Think You’ve Got A Case? Here’s How We Decide

Proving you earned your fee is far different from earning it. Since we accept collections on a contingency fee basis, we become your partner in the investment. For this reason, we have developed guidelines to decide whether to invest our time and money. Using them has enabled us to attain a 93% collection rate. Here they are:

1. Is The Recruiter Being Realistic?

It’s natural for unpaid recruiters to be angry. Some say they’d rather see us get the money than let the employer get away with not paying. Others insist they want far more than the full amount as compensation for their pain and suffering. We admire them, but suggest they call their local bar association for a referral.

You don’t satisfy clients by defying the laws of human nature. Even with a 93% collection rate, there is always some uncertainty in court. And some certainty too – certainty there will be delay and expense. There’s no defense against defying the laws of human nature.

2. Is The Case Set Up Properly?

I suppose we could approach a 100% success rate if we were more conservative in our investments. But that would take the fun out of the game. Instead, we look at four primary documents:

  1. The job order. Is it complete enough to show the employer didn’t hang up when the conversation began? Does it at least contain the title of the job? Does it show the fee was confirmed? Does it verify the fee schedule was sent?
  2. The fee schedule. Not a problem unless it’s been modified (see Item 3). If a fee letter is used, and there’s no copy, the blank form is a poor substitute. Don’t expect the employer to admit it has the original (unless it looks different from your creative copy).
  3. The invoice. Also not a problem unless it contains a fee reduction, unreasonable late charge or other defense. “Revised” invoices are another payment pain. They supersede earlier ones, so be sure they contain words of self-destruction if they’re not paid (see item 3).
  4. The correspondence. Too much written dialogue often gives away the fee. The classic cases educate and anger the employer. Too little written dialogue before the placement isn’t fatal, though. It just makes proving the case a little more interesting. Data sheets, applications or resumes on candidates show you didn’t make the whole thing up. Beyond that, they don’t budge a judge.

3. How Much Is Involved?

We slide the scale on this one, depending on where the action must be filed. It starts at a minimum placement fee of $10,000 in local jurisdictions.

So if you have a situation where the employer has made a partial payment, the amount in controversy is reduced by that amount. If you’ve negotiated a lower fee, but it’s still not satisfactory, we reduce the amount in controversy by that amount too. You don’t have to pay a lawyer for money that you can get on your own.

A common problem here is where you agree to reduce the fee prior to the placement. Then the placement occurs, you send the invoice, and the client doesn’t pay. Can you revert to the full fee? Yes, if you do three things:

1. Cross out and change your printed fee schedule to reflect the modification, and write the following on it:

Maximum __% fee provided payment in full is received within 10 days from date of invoice. Otherwise, full fee pursuant to attached fee schedule will apply

2. Attach another unmodified printed fee schedule.

3. Invoice the full fee and the reduction (designated “Reduced fee if paid in full on or before __________, 20___.”). Then at the bottom of the invoice, insert the following:

Reduction in fee pursuant to agreement with ________________ on __________ __ 20__.

Otherwise, you’ll be stuck with your lower fee. We’ve never seen a case where a court decides you’re entitled to more than you actually charged.

4. Can Attorney’s Fees Be Recovered?

It’s often a shock when clients discover their attorney’s fees won’t be reimbursed. Almost all states don’t allow this automatically, though. If yours doesn’t, or you’re placing outside its borders, insert the following words on your fee schedule:

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In the event it becomes necessary to enforce or interpret this fee schedule or any part thereof, the prevailing party shall be entitled to reasonable attorney’s fees and costs, in addition to whatever other necessary and proper disbursements may be awarded by a court of competent jurisdiction.

Why not just draft the provision to allow you to recover if you win? Two reasons: First, it’s pretty heavy to drop on an employer before you even have a sendout. Second, most statutes or court decisions interpret this as going both ways anyway. Inserting an attorney’s fee provision on an invoice alone is wasting ink. The contract has already been fully performed and you won’t get an order for reimbursement.

Attorney’s fee provisions are used by over half our clients in their fee schedules, with no marketing or enforcement problems. So please use one.

5. Was Another Lawyer Involved?

I use the ol’ “ex-HR manager” routine (“I know how you feel”), or my credentials most effectively when we hit hard and fast.

Coming in behind another lawyer invariably means:

  • Things have not been done our way.
  • The effort was unsuccessful.
  • The employer received a free factual and legal education.

We’ll help with on these. But they’re often a heartbreak.

6. Did The Recruiter Wait Too Long?

Placement fees are even more perishable than the placements they represent. The longer the client waits, the more likely the intake documents in the candidate’s file will be changed (or sanitized), collusion with the candidate (or another source) will occur, or that there’s a fall-off.

It’s also more likely the client will give the case away by over-negotiating (see item 5).

If you follow these guidelines, our 93% collection rate should work for you too!

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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1 Comment on “Think You’ve Got A Case? Here’s How We Decide

  1. Have a long time client that I’ve billed over $600k that hasn’t paid last 5 invoices ranging from 3 @ $2,500 (initial retainer), 1 @ $13,750 and another @ $17,500. They are a large company with revenues approximately $350mm. Oldest invoice form October, 2013. Claim they will pay but having cash flow and trying to negotiate a new credit line. Have invoiced and followed up with 2nd and 3rd notices, emails to VP of HR with confirmations of receipt and comments he/they intend to pay once they obtain line of credit/revolving credit with a bank. They are paying needed vendors but withholding from others. How do I collect? Think future business with them will substantially decline. Total outstanding amount is $38,750.

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