Tom  Shaw
Tom Shaw
Associate: In House

Articles From the Team

The Great Fee Squeeze of 2019!

In the interest of projecting a more sociable image at work, I’ve been having more conversations with my colleagues in the office kitchen. On both the private practice and in-house side, we’ve noticed a recent attempt by a number of our clients – some with whom we hold long-standing and fruitful relationships with – to reduce our fee percentages (much to our dismay!).

I won’t bury my head in the sand and pretend I don’t see the short term commercial gain that our clients must perceive from this reduction; after all, who doesn’t love haggling at a car boot sale? But for what it’s worth, I thought I’d offer my own observations (from the other side) in response to some frequent client assertions to justify the above.

Again, I get the thought process here. All businesses should look to reduce costs where possible, so it’s worth bearing in mind it’s a commercial decision for us too.

“We pay less for other recruitment agencies and want to bring our fees in line”

I get this. Everyone loves simplification and why pay more for legal recruitment (compared to other recruitment)?

Ultimately, this argument falls down because it doesn’t account for the vastly different elements involved in recruiting for legal roles, compared to others. Legal recruitment is far more specialised, infrequent and in-depth than other areas.

Due to the more challenging aspects of recruiting in-house lawyers, fees tend to be higher than other more voluminous sectors: the intricacies of each individual position and business require more understanding; and, the candidate search is far more challenging – given the current shortage we’ve had processes drag on way beyond the six month mark.

Is the substantial amount of extra work not deserving of extra remuneration?

Fee Squeeze

“It’s just a commercial decision”

Again, I get the thought process here. All businesses should look to reduce costs where possible, so it’s worth bearing in mind it’s a commercial decision for us too.

There’s an abundance of vacancies out there and not enough candidates to fill all of them. With this in mind, it makes no sense for us to prioritise low paying jobs and clients putting the squeeze on our margins over those willing to pay the fair market rate.

“Other agencies will do it for less”

Competitors undercut each other to win clients in all forms of business, but again it’s worth looking a little deeper.

Other agencies may offer to work for a discounted rate, but again, the same thought process (mentioned above) applies: will they really prioritise your role at a reduced fee over another at a higher fee?

A high percentage of jobs are taken on by agencies on a contingent basis, meaning we’re only paid upon successful completion. The likelihood is other agencies will give your low-reward vacancy a cursory look before focusing their time and efforts on others, leaving yours forgotten and unfilled. We’d rather take on roles in good faith and genuinely put our concerted efforts in – over a period of time – to meet your needs.

The likelihood is other agencies will give your low-reward vacancy a cursory look before focusing their time and efforts on others, leaving yours forgotten and unfilled.

What’s the solution?

My honest opinion is that if you’ve got a strong working relationship with an agency that consistently delivers, why upset the apple cart and risk them making a choice to chase other business elsewhere?

On the in-house team at BCL, loyalty is the key: we like to consistently deliver for clients over the long term and win repeat business; it suits all involved but it needs to make commercial sense to do so.

If you really, absolutely have to reduce fees, have a think about how you can do this so that it continues to be commercially viable for all parties. From our side, this means reducing the risk of going unpaid for hours, days and weeks of work.

Have a conversation with your recruiter about retained recruitment, whereby you usually stagger the fee over three stages: upon instruction, upon production of a shortlist and upon completion. This guarantees some remuneration for our efforts, which makes it commercially viable, and allows room to lower fees.

After all, how many other professions can you think of that effectively work on a no-win no-fee basis in such a high risk, low volume market?

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