53 and having been married for a LONG time the idea of being careful not to be accused of something is just plain funny 🙂

    Thanks,Dave.

  2. I’m right there with you Dave with a couple of exceptions.

    1) Our definition of a client is any company that we are very sure will come to us first and give us a 30 day exclusive on all appropriate searches regardless of whether money has changed hands yet. That does not include any company we just wish was a client.

    An example might be that a Senior Executive and good client from Company A hops to Company B or is involved in a startup of another company. We would not recruit out of there, if we were pretty certain that when there was recruiting work, we would be getting it.

    2) Another situation would be if a good client suddenly (new HR head, new CEO etc.) wants us to cut our commission rate or instead of a 30 day exclusive, wants us to be part of a multi-recruiter dog pack. In this type of case we would fire the client but might delay recruiting from them as long as they were contractually bound to pay us for candidates that we had already referred to them should they hire those candidates. Our contract reads that we get referral credit for two years. We would make it absolutely clear in writing to the now ex-client that we would expect to be paid if they were to hire one of those candidates and that if payment was not forthcoming we would use all means possible to collect. If we were to recruit from that company it could plausibly (but not necessarily) give them an out to escape from our contract. In practice although I would stay away from a wholesale recruiting raid (until the contract period is over) I likely would call a couple candidates from the company who I knew very well and trusted to keep their mouths shut if I had a specific search that they would fit.

    Lastly, I would like to register a complaint. Dave, your blog has been inactive for several months. I hope you have just been enjoying a summer vacation. Your blog always focused intensely on the bottom line. At best your many posts on new techniques and technology all focused on those that provided tangible evidence for what actually works and took on those that were nothing but the cool new technology flavor of the month. Summer’s almost over. I hope to see you back soon.

  3. Dave,

    Great hearing from you. As always, you add to the conversation.

    1) The passage of time is a very important legal consideration. With it, employers can waive their rights, can be “estopped” from asserting them, and can be “barred” from enforcing them under the theory of “laches” (unreasonable delay). Waiting one year works well because it is considered a reasonable time, and is justified nicely by the contingency fee based on a one-year estimate of earnings.

    2) Recruiters are usually accused of the solicitation in these situations — regardless of whether or not they initiated the conversation. That is not a good thing. So I meant exactly what I said about being careful not to be accused of it. Tom Keoughan covers how to recruit the right way in this situation, and his advice should be followed.

    Hope this helps!

    Jeff

  4. Wow, I don’t have any argument with you OR Tom,Jeff. I do stand by the idea that I can control what I do but not what I am accused of (this gets fun when people talk about what we do vs what we appear to do with LinkedIn for example).

    I appreciate the input on passage of time and in actual practice probably heed the advice by default. I guess I was saying I honor my agreements but I make them carefully.

    As for my blog…I HAVE been taking a bit of time off but it also has moved because there’s a bit of a disconnect between TFL’s right to edit their content and my right to say what I want on my blog. NO argument over that,by the way. Totally supported.

    I have offered to have them post the ones that don’t have offensive terms about dead pop stars but now that it is in a place where no one will see it but me it is viewed as ‘previously published material’. I am ok with that… but here’s a link…

    Read Dave’s Blog:
    “Truth, Justice and the American Way of Headhunting”
    http://hdhuntr.wordpress.com

    Thanks,Dave.

  5. I have a situation in play where a company recruited and hired a person for a full time staff position five months and 21 days after I had the candidate in for an interview with that company for that exact position with the same exact people in the company. Nothing changed in that frame between any of the parties. The company argues that because they didn’t hire him in March (2009) that is was fine for them to recruit this individual on their own in August (2009) and that my referral is not relevant due to the fact that the applicant was not hired on the initial round. One of the individuals from the interview process in March (so introduced in during the interview I created) called, recruited and collected a fee for bringing my applicant back to the company for interview. I have argued that a referral stands for at least 6 months and in a truly ethical world the frame is a year, even if not stated as such on a contract.
    Any advice as on this matter would be greatly appreicated.

    Eddie D’Zmura Principal
    Avisar Search 978.234.1341 edz@avisar-search.com

  6. Hi Eddie,

    The answer to your question is as easy as: “What did the signed contract say?” If it says that you should be paid then you should hire an attorney who specializes in placement law and enforce your contract. If there is some loophole in your contract which allows the company to wriggle out of paying you, again hire an attorney both to discuss your case and to close the hole in your agreement letter for the future. Your contract should be a living document and you should consider tweaking it whenever you discover a loophole.

    I’m getting that queasy feeling though that you were flying naked without a signed contract. Again contact a knowledgeable attorney and review your case, and even more importantly, work with him to put an appropriate contract together. Some recruiters work without a signed contract for a whole potpourri of not very convincing reasons. (That is the absolutely first time I have ever used the word “potpourri” in a sentence. May it be the last.) Most of the time it boils down to them being afraid to ask for one. Get over it. This is Business 101. Companies sign contracts with all of their other vendors. Why shouldn’t they sign one with you. HR and internal recruiting departments have become much more aggressive about trying to use recruiters’ work without paying for it. By not requiring a signed contract you are showing them that you are less than sophisticated in the ways of business and a perfect candidate to be waylaid by a situation like the one you presented. I can almost hear the soft chuckle and see the gleam in their eye. Without that contract your ability to prevail and receive payment is greatly weakened. If you leave the keys in the ignition and the top down on a shiny new convertible and it gets stolen – it’s almost not even the thief’s fault.

    All the best,
    Tom Keoughan
    http://www.toyjobs.com

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