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Straight Talk for the Recruiting Profession


Articles tagged 'legal issues'

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The Allen Magic Collect-A-Fee System, Part 1

by on Oct. 20, 2009


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The Allen Magic Collect-A-Fee System was actually introduced over 30 years ago. It was unveiled at a California Association of Personnel Consultants convention on the day I was voted in as its General Counsel. The seminar was recorded, and over the next two decades, became the most popular title in the EMPLAW Audio Series. Since then, the 10-point system has been refined as the law, technology, and our business has evolved.

In one way or another, The Allen Magic Collect-A-Fee System is now used in thousands of offices every day. It has also been adapted to collect retainer balances and temp service fees. It’s impossible to know how much has been collected in well-earned fees, but the amount through use of that little $39.95 package is easily in the tens of millions of dollars.

The package came with the guarantee of a free collection from our offices if any recruiter who used the system wasn’t paid. To this day, nobody has ever needed the guarantee; nobody ever asked for a refund either. The system is out of print now, and only those who still have the package get the guarantee.

Here are the details:

1. Obtain any written confirmation of the fee from the employer.

This is done best by emailing or faxing a copy of your customized fee letter to the person responsible for the fee and requesting a signature. You can use a customized cover letter with a fee schedule, but we prefer the fee letter format because it’s more marketable and just as enforceable.

There’s still some reluctance to do this by recruiters, but those who won’t work the search without a signature have almost no receivables.

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Keeping the Fee On a No-Show Director of Nursing

by on Sep. 2, 2009


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A hospital in Tennessee has filed a lawsuit against an Atlanta search firm after a new employee’s start date came and went, the director of nursing was a no-show, and the firm kept its $23,000 fee.

Is Management Search Inc. International entitled to the 25% fee? According to this article, the hospital was open to working with the firm to find another candidate for the director of nursing position, but Management Search allegedly never found a qualified replacement.

Any bets on how this lawsuit will pan out?

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Jeff on Call: Where Is the Leverage in My Fees?

by on Aug. 26, 2009


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Q: I read one of your articles on “Does Arranging Interview = Placement Fee?” I’m reading the book SEARCH AND PLACEMENT by Larry Nobles. He talks about the marketing cold call in which we present a qualified candidate to a company when we don’t know if they have openings. I understand the whole point is to get a search assignment, but if they like the candidate I’m presenting and want to interview that person, when should I mention the fee? After I suggest we set up an interview or before? Should I say something like, “Great, I’ll fax over our client agreement and you can give me a couple of good interview dates”? The book talks about closing on a search assignment but says nothing about what to say besides “Let’s set up an interview,” when they happen to want to meet the person I’m calling about.

Thank you,
Kenneth Stallworth

Dear Ken,

I’m honored to answer this question because it mentions Larry Nobles.

Larry died a decade ago from inoperable brain cancer. I remember talking with Fordyce Founding Father Paul Hawkinson after Larry visited him in St. Louis, knowing it would be for the last time. A few hours after dropping him off at the airport, Paul received the call.

Larry was among the few extraordinary people who keep our industry placing. His techniques, his delivery, and his “desk-up” knowledge were superb. He was a great guy, as unpretentious as he was wise. Larry still lives through his work that he shared so generously during his life. You can still buy his classic books at www.larrynobles.com.

So speaking for this angel on high, here’s my reply:

Your greatest leverage exists at one point, and one point only. It’s just after you present — and just before you identify — a candidate the client thinks she wants to hire.

Note there are two phases to the referral:

1. Present, and
2. Identify.

If you haven’t fully cleared your fee in writing prior to identifying the candidate, you’ve lost your leverage — and given away your stock in trade.

Best wishes for collecting your well-earned fees. Clearing and documenting them before the sendout is the key!

***

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.

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Jeff on Call: Recruiting From Former Clients?

by on Aug. 19, 2009


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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.

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.

***

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.

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Jeff On Call: How Will Incorporating My Business Protect My Assets?

by on Jul. 31, 2009


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Q: How will incorporating my business protect my assets?

While the person claiming money or some other relief will undoubtedly name you personally, a corporation offers an additional layer of protection by virtue of its separate legal entity status under the law. Legally it is a separate person for liability purposes. Not necessarily the only person, though.

You’ll pay initial legal fees and recurring accounting fees. You must comply with certain state meeting and recordkeeping requirements. You’ll also pay additional corporate taxes.

Unlike a simple sole proprietorship or general partnership that merely requires a fictitious business name filing with the local county recorder’s office, corporations are more complicated.

However if you take your corporation seriously, a court will too.

This means:

  • Fully and completely finishing the entire incorporation process. Filing the articles of incorporation, preparing by-laws and first meeting minutes, issuing stock certificates, opening a separate bank account, and completing any federal, state, and local requirements.
  • Maintaining the books and records required by federal and state agencies.
  • Filing all official reports required by federal, state, and local agencies.
  • Filing all federal and state corporate and personal tax returns, being certain they are consistent.
  • Keeping corporate activities financially and operationally separate from personal activities.

Of course, consult with your attorney and accountant before incorporating.

***

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.

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Jeff On Call: Is a Corporation Right for My Business?

by on Jul. 24, 2009


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Q: Is a corporation right for my business?

If you have multiple owners (other than spouses) or employees, there are distinct advantages.

These legal entities exist because a properly established and maintained corporation is a separate person under the law. Therefore (at least in theory) the corporate assets and liabilities are not those of the owners (shareholders).

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Jeff On Call: Does Arranging Interview = Placement Fee?

by on Apr. 2, 2009


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Q: Does arranging the interview mean I am entitled to the placement fee?

A: It’s usually better than just sending a resume.

Legally, it’s the same (a “referral”), but factually it’s better because there’s often some evidence that you were involved. Proof that you did something to actually cause the hire can be used to budge a judge.

This is probably a good time for us to dissect the placement process.

When is your fee earned?

Cold Call – Solicit Job Order – Verbally Confirm Fee – Send Fee Schedule –
Receive Written Confirmation of Receipt of Fee Schedule – Receive Verbal
Agreement to Written Fee Schedule – Receive Signed Fee Schedule – Present Candidate – Arrange Interview – Request to Check References – Assist with Offer – Receive Offer Letter – Receive Notification of Acceptance – Candidate Starts – Invoice Sent – Guarantee Period Expires

You can see that “Arrange Interview” is still very far behind the finish line. All of the steps are really links in the causal chain — the chain of causation — starting with the presentation and ending with the start date.

Let me share the ultimate contingency-fee secret with you: There’s only one thing necessary for you to be entitled to a full fee. It is “identify,” but be sure you can prove it in writing.

In its most rudimentary form, a placement fee is simply a “finder’s fee.” An agreement to pay and communication of a name and contact information are legally sufficient.

They can scream about “a five-figure fee for a phone call” until the bailiff escorts them out the courtroom door.

Judgment for the Plaintiff. Plus interest, attorney’s fee, and costs.

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Legal Q&A with Jeff Allen

by on Jun. 18, 2008


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It’s a catchy tune for sure: Where have all the good client databases gone?

If someone has stolen yours, and now your trade secrets are MIA, what is your recourse?

Even though you’re not an attorney specializing in placement law, you can pretend to be while you listen to Jeff Allen “talk shop” about the Computer Fraud and Abuse Act.

(Did you know that in Federal court, the CFAA requires only an unauthorized use of your computer and that it did just $5,000 worth of damage? Allen calls this “an amazingly important” piece of legislation.)

Race, religion, sex, age, physical characteristics, psychological attributes, marital status, family and personal responsibilities — you know the drill. Allen also offers tips on avoiding discrimination, and other burning legal quandaries in this video shot at the Fordyce Forum 2008 in Las Vegas.

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