I read with interest an article in Business Week that Barclays was being sued in Singapore for failing to pay Pagoda Partners Pte. S$365,000 ($266,000) after Britain’s second-largest bank hired Timothy Last from Merrill Lynch & Co. on the recruitment firm’s recommendation. Barclays was “unjustly enriched” by Pagoda after the headhunter sent the bank Last’s resume in January 2009 and wasn’t paid, according to documents filed with the Singapore High Court. A pre-trial hearing was held on April 19. Last, Barclays Capital’s head of equity derivatives flow sales for Asia, excluding Japan, was hired as a direct referral after Pagoda failed to set up a meeting, Barclays’s lawyers from Straits Law LLC said in the court filing. “There was never any agreement for the engagement of” Pagoda, Barclays said.
Not surpirsingly, an out of court settlement was agreed. The headhunting firm does not usually want to sour relationships with big clients such as Barclays, usually taking a long term view and settling out of court or even ‘taking one on the chin’ to preserve the big account relationship.
This leads me to believe that Pagoda does not have a reputation or a relationship with Barclays to protect or else I cannot believe they would take matters so far. Either there has been a falling out and the relationship is broken beyond repair or much more likely, they never did have a meaningful relationship with Barclays in the first place and the prospects of them forging one were so slim, they preferred to pursue the sizable $266,000 fee as a one off.
So how does this happen? Could you also be sued because some recruitment agent sent you a CV and then months later your company hired them? I would definitely err on the side of caution.
The way some recruitment agencies work is that they obtain CVs from various sources and then try to sell them to potentially interested parties, sometimes without any prior relationship with the target company. CVs are obtained by advertising and other legitimate means. However, to get a really valuable CV, e.g. a top-performer in the banking industry, some recruitment agents might pose as headhunters with a great opportunity with a competitor. The agent may have discovered that the competitor is recruiting for such a role or he may just be taking a complete flyer. The point is that the top-performer’s CV is the valuable asset the recruitment agent seeks. Once obtained, the agent will approach the competitor, always a hiring manager rather than HR, and then try and uncover and opportunity for his prized candidate. The fatal error is made when the hiring manager shows some interest and agrees to allow the recruiter to send the CV. The agent will send the CV along with terms and conditions and as the recipient of the CV, you and your company can find yourself in deep water – as Barclays have found to their cost.
In some cases this can work fine. The hiring manager gets a great candidate, the candidate gets to explore an opportunity that he didn’t know existed and the agent makes a fee if the candidate gets hired – not very ethical but no harm done. HR doesn’t tend to like it but the hiring manager has a new valued employee so he will usually square it away with HR. However, there isn’t always a happy ending. Let’s say the hiring manager is not the least bit interested in the CV and so doesn’t bother to respond. Then some months later a position becomes open in another part of the business and through recommendation the position gets filled by the very same candidate, introduced by the agent some months earlier. The agency made the introduction to the company and can prove it. Check the terms and conditions, it will clearly state that the recruitment agent represents this candidate and if the business takes this person on in any capacity in the next 2 years, a fee is due!
My advice to hiring managers is first and foremost, don’t agree to be sent a CV from a recruitment agent unless you have an agreement in place with them and the terms are clearly defined. If you do receive a CV with or without the agent’s terms and conditions attached, respond immediately to say that you do not agree to and you are not signing up to the terms presented (or not) and that you have not engaged the agent on this or any other opportunity with your organisation. If the CV is of some interest, I would recommend that you go back to the agent and ask them to provide written proof that the candidate has agreed for them to represent them in a ‘general capacity’ and not for any specific opportunity with the organisation – this will make life particularly difficult for the agent if he has obtained the CV by some deception.
The final point is that this must be a recruitment agent rather than a headhunter. The distinction here is important because a true headhunter would never operate in this way. Headhunters work purely for clients, not candidates and they are engaged and mostly retained to source relevant candidates for specific roles. Don’t be fooled by unscrupulous recruitment agents trying to make a fast buck; it may prove to be very expensive!
Note: – Just to be clear, I am not knocking recruitment agents in general, most do a good and valuable job and operate very ethically. It’s the small minority that gives our industry a bad name!
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