How To Avoid Paying Recruitment Agency Fees - Guide to Worst Practice

TP Legal Recruitment and Interim Lawyers have been operating in the UK and overseas for almost 20 years, and here is our list of top methods for avoiding paying recruitment agency fees, as personally experienced:

Tell the recruitment agency to sue you and don't pay.

Fairly simple to do, simply use the recruitment agency to recruit a candidate, go through the motions of the recruitment, thank the recruitment agency for their sterling service and then inform them that you have no plans to pay them and tell them to sue you.

In our experience of the recruitment industry we think about 50% of recruitment consultants at this point will simply write off your debt. The other 50% will take great pleasure in suing you for the fee due plus commercial costs and interest. Why do 50% of agencies not bother suing? Simple economics really; if you have been through the county court system in the UK you will probably know that it is fairly complex and cumbersome to an extreme. As most lay people struggle to comprehend the technical terms used to commence and progress proceedings, justice was removed for most small businesses when legal costs were removed from claims of £10,000 or less. This means that unless you have a good grasp of what are known as the CPR Rules (the Civil Procedure Rules), you will find it very hard indeed to utilize the courts to recover your money, and as most recruitment consultants are not solicitors, they are very hesitant to go down this route for a smaller sized fee.

* Risk factor - 50%
* Chances of success - 50%
* Damage to your moral integrity - 75%.

Advise the recruitment agency that the candidate they have introduced has in fact cost you considerable amounts of money and that if they think they're getting paid they have another thing coming.

Fairly effective, particularly when considering that at least half of all recruitment agencies simply won't bother suing you. You will of course need to make up some spurious allegations of malpractice, incompetence or negligence on the part of the candidates you have taken on and seek to scare the recruitment agency sufficiently that they will not seek to take any action against you.

This may be harder than it looks because the recruitment agency will know the candidate is still working for your company and therefore will also know that they're obviously not as bad as you are making out. So the risk on this one is a little bit higher, but again, perfectly possible unless you meet a recruitment agency prepared to litigate against you.

Risk factor - 50%
Chances of success - 66%
Damage to your moral integrity - 65%.

Take the initiative and threaten to sue the recruitment agency for negligence, breach of contract or incompetence, even before they have asked you for any money

Easy option this one, simply write to the recruitment agency, advise them that you have been thoroughly dissatisfied with their service, and regardless of what their terms say in terms of limiting liability (most recruitment agencies have such a clause) you threaten to sue them for £100,000 or to countersue them for the same amounts if they so much as breathe near a county court. This will involve making up a load of spurious allegations against the candidate or against the recruitment consultants, but it is probably quite an effective method for avoiding paying any recruitment agency fees, as a good number of recruitment agencies will read your letter, immediately panic, think of their dwindling bank balance and dismiss any thoughts of claiming a fee from you or your business. Of course, some will relish the challenge and you could end up with a great court bill, but we estimate that again quite a large number of recruitment agencies will avoid any action at all and simply move onto their next contract.

Risk factor - 40%
Chances of success - 75%
Damage to your moral integrity - 80%.

Go bust.

Quite an extreme technique for avoiding paying a recruitment agency, but if you think about it, fairly effective to get out of one fairly sizeable fee in most cases, simply by closing down or transferring all your assets out of the business into something else and starting over again. Particularly good if you had a very senior member of staff join you, or you have taken multiple staff on from the agency in question. Even more useful if you have already got another company set up ready to carry on trading and you simply move everybody across to it.
Closing down a limited company is fairly easy to do, doesn't take much effort and is a very useful tool these days for avoiding your creditors. Partly because the HMRC and Companies House investigators lack any resources to investigate circumstances where this happens and so many directors seem to get away with it.

Risk factor - 60%
Chances of success - 100%
Damage to your moral integrity - 25%.

Commit Fraud

Fairly simple to do - simply pretend that a candidate has not joined your firm and that you have not hired them. Or, alternatively claim you dismissed them after 24 hours because they weren't very good and then make them a partner of your law firm. Alternatively, you could claim that the candidate is working at your firm, but in reality they are not being paid anything and therefore no fee is due to the recruitment agency.

* Risk Factor - 100%
* Chances of success - 10% (most agencies are good at tracking candidates)
* Risk of getting struck off - 10% (when we have reported the incidents above to the SRA (Solicitors Regulation Authority) and in one case to the government Modern Slavery Unit no action was taken).
* Damage to your moral integrity - 100%.

Summary

In the 20 years we have been in recruitment we have seen all of these techniques used by employers, with varying degrees of success. It is very often much simpler simply to pay the agency fee rather than try to avoid it, as some dodgy clients over the years have found out when they have finished up with a charging order on their house, block of flats or business, together with a hefty bill in addition to the agency fees.

Is it morally acceptable to try avoiding paying a recruitment agency or, for that matter, any professional once you have had the service from them? We would suggest that it is definitely not. If you have taken the benefits of a service, knowing that a fee is going to be due and knowing what that fee is going to be then it is your hard luck if you have entered that agreement and then decided that it is not for you or it is inequitable. So pay your fees when they're due, sleep well at night and develop a reputation as being a morally decent, nice and happy business to work with and for.

Jonathan Fagan is Managing Director of Ten-Percent Legal Recruitment and a non-practising Solicitor. Ten-Percent Legal Recruitment provides online Legal Recruitment for Solicitors, Legal Executives, Fee Earners, Support Staff, Managers and Paralegals. Visit our Website to search our Vacancy Database.