Being Taken Advantage Of By Agency Owner

I left my former legal recruiting firm after 8 years recently to start my own shop. The entire time I was with my former firm, I was singled out as the best performing recruiter the agency had ever had and the owner had often referred to me as her partner (though I was not). After not being able to convince me to stay, upon my departure, my boss and I had a discussion of what would happen with my commissions if she placed any of my candidates within a relatively short period of time after my departure. It had always been her feeling that if a recruiter was not employed on the date of an offer and acceptance, that recruiter was entitled to nothing even though, but for that recruiter, there wouldn't be a placement. I had strongly disagreed with this idea and told her I believed that after 8 years of service, I deserved to be compensated for the work I put into bringing the placements along even if I wasn't there when and offer and acceptance happened. She agreed to compensate me (probably not at the 50% I would receive if still employed but an amount she would determine depending upon ho much work she had to do to close the deal). I left believing she would make good on her word. Well....

Now, that she has placed two of my candidates (they were referred to me personally not her agency, she never met either candidate and I chose which firms the candidates should be presented to and I set up the initial interviews and debriefed them before I left the firm). The commissions she has made come to $102K on these 2 placements and she has told me she has no recollection of offering to compensate me in any way. She says I am entitled to nothing.

As you can imagine, I am pretty unhappy. Why is our business so mean and cuthroat? Why can't recruiters stick together so that agency owners can't take advantage of the recruiters like this. I wish I could start an organization for recruiters rights! I would love some feedback from other legal recruiters. Many Thanks! Casey

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Permalink Reply by Peter Ceccarelli on August 10, 2009 at 4:13pm

You know....I'd sure love to hear the owners side of the story. There's always another side of the story. Right?

I'm not implying that you're right/she's wrong..........you're wrong/she's right. But at the end of the day like everyone has mentioned, no paper, no payment! That's why God invented written contracts. And although I'm sure the owner was sad to see you go, how close were you really if you feel like you've been shafted? Perhaps you weren't as close as you thought you were. Personally, I'd pay you the money. But hey, I'm a stand up kind of guy. Most people are needy and greedy and fall victim to the "have and have not" mentality. Money does weird things to the nicest people, especially when they think you have more than they do, it then becomes downright nasty. I've seen perfectly sane, kind, sweet and gentle people turn into raving viscous maniacs over money because of the "have and have not" mentality. Most people do. We all feel like we're always shorted or less than someone because of money. There's more to life than that concern. Okay........getting too philisophical here.

I have a phrase that I use all of the time. Catch and release. You've caught it. It stinks. Now release it and chalk it up as a bad experience. Time to move on.

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Permalink Reply by Mat von Kroeker on August 10, 2009 at 7:12pm

Casey-- where were you working that was giving you 50% commission???? I want to work there!!

It's pretty well known throughout the recruiting business (or other industries, for that matter) that you don't receive commissions after you've left the company-- unless there's a signed contrcat stating otherwise. I'm sure you're kicking yourself for not hanging around your former company for a little while longer, huh??

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Permalink Reply by Thomas Patrick Chuna on August 10, 2009 at 11:08pm

casey - let me get this straight.. you announce your intention to leave the company to go start your own show, and THEN you start making demands about what the company you are leaving must do regarding commissions for placements that hadn't closed yet, AND you expected to get paid by the company you no longer worked for when the deals closed?

No offense, but you have some interesting expectations.. With no written agreement, the owner just patted you on the head and sent you on your way. Not that anyone would ever sign an agreement like that in the first place - Why on earth would anyone do any favors for someone who will hurt them financially in the near term by leaving, and in the long term by competing?

Maybe she was your friend and you trusted her, but you have to be realistic - the concept of fairness isn't even found in the bible, much less practiced by emotional humans faced with losing their moneymaker.

best thing is to orient yourself to winning, and beating your former employer in the marketplace.

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Permalink Reply by Casey on August 11, 2009 at 7:31am

I'm sorry you condone this type of behavior on the part of recruiting company owners? I don't condone it. I think it is wrong to treat hardworking, long term, well liked and highly successful employees this way. unless an owner makes it worth someone's while, many recruiters go off after a while to open their own shops. there doesn't seem to be any reason to me for this unfair treatment, animosity and greed. My boss opened her own shop, she should have understood and have been supportive so we could have both continued to benefit from the relationship. She reneged on an agreement. Yes I wanted to be paid on placements that were close to closing and but for me would not have existed. Why would that be unusual?

Casey

Thomas Patrick Chuna said:

casey - let me get this straight.. you announce your intention to leave the company to go start your own show, and THEN you start making demands about what the company you are leaving must do regarding commissions for placements that hadn't closed yet, AND you expected to get paid by the company you no longer worked for when the deals closed?

No offense, but you have some interesting expectations.. With no written agreement, the owner just patted you on the head and sent you on your way. Not that anyone would ever sign an agreement like that in the first place - Why on earth would anyone do any favors for someone who will hurt them financially in the near term by leaving, and in the long term by competing?

Maybe she was your friend and you trusted her, but you have to be realistic - the concept of fairness isn't even found in the bible, much less practiced by emotional humans faced with losing their moneymaker.

best thing is to orient yourself to winning, and beating your former employer in the marketplace.

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Permalink Reply by Casey on August 11, 2009 at 7:38am

Matt-

Yes. I am kicking myself. But, I was ethical and she was not. I worked for her for 8 years and helped build her business and reputation. She offered to make me a partner to try and keep me when I announced I was leaving. During these discussions she agreed to pay me on a few deals I was working on that hadn't closed yet I was completely responsible for their existence and had done all the work. Therefore, I didn't need to stay to wait for the deals to close and just hang out and not do other work as many recruiters would have done in my situation. Unfortunately, money trumps friendship. Money trumps everything. That is a sad realization.

I agree, the best revenge is doing well without her.

Best,

Casey

Mat von Kroeker said:

Casey-- where were you working that was giving you 50% commission???? I want to work there!!

It's pretty well known throughout the recruiting business (or other industries, for that matter) that you don't receive commissions after you've left the company-- unless there's a signed contrcat stating otherwise. I'm sure you're kicking yourself for not hanging around your former company for a little while longer, huh??

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Permalink Reply by Casey on August 11, 2009 at 7:46am

Heather-

Thank yo for your feedback and important information.

For 8 years I worked completely on commission. I never once took a draw. My contract states that we split everything 50/50. It doesn't describe what a placement is and when it is considered to be earned or what happens if I leave before something I worked hard on closes. The only thing I ever signed was an offer letter. I can prove that the candidates were referrals from other people I'd worked with and were specifically to me but it would be shame to have to involve the candidates. I'm not quite sure how I will handle this. The bridge between me and my former boss has already been burned. But, I do care about the candidates.

Again, thank you. Your information is quite useful.

Best,

Casey

Heather Bussing said:

Commissions are governed by the contract or state wage law or both. You may be able to make a wage claim for earned, but unpaid, commissions with your state's labor board. The agency will look at any written agreements you had as well as state wage law.

If there isn't a written agreement or policy that the employer provided to you, then state law will apply. Most states have some type of law that provides for the payment of earned commissions after an employee leaves. The factors that matter are the employee's salary structure-- mostly salary, mostly commissions or a combination, and the influence the employee had in making the sale/placement.

If you can show that a large part of your compensation depended on commissions and that the placement was due to your work, you may be able to collect part or all of the commissions.

But before you file a claim, also consider that making the claim will effectively burn any bridges with your former employer and potentially your former clients. You will need to call the employees who were placed to give testimony that you were the reason they went to the agency and that you were a substantial factor in the placement. Getting served with subpoenas to attend wage hour hearings will not make the candidates you placed or your former clients who hired them happy.

So while there may be a remedy, please consider the cost of pursuing it on future business as well as your own mental and emotional well-being in staying embroiled in the past relationship.

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Permalink Reply by Slouch on August 11, 2009 at 9:01am

I suppose you can break a placement apart into a number of different parts. writing the job order, finding the candidate, arranging the many interviews, checking the references, prepping the candidate it goes on an on. Maybe what you should do when you hire recruiters in the spirit of being fair, you should say in your contracts that you are entitled to the total fee if you participate in all of the steps. if not, this is what you get based on what you did so if you have a recruiter who works for you and identifies a whole bunch of candidates who look like they are going to get placed and they figure, this is a good time to leave cause my placement fees will help me start my new business, they will know that they are not getting all of it.

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Permalink Reply by Jerry Albright on August 11, 2009 at 9:10am

Casey - this really is a bummer. I've seen all kinds of stuff over the years. Usually it's just a few thousand bucks going one way or the other - nothing like this.

Sorry to seem skeptical here - or maybe just a bit more inquisitive - but 102K in fees on 2 placements is alot of money in anyone's book. So the folks you are/were placing are in the 250K salary range?

When I left my old agency I realized I would not be getting paid ongoing commissions for the contractors I had in place at the time - but I would not have left 50K on the table.

Are we missing something? What made you decide you had to leave (right then) with some great sendouts on the books? I am just not seeing how a Senior Recruiter - negotiating 250K salaries for executive roles - would be so up-in-the-air about what to expect on this stuff.

I am now puzzled......

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Permalink Reply by Casey on August 11, 2009 at 9:40am

Jerry-

I work with top tier attorneys in NYC and they make a lot of money. I worked at my former firm for a long time. I trusted my employer and we were supposedly friends. I would have stuck around to earn the money but I didn't want to take advantage of her by just hanging around to get the placement fee. I thought that would be a slimy thing to do. So, we agreed that if the few people I had in play (because of the economy it wasn't that many but the few were quality) closed within a reasonable period of time she would pay me a partial commission. Usually I get 50% but it was implied she'd reduce it by a certain TBD percentage since I would have already been gone.

Oh well....I'm much poorer but I would NEVER cheat someone out of money they earned and money I said I would pay. People are crazy when it comes to money.

Jerry Albright said:

Casey - this really is a bummer. I've seen all kinds of stuff over the years. Usually it's just a few thousand bucks going one way or the other - nothing like this.

Sorry to seem skeptical here - or maybe just a bit more inquisitive - but 102K in fees on 2 placements is alot of money in anyone's book. So the folks you are/were placing are in the 250K salary range?

When I left my old agency I realized I would not be getting paid ongoing commissions for the contractors I had in place at the time - but I would not have left 50K on the table.

Are we missing something? What made you decide you had to leave (right then) with some great sendouts on the books? I am just not seeing how a Senior Recruiter - negotiating 250K salaries for executive roles - would be so up-in-the-air about what to expect on this stuff.

I am now puzzled......

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Permalink Reply by Casey on August 11, 2009 at 9:49am

I didn't answer you about what made me decide to leave.

After 8 years, I wanted to do my own thing. Pretty simple. I don't like how the majority of recruiting company owners treated their employees and I wanted to elevate my own company. I have worked for three top NYC legal recruiting companies and none have been aligned with my ethics and values. I believe you can make money and treat people well. What a concept : )

Casey said:

Jerry-

I work with top tier attorneys in NYC and they make a lot of money. I worked at my former firm for a long time. I trusted my employer and we were supposedly friends. I would have stuck around to earn the money but I didn't want to take advantage of her by just hanging around to get the placement fee. I thought that would be a slimy thing to do. So, we agreed that if the few people I had in play (because of the economy it wasn't that many but the few were quality) closed within a reasonable period of time she would pay me a partial commission. Usually I get 50% but it was implied she'd reduce it by a certain TBD percentage since I would have already been gone.

Oh well....I'm much poorer but I would NEVER cheat someone out of money they earned and money I said I would pay. People are crazy when it comes to money.

Jerry Albright said:
Casey - this really is a bummer. I've seen all kinds of stuff over the years. Usually it's just a few thousand bucks going one way or the other - nothing like this.

Sorry to seem skeptical here - or maybe just a bit more inquisitive - but 102K in fees on 2 placements is alot of money in anyone's book. So the folks you are/were placing are in the 250K salary range?

When I left my old agency I realized I would not be getting paid ongoing commissions for the contractors I had in place at the time - but I would not have left 50K on the table.

Are we missing something? What made you decide you had to leave (right then) with some great sendouts on the books? I am just not seeing how a Senior Recruiter - negotiating 250K salaries for executive roles - would be so up-in-the-air about what to expect on this stuff.

I am now puzzled......

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Permalink Reply by Casey on August 11, 2009 at 12:39pm

I never had a salary or a draw against commission. I was paid purely on commission and my split with the owner was 50/50. I was an employee.

I appreciate your feedback. What was at issue here was that I had a couple of deals but for me would not have existed and closed. Prior to my departure, I was told that I would receive commission if the deals closed after I left. The owner reneged. My fault. I didn't get it in writing.

Heather was trying to point out options and circumstances whic might result in my getting paid some of the commissions.

Best,

Casey

KarenM said:

Heather,
interesting advice to give casey regarding 50/50 splits are related to partnerships.. what was this based upon? had you seen his contract? what exactly were you able to make deduction? and was this also based upon New York Law, which i assume the contract would be based in? as that is Casey's residence..

I guess you are also familiar with NY business contract law right? of course you must be, to give that advice.. but it was an interesting perspective, .

Casey please help clarify - since a commission is not a split there may be some confusion, were you paid straight commission, draw against commission, or salary and commission, in an employee type relationship?

or were you splitting placements, because you had your own company? which changes the whole dynamic.. I am assuming you were an employee since you said boss? is that correct..

Have always learnt that one should Never assume the obvious is true..

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Permalink Reply by Joshua Letourneau on August 11, 2009 at 2:17pm

Casey, make it a point to earn that $102k back as fast as you can. Set yourself a goal to do so. I was in a partnership and walked away being owed $40k. It stung, but I made it a point to recover it through hard and intelligent work. It's just money - paper. It comes and goes, and it's more about what we do with it than how much we can stockpile.

Which brings me to the point that Startups take capital. The rest is just conversation.

I mean that - once you start your own firm and start putting all the sweat equity needed, your outlook will change in terms of what you determine to be 'fair' (quite the subjective term). I'm not saying you're right, or she's right - I'm just saying that each and every day, there is somebody complaining about commissions they should have made, deals they could have closed, or candidates they might have known. Losers talk in terms of 'woulda-beens', 'coulda-beens', and 'shoulda-beens' . . . so make it a point to earn that 100 Gs back and you'll have the last laugh.

I consider myself a nice guy and would give a friend the shirt off my back if they needed it. I've also never knocked anyone out at a bar that didn't ask me to first. However, there is a point where you can become "too nice" - and people will feed on that if they can exploit this trait. Family will be the first to get in line . . . I digress.

One of my favorite lines is from American Gangster, and it's good to always keep it in mind when you're launching a new business:

"Success has enemies, Frank. You can be successful and have enemies . . . or be unsuccessful and have friends."

If you're launching a business to directly compete with her, what does she have to lose? Yes, I consider myself an ethical person, which is why I believe in contracts. It's ethical and 'fair' to have everything spelled out upfront. Secret handshakes didn't work in the 20s or 30s any more than they work today.