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 pam claughton on August 8, 2009 at 10:02am

Wise words from Sandra. I agree completely. When I left the agency I worked at for many years, I had several deals in process, but only the ones that closed before I left were considered 'mine'. So, I essentially left money on the table too, quite a bit. But, as Sandra said, it's fairly standard in sales and our industry.

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Permalink Reply by Casey on August 8, 2009 at 10:49am

Sandra-

I appreciate and thank you for your feedback. In many ways you are correct especially about getting it in writing! I will add that though I did develop contacts and a network (no training btw, I trained myself through trial and error) which I used to help myself and the owner grow her business. Over the years, I brought in a number of in-house jobs and even a retained search so I think that we both benefited from each other during the years we worked together. My issue is that in paying me nothing on the two recent placements, she is just being mean and spiteful. And, I think that agencies should pay their recruiters something reasonable on deals they were working hard on even if they aren't there when the deal closes. It is simply a better business practice and would not leave to such bitterness. Many owners abide by this way of doing business and I feel it is unethical to take the money out of workers' mouths who have been loyal employees over the years. In my opinion, it is taking advantage.

Best,
Casey

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Permalink Reply by Casey on August 8, 2009 at 10:52am

My point is that this shouldn't be standard practice because it is wrong and needs to be changed. It is behavior from the dark ages. Recruiting agencies need to be more progressive and treat their employees better. It is a hard enough business without adding such greediness to the mix. Just because something has been standard doesn't mean it should continue to be...

That said, I do appreciate your feedback.

Best,

Casey

pam claughton said:

Wise words from Sandra. I agree completely. When I left the agency I worked at for many years, I had several deals in process, but only the ones that closed before I left were considered 'mine'. So, I essentially left money on the table too, quite a bit. But, as Sandra said, it's fairly standard in sales and our industry.

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Permalink Reply by Jerry Albright on August 8, 2009 at 1:08pm

Good recruiters are the only ones who should every try stepping out on their own. The dilemma here is that good recruiters always have sendouts going on......so it's a catch 22. If you're good enough to start your own practice - then you've got a few interviews going on. You just gotta hit the eject button and roll on.

It has been my experience that very rarely (never?) are commissions paid to recruiters who left. Now that I think of it - I can remember the vultures circling a desk shortly after each resignation - just KNOWING there were a few placements in there somewhere.......

Ah. The good ole days!

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Permalink Reply by Casey on August 8, 2009 at 3:23pm

Sandra,

You bring up many interesting things to consider. And, yes I have an opportunity to run my company with much more integrity and fairness and that's what I intend to do and I am greatfull for the opportunity to be an agent of change!

Though I have no policy in place yet, I think my policy would be to pay a recruiter a slightly reduced commission (15% less than the typical 50% if they weren't there when an offer and acceptance happened). The recruiter must have met face to face with a candidate (whenever possible) worked on their resume, deal sheet, business plan etc. if with them, subitted the candidate's resume, secured an intereview for the candidate, arranged the set up of the interview, prepped the candidate for the interview and debriefed the candidate afterwards. If the recruiter has done a good portion of the work, then my intention would be to pay them for their contribution to the placement. I might wait for the guarantee period to pass before paying them just in case there was any issue with the placement. Alternatively, they could sign an agreement at the outset of employment indicating that they would be responsible for refunding their portion of any placement fee that didn't stick (whether they were employed or whether it was after they left). I certainly would not feel good about not paying them for their contribution and pocketing the whole commission. If they brought in a job and they left before it got filled I would pay them their commission on bringing in the job. Frequently, another requiter would place the job anyway but I think the recruiter who brought it to the company should be compensated whether still employed or not. I would draw the line at not paying a commission to a recruiter who has left on candidates who were recruited by them but have not begun the interview process yet.

I hope I answered your questions Sandra. My goal in this discussion is to bring a fairer standard to the industry for both employers and employees. Thanks for bringing up some valid sticky points which need to be addressed and thoughtfully considered.

Best,

Casey

Sandra McCartt said:

Casey,
If you feel that this is a wrong process you have the perfect opportunity to change it. As you are starting your own shop ,when you hire a recruiter to work for you set up a policy that if they leave to compete with you, you will pay them commission on anything they were working on before they became your competition.

The question would then be: do they get commission on deals that have not closed when they leave but candidates have been interviewed?Do they get commission on candidates they recruited but have not been sent on an interview? There has to be some cut off point. Where will yours be?

The other question is , if you placed someone before you left , were paid commission and the employee quit before the guarantee period was up but after you left, would you refund your part of the commission or replace the employee at no charge for the agency you left? Probably not. Does it seem fair to you that you received commission but didn't have to honor the guarantee? It is also standard that the agency is left with the responsibility to honor guarantees but normally a departing recruiter does not have to pay back commission or replace. Would you want to change that standard?

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Permalink Reply by Casey on August 8, 2009 at 3:35pm

You are right Jerry. The business has a lot of vultures. I guess that's what I'm trying to change just a little bit. I don't think it needs to be so harsh.

My situation isn't exactly the same as I had a verbal agreement with the owner of my shop and she reneged. As Sandra pointed out, I should have had it in writing! But, when you work for someone for 8 years, you think you can count on their word. Also, I could have just stuck around waiting for the ciommissions whioch most recruiters would have done but I respected the owner enough to be honest and not try and take advantage of her. I gave a lot to this company and the owner often jokingly referred to being the one who worked for me (as she always acknowledged how much I contributed to the success of her co). She is just pissed that I left and is acting like she got dumped by a boyfriend. It's too bad because i am an excellent recruiter and she and I could have worked together on splits from time to time and remained helpful to each other in a business capacity if nothing else.

Thanks for your thoughts.

Casey

Jerry Albright said:

Good recruiters are the only ones who should every try stepping out on their own. The dilemma here is that good recruiters always have sendouts going on......so it's a catch 22. If you're good enough to start your own practice - then you've got a few interviews going on. You just gotta hit the eject button and roll on.

It has been my experience that very rarely (never?) are commissions paid to recruiters who left. Now that I think of it - I can remember the vultures circling a desk shortly after each resignation - just KNOWING there were a few placements in there somewhere.......

Ah. The good ole days!

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Permalink Reply by Casey on August 9, 2009 at 3:14pm

Sandra,

You have helped provide a nice, new perspective to consider and I appreciate the time and thought you put into advising on this situation very much. I will approach her and let you know what happens.

Best,

Casey

Sandra McCartt said:

Casey,
I don't know where you are in the process with this situation but if it has not reached the "to hell with you" stage, you might consider more talking with your previous employer. Maybe go back to her and say, "You know i want to maintain a good business relationship with you and hopefully we can work splits just as we did before when i was here. Then neither of us have to totally give up what we worked to build together for 8 years."

"You know that we discussed me being compensated for these last two placements that were about to close when i left. I realize that with me leaving you stand to lose the benefit of the revenue that i brought in so i can understand that perhaps you would be resistant to paying me for something that had not closed. In the interest of being able to work together in the future would you consider paying me 25 % of what you made on those if i am willing to agree to refund that amount to you if they fall out? Realizing that i built the base for my own business while working here i would be willing to share all job orders and candidates with you for the next 60 days so both of us do not have to take a total loss during the transistion period. We could split 50/50. After that period of time we can work together anytime either of us needs help on a candidate or a job.

If you feel it would help you get your new business started and a relationship with her would benefit both of you in the future, be willing to put an offer on the table in order to achieve something of value for both parties.
You are no longer an employee. You are business owner so perhaps negotiating as one business owner to another instead of staying in the damaged employee mindset might be the better way to go.

No business deal is ever all to the advantage of either party. She is losing her top recruiter and you are losing some commission that you feel you earned. If both of you can get over being pissy and talk business like big girls you may be able to work something out that both can feel better about.

Running your own business is always full of "sticky points" that do indeed have to be considered carefully as well as what they will mean in the future. Best of everything in your business. The bottom line on this situation in my opinion is put it behind you one way or the other and focus on the future. Let's face it, in the future you will be making 100% of all your efforts (less overhead of course) so you just got a 100% raise.

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Permalink Reply by Natalia Corres on August 10, 2009 at 11:41am

It is not the business, per se, but the people who are not always the most scrupulous. If you did not get the agreement in writing, you have learaned an expensive lesson in trust. I am sorry that this happened to you, and I think that your trust was a sign that you have a higher level of integrity than the person you are writing about. Too bad for her, she may have made 102K now, but she will not be able to replicate it in the long run, since you are gone. Move on, and be successful (the best revenge is doing well without her).

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Permalink Reply by Casey on August 10, 2009 at 11:43am

Thank you for the support and encouragement!

Onward and upward as they say!

Best,

Casey

Natalia Corres said:

It is not the business, per se, but the people who are not always the most scrupulous. If you did not get the agreement in writing, you have learaned an expensive lesson in trust. I am sorry that this happened to you, and I think that your trust was a sign that you have a higher level of integrity than the person you are writing about. Too bad for her, she may have made 102K now, but she will not be able to replicate it in the long run, since you are gone. Move on, and be successful (the best revenge is doing well without her).

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Permalink Reply by David Cantor on August 10, 2009 at 12:08pm

Hi Casey,
I'm an owner (sorry about that!), but I agree with you. Then again, I also agree with your former employer (but only a very little bit). After 8 years of a strong relationship, she should have been willing to live up to her agreement to pay you. However, unless you and she had a formal, written agreement, the fruits of your labor for her company belong to her after you leave. I found early on that having things in writing with my employees went a long way towards avoiding such unpleasant circumstances...although they still come up, now and again. Going forward, if you plan on hiring anyone to join your company, I strongly urge you to spell out how and when commissions are paid, and what will happen when an employee leaves your company. For example, in our firm, if a recruiter places an applicant and the job has closed (the applicant has started and the invoice has been sent), then the recruiter will be paid even if they leave--assuming, of course, that the guarantee period has been satisfied. However, should the recruiter have an applicant in process but that applicant starts the new job after the recruiter has left, there is no commission due, because someone else has had to close the deal.

Your previous employer looks bad here, because she promised you one thing and then reneged on that promise. Is she being "mean and cuthroat", or is she just doing business and protecting her company? Depends on your point of view. What she did is shabby and bad practice, but I doubt you could go to court about it. The only answer is GET IT IN WRITING. Then take all of your energy and build a great business for yourself!

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Permalink Reply by Pamela Zirakian Day on August 10, 2009 at 12:49pm

Join the rest of us with similar experiences. I have never met more mean and nasty people in my life - called owners. I would never work for anyone else again. My previous owner ripped me off of $50K in fees which included renigning on the last 2 year bonuses and purposely miscalculated 401 contribution. I had a case to sue her which in damages would have amounted to $200K. She was trying to sue me based upon no evidence of anything - just bring mean. She finally backed off when my attorney put this counter suit in her face.
- you just have to seek legal advice - and the based upon that best attorney advice - move forward which might be NEXT! She dropped pursuing me, and I decided not to pay for the long legal fight that would have resulted in go after her. I cut my losses and moved forward.

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Permalink Reply by MsNita on August 10, 2009 at 3:46pm

I have to preface this with - I swear, I'm not trying to be jerky! Just making a point ...

Casey,

You are a legal recruiter, yes? I'm surprised that being immersed in the legal realm, you didn't get a more concrete agreement in place - and get it signed.

There's an old saying that a lesson learned hard is a lesson learned well. Watching you puzzle out future terms *is* interesting. With so many variables it doesn't seem resolution will come easy.

I've worked many 'commission-based' jobs in this life. When I was a waitress, if I left early then I left the tip for the person who finished the work. When I ran a spa and left to start my own salon, they would not give any information aside from, "She's no longer here." Almost by accident I started sourcing for a great firm, call them Firm A, a couple of years ago. Needs have since changed on both sides. I'm now full-time/full life-cycle in another vertical with Firm B, and Firm A's book of business no longer requires so much personnel so ... we parted on very good terms and I have many people in their database that I've spoken with, etc. And! I'd be shocked to get a check from them if someone pops into a position at any time in the near future.

I can understand wholeheartedly your disappointment. It does seem that your former boss does not value her word - however offhandedly it was given. That's too bad. For her.

At the end of the day, when you're brushing your teeth and getting ready to lay your head down, there you are in the mirror. Do you like what you see? Have you spent your day engaged in activities that let you sleep at night? Have you conducted yourself in a manner that leaves you feeling proud and satisfied? I have a feeling your answer is usually yes so good for you.

That said, get it in writing! Especially if it's outside the 'norm.' Turns out that IOU's are as good as the paper they're written on - ask one of your placements :)

Best wishes to you in your new venture!

Best,
Nita