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The Fordyce Letter

Straight Talk for the Recruiting Profession


Fees, Jeff's On Call!

Ask These Five Questions and Your Fee Is Assured


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Day in and day out, we receive calls about placement fees that are lost because the employer alleges it acted on the referral from another source. Since lawyers live in a world of proof, our belief as to whether the allegations are true really makes no difference. As a matter of proof, they can short-circuit the fee. This report is designed to give you an approach that will reduce the “defense of another source” and enable you to win when you’re faced with it.

In order of popularity, the other sources claimed are:

  1. Employee referral.
  2. Candidate response to an advertisement.
  3. Candidate mass mailing and inquiry.
  4. Prior contact with candidate.
  5. Prior referral by another recruiter.

In all of these, the other source usually surfaces after your submission of contact information. This makes the story suspicious, but the argument is that the employer had no way of knowing the candidate was the same until you revealed the name. So the key is to find out before you give away the placement.

Many recruiters ask candidates where they’ve been, and either don’t present them or resubmit their background if the employer agrees to pay the fee. This is an excellent idea to reduce the chances of items two and four surfacing. However, the candidate might not know about the referral (as in the case of a blind ad), or even that he’s being considered. In addition, since the candidate isn’t a party to the fee agreement, his knowledge is irrelevant. Most importantly, the candidate is an employee now, so don’t expect his story to sound much like it did when you flew in wearing your blue T-shirt with the big red “S” on the front. If he’ll be a witness at all, it will be for the employer.

The ‘Other Source’ Questionnaire

So let’s ask the employer! Either on your job order or a separate form, ask the following Yes/No and “fill-in-the-blank” questions:

  1. Do you have an employee referral program?
    1. If “yes,” are you considering anyone who has been referred?
    2. If “yes,” what are their names?
  2. Did you run an ad for this position?
    1. If “yes,” are you considering anyone who has replied?
    2. If “yes,” what are their names?
  3. Are you considering any candidates who sent unsolicited inquiries?
    1. If “yes”‘, what are their names?
  4. Are you considering any former candidates?
    1. If “yes,” what are their names?
  5. Are you considering any candidates referred through another recruiter?
    1. If “yes,” what are their names?

The form should be dated, contain the name and title of the person who replies, and be signed by the consultant. If the employer won’t tell you the names of the candidates under consideration, you’re destined for a permanent assignment at the Daily Planet.

There’s nothing to be mild-mannered about. You’re not asking the employer to give away contact information. You just want to be sure you’re not wasting everyone’s time. It might even interfere with the hire. (We know it wouldn’t, but you know how they think.)

Questionnaire As Evidence

The exercise of asking these five questions every time and writing down the answers will do more than help you avoid duplication. The questionnaire can be introduced as evidence since it is a business record. But you must be able to testify that the information was written prior to presenting the candidate and was done consistently as standard operating procedure.

Flying out of phone booths is expensive. If you’re going to do it, at least be sure your cape is fastened.

Now is the time for the confirmation to clear the air and lock the client into a position before a dispute arises.

Sample Letter

A letter confirming the conversation is all you need. The basic format is as follows:

(full name and address of employer)

(date)

ATTN: (full name and title of hiring authority)

Re: Search for Positions of (titles of positions)

Dear _______________:

It was a pleasure speaking with you by telephone today to discuss the requirements of (name of employer) for the (titles of positions) positions.

Pursuant to your request, (name of your business) will be commencing a search immediately to recruit qualified candidates. A copy of the fee schedule we discussed is enclosed. Since we operate on a contingency fee basis, no fee will be due unless you hire a candidate we present.

(VARIABLE PARAGRAPH TO BE INSERTED HERE)

We look forward to assisting you in hiring the most qualified candidates. Should you have any questions, please let me know.

                                                                         Very truly yours,

                                                                        (your full name and title)

 If you want to vary the words, be my guest. But the basic format should be the same. Now select the variable paragraph from one of the following:

  1. In our conversation, you indicated that (number) candidates had been referred by employees of (name of employer). Their names are __________________ and __________________. We agree that if any of them are hired, no fee to (name of your business) will be due.
  2. In our conversation, you indicated that (number) candidates are being considered as a result of your newspaper advertisements. Their names are ____________ and _______________. We agree that if any of them are hired, no fee to (name of your business) will be due.
  3. In our conversation, you indicated that (number) candidates are being considered who contacted (name of employer) directly. Their names are __________ and ______________. We agree that if any of them are hired, no fee to (name of your business) will be due.
  4. In our conversation, you indicated that (number) candidates are being considered from the files of (name of employer). We agree that if any of them are hired, no fee to (name of your business) will be due.
  5. In our conversation, you indicated that (number) candidates have been presented by other recruiters. Their names are _________ and __________. We agree that if any of them are hired, no fee to (name of your business) will be due.

Of course, if there is only one opening or one candidate being considered, the letter will require slight modification.

Offering the Evidence

As the plaintiff in a lawsuit to enforce your fee, you have the burden to prove the letter was received and its terms accepted. Let’s assume the employer denies receipt and acceptance. Since you didn’t deliver the letter yourself, you can only testify that you mailed it. The law helps you here with two important presumptions.

  1. You testify that the envelope was sent by first class (ordinary) mail, properly addressed and postpaid. Boom. The probability is that it was received. Enter Presumption No. 1. (27 AmJur 2d 197)
  2. Then, you testify that the hiring authority didn’t reply to the letter. Wouldn’t a reasonable person probably call you and mention other candidates that were off limits to you? Of course: Presumption No. 2. (29 AmJur 2d 637)

These presumptions are pure kryptonite. Here’s how the Federal Trial Handbook describes their effect:

During the trial of an action, the party who has the burden of proof upon an issue may be aided in establishing his claim . . . by the operation of a presumption. A presumption is a logical and reasonable conclusion . . . inferred from experience. It has the force of proof until it is overcome by contradictory evidence.

So now, the burden of proof automatically shifts to the employer. Now tell us! How can an employer disprove receipt of a letter? Did the hiring authority open the mail himself? Or was it picked up from the post office by a truck driver, delivered to a mail room, opened, sorted, routed, dropped, received, stamped, routed again and filed? Or maybe the hiring authority read it and threw it out. How many fee schedules, resumes and transmittal letters did he receive every day? Particularly when he was hiring? The result is that the employer can’t disprove receipt of the letter. And we’re only on Presumption No. 1.

Sloppy Administrator Defense

Presumption No. 2 is even tougher to disprove. The hiring authority usually mumbles something about being too busy to read all the correspondence, or to know the names of all the candidates. Imagine. Defending a lawsuit by testifying that you’re a sloppy administrator. Your biggest problem at this point will be to resist the primordial urge to smile.

We started using these two presumptions together in 1975, and they work every time. Whether it’s to show receipt of a fee schedule, resume, introduction slip, invoice or letter, the employer is in big trouble.

If you just use the questionnaire alone, you’ll be reducing the claim of another source dramatically by avoiding dual referrals. But when the employer realizes that you have a copy of the letter, the claim is rarely pursued. Lawyers live in a world of proof.

And some people think you can’t predict what will happen in court.

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.