We have a high demand candidate who was just laid off who we "bring to the market" by making lots of phone calls.  Two companies express interest in the candidate.  Company A interviews first and then conducts a second interview before Company B's first interview.  

Company A presents an official offer which is being worked through.  The candidate likes Company A, the money is in the acceptable range.  The culture of Company A is not a dead lock cinch for the candidate but still believes its a good company and offer.

Company B calls us and wants to finally interview the candidate.  I tell Company B that the candidate has just received an offer and is strongly considering it.  Expecting Company B to ask for new candidates, they instead want to speak with the candidate before she accepts the 1st offer from Company A.

I inform the candidate that Company B really wants to talk.  Candidate is interested in talking but has heard negative things about Company B from trusted colleagues and friends.  Candidate interview takes place and both Company B and candidate like each other a lot.  But the reputation of Company B remains a question mark.  

We press Company B for action (i.e. offer) because Company A has extended an offer several days ago.  With no feedback after several more days, thinking nothing would progress with Company B, candidate accepts Company A's offer and sets a start date for the 1st of the month.

A day or so after that acceptance, Company B comes through with an offer that is more lucrative than Company A's offer, now accepted offer.

As is our duty to take care of our candidates, we do not hide the existence of the 2nd offer from the candidate but instead tell the candidate.  The candidate likes the offer and is now leaning to Company B.  However, the start date is the next business day and the question of prior negative reputation of Company B has not been answered.

Candidate wants one more in-person, look you in the eye, meeting with Company B before a final decision is made.  Company B agrees to meet with candidate on noon, the same day of candidate's start day at Company A!

After that meeting, candidate has all questions resolved and accepts Company B's offer.  Candidate then returns to work at Company A and then resigns in person and departs.

Candidate has now been working at Company B for a couple weeks but then things turn.  The hiring manager at Company B is upset that candidate worked at Company A for 1 day and then joined Company B.  Upset for what reason, I do not know.  It is explained to me that if the candidate interviews for a job while working for another company, what will keep that candidate from doing that to me?  Company B contends trust is broken with the candidate.  But they continue to employ the candidate.

It turns out that the hiring manager had also worked at Company A several years ago and maintained friendships.  Company A and Company B are direct competitors, too.

I did not believe it is any client's right to know which clients we are working with and thus did not tell them they were competing with each other for the same candidate.  Both companies were clients on contingency searches for the same type of candidate.  

Our firm received the full fee from Company B.   Nothing fee was received or requested from Company A.

Now Company B, citing performance issues, decides to terminate the candidate after one month of work and now wants the full fee returned due to lack of honesty on the part of the candidate and us, the recruiting company. 

Our guarantee is for 60 day's pro-rata credit towards replacement or future search.  There is not timeline for the replacement or future search.  And no refund will be provided to Company B.

Our contention is that we fulfilled our contractual obligation by recruiting someone for their position who was qualified and interested.   The candidate was going to be much, much happier at Company B than at Company A.

Company B paid the fee in the time frame required to validate the guarantee, which we will honor.

Company B is now threatening legal means to recover the full fee, not merely the pro-rata credit they are due.  

It is the view of our recruiting company that no refund will be provided but pro-rata credit will be.  We do not want to keep them as a client once our contractual obligation has been met due to their treatment of the candidate (who was essentially ostracized for a reason I still cannot understand) and unprofessionalism and threatening tone when dealing with us.

The concerns that the candidate had heard about were the same things we as the recruiting company have now experienced.  

Thoughts anyone?  Feel free to critique how our recruiting company handled this situation.  Candor is welcome.

Keep in mind that this is an At-Will employment state.