Placements And The Law


There isn’t a recruiter alive that hasn’t thought about being a “management consultant”. Oh, we call contingency-fee recruiters “consultants”, and they give advice to management all the time. But that’s the difference. They give it.

Here are some things to think about if you decide to enter the management consulting field:


On a regular basis, we see letterheads that include “executive search” or “management staffing” with such items as “human resource development”, “compensation planning” and “market research.” Invariably, the folks that market themselves this way are:

a. Contingency-fee recruiters attempting to improve their image.

b. Contingency-fee recruiters attempting to develop a management consulting business.

c. Management consultants attempting to develop a recruiting business.

It doesn’t work. Trying to convince clients to employ your recruiting firm for employee evaluations, job descriptions, compensation plans and other hourly-rate consulting projects is futile. Companies will seek specialists with strong track records for these tasks. Face it . . . if they won’t even pay you retainers for your recruiting expertise, don’t delude yourself into believing that they will do so for projects beyond the scope for which they usually utilize your firm.

If you’re going to join the “advice squad,” you’d better do it undercover. Establish a separate business (name, logo, phone number, brochure, etc.). In that sense, “joining” is jumping into management consulting.


The longer it takes to explain what you do, the less interested the employer will become. If you doubt this, just think about your last cold-call to a long-winded recruit.

As explained by Robert Kelley in Consulting: The Complete Guide To A Profitable Career:

Many consultants make two mistakes. First, they explain what they do in vague, long sentences which bore and confuse the client. Second, they want to be a jack-of-all-trades; they do not want to be tied down to any particular area. The public cannot distinguish between these two types. Instead, potential clients write off both types as amateurs.

Samuel Goldwyn (the “G” in MGM) became so tired of being bothered by people with movie ideas that he gave each one of them his business card and said, “Write your idea on it. If you can’t, it’s not clear enough in your own mind.”

Consultants suffer from the same problem lawyers have . . . stuffiness.


These are the requirements to join the advice squad:

a. An age of 40 to 70. (No ID required.)

b. A judicious look on your face. (If you’ve been recruited, you’ve got it.)

c. An ability to pronounce at least 20 of the latest human resource buzzwords. Doublespeak is a mandatory requirement and the words can be found in human resource trade publications.

d. An ultra-conservative suit or dress.

e. A brochure or web site about your expertise and services. (Contingency-fee recruiting should not be mentioned.)

f. A business card.


In my book Finding The Right Job At Midlife, an entire chapter was devoted to the “Consultant Phone Call.” Part of it said:

Telephone solicitation is the best way to obtain an appointment. Simply look in the Yellow Pages in any field you like with an appointment calendar open, and start in the ‘A’s. The beauty of the “consultant” routine is that it postures you immediately to talk to the hiring authority without alienating the HR type. It is an accepted practice for consultants to discuss “projects” directly with those responsible for them. Even the HR field has its cadre of management development, training, human factors, wage and salary, recruiting, outplacement, insurance, pension, employee benefits, safety, communications, labor relations and other consultants.

Listen actively, but don’t give away your valuable advice when clients are willing to pay for it. How much is “too much”? Anything beyond “just enough.” You’re giving away the sample, not the product. Fee or free, which will it be?

The emphasis is on helping someone else. We are utilizing one of the most basic success principles ever discovered:

You will get what you want if you give others what they want.

The call also considers the natural insecurity of anyone who depends upon another for emotional and financial support. It’s a success principle deeply etched in bronze:

There’s a big difference between advising and assisting!

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A business plan is valuable is three ways:

a. It forces you to think through each aspect of your consulting business.

b. It enables you to forecast what to expect before performing your first consulting assignment.

c. It assists you in presenting your services.

Some of the items it should contain are:

a. A summary of the services offered (in no more than two typewritten pages).

b. A profile of the industry you will serve (history, products and services, location, size, projected growth, etc.)

c. A market analysis of the need for the services offered (not just the greatness of your idea.)

d. A profile of the competition (services, location, size, effectiveness, etc.).

e. An operations strategy (marketing approach, fees, use of specialists, etc.).

Business plans, like consulting itself, can easily lead to a terminal case of doubletalk lockjaw, so keep it as direct and simple as possible.


This is a highly scientific process that you don’t contend with in contingency-fee recruitment. Well … at least you’re not supposed to, since you have a printed fee schedule.

The majority of consulting firms prefer to use the “Rule of Three.”

First establish your base rate by making a few sourcing calls to find out what employees are being paid for the activity. Of course, you’ll find many variations, but this will give you a range anyway. Then convert the annual salary into an hourly rate by dividing it by 2,080 (8 hours X 5 days X 52 weeks).

Next, crank in overhead costs. Since you’ve already got your fixed expenses in your placement business, the additional overhead is negligible. If you’re a working manager, you should consider a third of your income as overhead though, since you’ll be spending time marketing and performing the new services. Divide your last 12-month billings by 2,080, and add that number to the base rate.

Then multiply that number by three to determine the hourly billing rate.


Although consulting should be marketed separately, the average earnings of a consultant are only about half of those of an average recruiter.

It’s a much more consistent business however, much like a temporary service. During a recession, business increases due to the desire of clients to find out why they’re in trouble and to pay only for what they need, so use consulting as a way to even out the cash flow and increase your exposure to new clients.

While a recruiter won’t be hired as a consultant, the opposite isn’t true. In fact, almost every major consulting and CPA firm has a search affiliate. This is because when you’re inside a company, bumping into its inefficiencies, changes in personnel are always recommended … and you just happen to know a super recruiter.

“Expertness” is in the eye of the beholder and your primary value to a client is in the collective experience you’ve gained helping clients and candidates since you first picked up your joborderphone. A few buzz words, a proposal, a “consulting agreement,” and you’re on your way.

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


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