Placements In The Basement

One of the most frequently asked questions in seminars and workshops is what to do about the “placement in the basement” — the “back door hire,” when you discover a referred candi­date has magically appeared working for a client.If you go through your recent files, you’ll discover that for every four candidates you know you placed, there’s another you didn’t know about. An incredible statistic — one out of five, so you see, rummaging around in the basement for collectibles can be very profitable. But you must know how, or you’ll just waste your time, use a lot of negative energy, and alienate can­didates as well as employers.

The four items that follow are designed to help you collect those collectibles ASAP:


People who have never worked a desk (including your “client” and candidate) have no idea of, and even less interest in, how much time and effort goes into a search. So they think nothing of beating you at your own game. Since you’re in a “what-have-you-done-for-me-lately” busi­ness and the placement has been made, you are perceived as nothing more than a nuisance.

Calling the candidate is the natural thing to do, but you’re so furious that you mishandle this crucial encounter. The greeting is usually some transparent variation of “Congratulations!” Might as well say “Gotcha!” Sooner or later you pop the question: “Did you know the company never paid us a fee for hiring you?” You’ve locked the candidate into an un­tenable position. His mind starts racing, and he soon realizes that no matter what he says, he’s trapped. His livelihood is on the line.

This approach casts the candidate for the wrong part in the placement play. He is the sub­ject matter of the contract, not a party to it. This means that the only value of the candidate is as a witness.

The best you can hope for is that the candidate will tell the truth about the source of the hire. Don’t expect an advocate — don’t create an adversary. Maybe there should be a sign in your office that reads:


Sixty percent (60%) of the time, the candidate won’t know you haven’t been paid. The rest of the time, he probably won’t care. That’s nice. You can get him to open up by starting out the conversation with “I wondered how things were going in your new job.” Then do the one thing that differentiates a consultant from a “headhunter” — listen. Take notes and draw the candidate out. Even those instructed not to talk can’t resist the temptation if you do it properly. Confirm that the candidate informed the employer of your part in the referral, that you were named on the application as the referring source, that your efforts were discussed during the interview. Don’t blow your cover, just lead the conversation a little.

If you can, end the conversation without telegraphing you’ll be pursuing your fee. If the candidate brings it up, just say you’re not sure. (You’re not. You’re working on it though.) This will reduce the chances of the next call going from the candidate to the hiring authority.


Under almost all federal and state laws, you can tape the conversation without obtaining the consent of the candidate. The problem is that you can’t play it for any third party. This becomes the equivalent of electronic eavesdropping, violates the candidate’s right to privacy and gets you in that permanent relocation to a job where they don’t pay fees. If you send the tape to a lawyer in a professional capacity however, you’re probably all right. Lawyers aren’t third parties. Legally, they’re you. In fact, the lawyer is bound by the attorney-client privilege from revealing anything obtained in anticipation of litigation. This even applies if you decide not to use the lawyer!

To a savvy attorney, the tape can be worth a contingency legal fee. He can evaluate how precise, articulate, responsive, impressionable, balanced, objective and hostile the witness will be. He can evaluate the facts of the case too. He can note the dialogue so you can take the witness stand and impeach a turncoat with prior inconsistent statements.


We urge you to do this before you call the client. More good placement fees go bad here than anywhere else. Why a contingency fee? Because if you diddle around with hourly rates for advice and letters, you’re removing the incentive for the lawyer. 74% more is recovered by collectors who work on a contingency fee even after payment of their percentage. If recruiters were on an hourly basis, there would be no placement to fight about. That should tell you something about human nature. Defy it at your peril.


If you’ve done your homework, you’re ready to call the employer. Since we urged you to obtain a lawyer, you probably wonder why we don’t recommend that you just turn over the file, and have him call or write a demand letter. Here’s why:

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You can assume that the employer knows you’re going to claim a fee. Occasionally, it’s an oversight — very occasionally. More likely, some other source of the hire will be claimed. Af­ter all, if you can document the open resume, presentation or sendout, and that the candi­date’s employed, the employer has some explaining to do.

Most supervisors or human resourcers won’t deal with your attorney. Instead, the matter will immediately be referred to the corporate counsel. Automatically, the positions have polarized and the dispute escalates.

Explanations tend to be much more complicated when people learn the law. A five-figure “oversight” becomes an argument that you waived your rights, breached your duty, or weren’t the procuring cause. How about but for the newspaper ad, the candidate wouldn’t have come back the day after the sendout and forced the employer to hire him? Lawyers live in a world of proof. What actually happened and what you can prove are two different things. Blaming lawyers for this is like blaming recruiters for employee turnover.

Just call the person who gave you the job order and say something like, “I understand you hired my candidate.” That usually starts the pump pumping and again, just lead conversa­tion, taking notes and using your tape recorder. Although you can count on a hostile witness later, the comments in Item 2 apply here.

There is a temptation to try to settle the case directly with the employer. This is a mistake, because you can’t do it without compromising yourself. Why would you take less than the full fee? If you say, “The only ones who’ll make any money on this are the attorneys,” you sound like you think it’s a weak case. If you say, “I’ll have to pay some lawyer 40%,” you’re giving away that your lawyer is being paid on results, not effort. This means that a defense attorney (paid on an hourly basis) can wear you down just by papering him. Even your offers to reduce the fee in exchange for an exclusive assignment or to fill another opening at a re­duced fee are empty. You’re entitled to be paid for this placement now. Compromise yourself and you compromise the industry. Judges usually don’t compromise placement fees. Either there’s a contract, or there isn’t.

Your call should be for free rummaging — what lawyers call discovery. If you receive an of­fer, just contemplate — let the client negotiate — against himself. There’s no law against con­templating. We do it all the time.

If you fall into the trap of writing a letter laying out the facts and “proving” to the client that you’re entitled to the fee, you’re making a big mistake. It’s so tempting to send copies from your file, articles from The Fordyce Letter or pages from the National Placement Law Center Fee Collection Guide, but their lawyer will probably use those same things to support their position.

At this point, every case is different. Maybe it’s time for a legal letter-writing contest, but proceed with caution. The days of hiring a lawyer to “write a letter just to show them we’re serious” ended when the legal profession became overcrowded in 1972. Letters usually just delay the solution and educate the employer (with you paying the tuition).

But file a lawsuit and you are serious (even of you’re not). Few employers will risk chang­ing documents or encouraging employees to change stories. It’s called tampering with evi­dence and perjury.

Collecting placements in the basement requires a combination of objectivity, patience and (maybe) a willingness to give up part of the fee for legal assistance. But it’s almost always worth 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


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