Kickbacks to Candidates: Just Smelly

One of my Lawcruiter colleagues recently penned an article, purportedly responding to a candidate’s question about how respond to a proposal to give another Lawcruiter an exclusive right to represent him/her in the lateral job market in exchange for that Lawcruiter’s written promise to “kick-back” to that candidate a portion of the Lawcruiter’s commission for placing that candidate in a new opportunity.

I am sure that most of us, in the Lawcruiter community (and this Lawcruiter is no exception) has faced a demand for a kickback – either from a third party in exchange for promise to refer potential candidates, or from a current candidate in exchange for the commencement or continuation of the agency relationship. In my case, I decided in both cases to refuse the demand – and, in each case, the candidate backed down. What I remember most of all is how unsavory the whole business seemed – both at the time, and as I again recall what happened.

At the same time, many of us are no doubt familiar with the happy feelings that come from implementing a relationship-building strategy whereby the source of a successful referral is “thanked”, after the fact, by way of restaurant reservations, bottles of champagne, etc. This, by comparison, seems as much as good manners as a heartfelt way of celebrating the good fortune of a common friend - now happily placed, as a result of effort motivated by the referral, in a wonderful new opportunity.

What is less familiar is the recent attempt by at least one new Lawcruiter firm, to attract candidates by offering them a significant cut of the Lawcruiter commission for a successful placement.

I can spend a lot of time analyzing the legal distinction – if any – between these situations. Or I can simply rely on my sense of smell to help me distinguish a right-feeling gift of heartfelt thanks, and the queasy feeling that rises whenever I am confronted with a kickback situation.

Some situations – like the one faced by my colleague’s questioner - can seem pretty straightforward. My guess is that there are a whole host of borderline situations as well - and I know very well that after-the-fact gifts can fall into this category too. And it is in these situations where the smell test works (since nothing else does) best of all.

The smell test can also be called a reality check. Here’s how it works:

1. The Candidate asks himself/herself

a. Firstly: whether receipt of the kickback compromises the sincerity of his/her agreement to take a new position - and whether the position under consideration would still represent the best career move even if the kickback were not paid.

b. Secondly: whether his/her new employer would be happy to learn that their latest hire took a position for the sake of a few thousand dollars kicked back by the recruiter. Since each set of circumstances is different, I think the question should be phrased as though this were a marriage: Would either side - in all honesty - want to know that the other is marrying for anything other than Love? Would they care?

c. Thirdly: whether the value to the candidate of the promise of a kickback is worth tying his/her job search initiatives to a Lawcruiter whose business model may depend more on the kickbacks then upon legal recruitment expertise - and worse , to someone who now has a documented lever (i.e., that smelly exclusivity/kickback agreement) that could theoretically be used to influence the candidate to make a choices and decisions that he/she would otherwise not make.

2. The Client applies the smell test in reverse, i.e., in the light of the new information about the candidate - is the recipient of a kickback really the kind of person the client wants to be hiring? I am sure we can all imagine unusual situations where this kind of behavior is looked upon kindly but – speaking for myself – I generally don’t like working with sharks.

3. The Lawcruiter’s issue (leaving aside what I see as an obvious obligation to disclose the kickback arrangement to the client) is essentially one of self respect. By kicking back a portion of a placement fee – the Lawcruiter effectively devalues his/her services by suggesting that they are undeserved at the rates being charged. It is frankly hard to imagine that anyone who knows what it's like to build a Lawcruiting practice would consciously accept this notion – which probably indicates the experience level, in the Lawcruiting business, of the folks offering kickbacks to candidates.

Finally – let’s talk about NALSC’s issue – which is basically one of relevance. Whatever we think of the idea of recruiters offering kickbacks to candidates – the problem for NALSC and for the Lawcruiter community in general is that this idea, and the business model it represents, seems at once seductively compelling and terribly threatening. To begin with, we will all fear that - in the short term – these folks will be competing more successfully for a greater volume of candidates. Secondly, we fear the paradigm shift these folks represent to the Lawcruiter business – moving it from the relationship-centered consultancy model to a more impersonal, less profitable, high-volume business that few of us are equipped to undertake. Thirdly, the potential for the success of this business model threatens to undermine NALSC’s efforts to professionalize the relationship-centered consultancy model of the Lawcruitment business by potentially rendering these efforts irrelevant. Fortunately for NALSC and for most of the Lawcruiter community, I believe, the kickback model, as we are currently seeing it, will smell too badly to be of much use to anyone. For the time being…