Say it Ain’t So: Inequality of Bargaining Power in Contract Negotiations?

I work in a complicated recruiting area –IP law.

Recently, two firms have presented me with oddly inequitable fee agreements during contract negotiations, as though there was no equity in our bargaining powers.

In addition to significant downward pressure on the amount of the fees the companies might pay, 1) the employment guarantees stretched out for a year; 2) fees were earned only after a 100% money back guarantee for the first 6 months- and then fees accrued daily on a prorated basis ---1/365+1/365 etc.; and 3) if applicable, the guarantee period on the candidate would not commence until certain state licensures, etc. were granted to the hired candidate, these licenses, etc. sometimes taking a year to be granted, and thus a one year guarantee might stretch into a two year guarantee.

In essence, I was being asked to act as an insurer against any issue/problem/change that might develop within the company over a year’s time, or more, not as a recruiter.

Our attorneys thought that these fee agreements were, and I hate to use the term, “Contracts of Adhesion,” not legal in NY, and he reminded us that we are not in the insurance business. In addition, our accountant pointed out the company would have financial incentive to get rid if our candidates first, if ever a problem.

We did not agree to the terms. The fee agreements were a disincentive for us to do the great work that we do and are proud of, and it made us wonder what problems lurked within these companies that representatives had so little confidence in their attrition rates.

Any comments appreciated.

Views: 88

Tags: Agency Recruiting, Fee Agreement

Comment by Noel Cocca on April 1, 2014 at 6:39pm

Great catch Kerry!  It has always amazed me the amount of guarantees that recruiters are asked to consider in making placements.  Recruiting in healthcare, this was a far too common request and I have actually seen requests made like the one you saw.  My firm (and I) walked on them all.  The service is getting the candidate to the client and hired...keeping them cannot be tied to the recruiter!  I am sure there are some better stories on Recruitingblogs about this one! 

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