Today, we are discussing what legal requirements a recruitment company needs to have with our Recruitment Expert, a Solicitor specialising in the recruitment sector and founder of recLAW, Barry Cullen. In this video and podcast, Barry talks about the legal journey from start-up to scaling and the various stages of growth, from how to handle restricted covenants to having your T&Cs work for you as part of your credit control process, the best way to handle legal issues when they arise so you maintain your valued client relationship, and much more.
Below is the full, unedited transcription. Well, we are talking about the law!
Sharon: I know it’s taken a few months, and many people are waiting to hear what you say today.
I will let you do a bit of a longer introduction to yourself, just a little background. Essentially, you are the owner, MD. You’re an ex-recruiter and a qualified lawyer. Rec law is your business going from strength to strength right now.
Before we talk about what today’s conversation will cover, there’s so much that we could talk about when it comes to law, isn’t there? For the sake of the listeners, maybe share a little bit about your background and how you came to set up recLAW
Barry: As you said, I’m Barry Cullen. I’m a solicitor in the recruitment industry and a founder of a firm called recLAW, and we are lawyers in the recruitment industry. That says who we are. How did I get to this? Wow. I was going to be an engineer; that was the plan.
It turns out my maths was nowhere near good enough. Therefore, that career– or, in fact, the degree didn’t even last very long. Like most of us in this lovely industry, I fell into recruitment and spent three and a half, four years working through resourcer, a recruitment consultant during the dot-com bubble and the year 2K testing period, but I was never good enough!
I left recruitment to get what my mum calls a proper job. I went off to study law and became a lawyer. As a result, I have been in recruitment, and all of my working mates were in recruitment, so my phone calls became recruitment. I knocked around doing more general practice. Then, ultimately, came to a realisation: I live and breathe recruitment and know it. It’s what I know. Why don’t I do that?
I went in-house to what was then Lawrence Harvey but became LHi Group. I was their general counsel for four years and then decided, at that point, that the stars had aligned, and it was time to set up my firm. That’s recLAW, which celebrated its third birthday last week.
I completely forgot that until just now. What are we? 11 of us now. As you say, growing and growing. Hopefully, adding another person in the next two months. That’s ultimately us. The recruitment industry’s problem solvers, or enforcers, are more likely.
Sharon: The recruitment industry law enforcers. I like that. Of course, there are undoubtedly many different parts to the legal conversation, aren’t there?
We’re going to try and condense that into almost 30 minutes. Just thinking about the market today, we’ve still got people who are startups. We’ve got people who started during COVID and are a couple of years in. Then we’ve got the whole spectrum of the clients we work with. They are incredibly experienced, have been around for a long time, and are still looking to grow to whatever level that might be. We’ve got bigger organisations, and people are experiencing different challenges in the market right now.
I guess, irrespective of size, every business will have some legal requirements that they need to put in place to protect their business now and as they’re growing.
Maybe a great start for today’s conversation is to think about if I could say, “Well, look, think about your client and the kind of journey they go on as they’re growing and their legal needs.” They put themselves in the strongest position right now, wherever they are, and then how they evolve that. How does that sound?
Barry: Yes, it sounds like a great idea. Much like you, we’ve got clients that are startups, first week, first month. Some haven’t even started yet. Then we’ve got others still in that early startup phase, growth phase, or much more established, from 1 to 2 people in an agency to 100 or 200 people in an agency and everything in between.
You’re entirely right. Everybody, at some point in their recruitment career, will have some legal issue to deal with; whether lawyers are involved in it or not, there’s some legal issue. Whether you are a business owner or an individual recruiter within a business, empowering yourself to have the right tools to deploy at the right time is invaluable. Otherwise, you do all the hard work and don’t get paid, which is not ideal.
Sharon: It’s not. It’s not when we know that, for many companies, contingency is still their main source of income. They’re already regularly doing a lot of work and not getting paid.
Then, it’s like a bitter pill to swallow. When you’re expecting to get paid and not get paid.
Barry: Exactly. When you’re contingent, you don’t get paid on the ones you should get paid on, rather than just the ones you didn’t close. Yes, I completely agree. I think maybe we’ll talk about it from the life cycle of a typical client for us because I think that covers most of those bases. At the starting point, we assume it’s a startup.
Typically, you get two recruiters who are freshly minted directors of their freshly incorporated recruitment company. They come to us and normally say, “We’ve had some nasty letters from our previous boss. What are we meant to do?”
It’s the allegation of breach of post-employment restraints. Most of these people don’t come to us saying, “I want to get away with it.” Most of them come to us saying, “I want to know what I’m allowed to do and what I’m not allowed to do. If I agree to anything, I want to ensure I agree to what I should agree to.” It’s that sort of advice that most people want. A massively sensible thing to do. Understand those restraints because there’s this wonderful fallacy within the recruitment industry.
I say it’s a wonderful fallacy because it makes me lots of money. This fallacy in the recruitment industry is that restraints aren’t enforceable or worth the paper they’re written on. We love that because they are enforceable when they are well-drafted and deployed.
If the employer doesn’t make some of the typical mistakes we see, then they’re enforceable. The fact that everyone thinks they’re not means that people breach them more often.
It’s a sensible starting point. Get someone to have a look. It doesn’t have to be us; I’d prefer it was! But get somebody to look at the restraints and critically analyse them because, most of the time, these things are written by lawyers.
They’re massively verbose and difficult to understand. The starting point is that you need help understanding what they mean to ensure you’re not tripping up.
The second point is for someone to say that they are reasonable and therefore enforceable or not.
In restraints, we could talk about restraints for not just hours; armies of lawyers apply their whole careers from the day they qualify to the day they retire, just dealing with post-employment restraints. It’s a massively contentious area of law that makes lawyers a lot of money. We won’t bore everyone with the full details, but broadly speaking, it’s what I call the mum test.
If your mum knew what you were doing, would she be embarrassed? If it falls into that category, you probably should look at yourself and think, “Is this okay? Isn’t it okay?”
Because restraints broadly work like this, the starting point is that you can’t prevent somebody from carrying out their chosen trade or profession.
Those liberal ideals are diluted down by generations of lawyers who came along and went, “Ooh, but what about–” and, “Ooh, what about–” and, “How about–” and, “What about–” and carving away at it.
The state of the law now effectively is that you can’t restrain somebody from their chosen trade and profession, except where the purported restraint goes no further than reasonably required to protect a legitimate business interest. That’s a nice long sentence; everyone understands all the words in that sentence.
As I say, armies of lawyers apply their trade in saying what that sentence means in any given fact and scenario.
Here’s the short layperson’s version.
Your employer can’t overreach. If they try to put you on a restraint of 100 years, that’s unreasonable. What a judge won’t do is say, “100 years is unreasonable; put a line through that and change it to 1 year.” A judge will say, “That’s unreasonable, therefore not enforceable,” and knock that whole restraint out.
When gauging these things, people need to consider, “For this employee at this level that we’re hiring and putting it to this role in this market, what is a reasonable period to restrain them from clients, candidates, contractors, suppliers, and soliciting key staff out of the agency?”
There are 101 mistakes you can make as an employer. I think of the outgoing employee, that life cycle of someone coming to us for that first bit of advice; that’s often what we’re trying to do: see what’s enforceable and what’s not enforceable.
That’s the first thing they normally do. Then they say, “Oh, we’ve heard we probably need a shareholder’s agreement.”
As the name suggests, a shareholder’s agreement effectively governs the relationship between the shareholders and the company and the shareholders themselves. It sets out what a shareholder can and can’t do.
Certain decisions, such as if somebody wants to hire someone and wants to enter a contract on behalf of the company, what rights do they have to do that? Is there a limit to getting permission from more than one shareholder? That sort of stuff. It also then potentially has its restraints.
Glibly, I usually say to people, don’t get a shareholder’s agreement. They say, “But everyone else tells me to get one.” I say, “Yes, because everyone else is a commercial lawyer. I’m a litigator. I don’t want you to have a shareholder’s agreement because if you have a shareholder’s agreement, then when you fall out with your business partner, and at some point, you will, there is a document there that sets out everything very clearly, and everybody knows what they have to do.”
One makes it very difficult for a litigator to make much money. As I say, it’s glib. It’s glib because you should get one. I say it with my tongue in my cheek: don’t bother because I get to charge one of you a lot more money in a couple of years when it all falls apart.
People’s motivations change, and people’s drivers and objectives change. Look, people get married, split up, and divorced.
If you could do that in a marriage, you could do it in a business. You need to make sure those rules of engagement are very clear. That’s all a shareholder’s agreement does.
Sharon: Also, when you’re setting out in business, you will have certain thoughts about, “We’re okay to have a single person decide on this, but then these are the things that we want to have joint decisions on.” When you’re starting, or even when you’re in the early couple of years of your business, you can’t possibly anticipate what might be individual and collective decision-making further down the line, can you?
Barry: 100%. Also, on day minus one, starting up a business, or Day 1, or Week 1, or whatever it is, when there’s no money available. There’s no money on the table; it’s much easier to negotiate what the business looks like, its structure, how it should work, and what the rules of engagement are at that point.
I can tell you, once the business is worth 1 million, 2 million, 5 million, 10 million, 50 million, it’s much harder at that point to start negotiating because it’s a real thing, there’s loads of money, and then you’re not all necessarily on the same path anymore.
We often get people coming to us saying, “We set up a company, and there were three of us. We’re all directors; we’re all equal shareholders. One of them is not pulling their weight; how do we get rid of them?”
It’s like, “Well, where’s your shareholder’s agreement?” They go, “We haven’t got one.” I go, “Brilliant. It’s going to cost you a fortune.” Again, tongue in cheek, right?
A shareholder’s agreement makes it easier to point at it and say, “Here’s what we agreed would happen in this situation.” Whether “We, as these two directors, can now serve you notice and buy your shares off you,” or whatever it might be, you set out those rules in advance so everybody knows this is how it works.
Restraints, shareholder’s agreement. The next conversation is always in terms of business.
This is business-as-usual stuff, right? It’s not, “We’re at the beginning, we’re starting up,” it’s “What should I be doing within my business to ensure I get paid and it’s all dealt with fairly?
Our commercial team does it. That’s a shameless little plug; we can support you with that side of things.
We normally find nine times out of ten, these two people who set up their own business normally ‘nicked’ their terms from their previous boss or nicked them offline somewhere
They’ve gone, “Here’s a set of terms. They worked for my boss; they must be okay.” They don’t realise that their boss did the same thing five years before, and their boss did that five years before, and nobody’s looked at them since day dot.
They may be massively out of date, not up to date with the latest regulations, not up to date with the latest best practices within the recruitment space, and often don’t work. From time to time, we still see a set of terms, and I love this.
The recruiter comes to us and says, “XYZ owes me money. Can you get it?” “Yes, yes, yes, sure. Send us all the documents.” They send them through. We get their terms; they have a pretty logo at the top of their company name.
They’ve got all this lovely stuff. It looks great, and it all works. Then, on pages 3, 4, or 5, they got bored and stopped remembering to change the old company name to their new company name. Their old employer’s name is still in the terms somewhere; that’s always fun.
Then, some people are using document automation, such as AI-driven, LLM-driven drafting; they’re pulling together this weird Frankenstein document, which is all written in English, but part German law, part French law, part English law because a lot of people. As a failed recruiter, I say this with love in my heart; many recruiters don’t know what good looks like.
If you put a bad and good contract in front of them, they are both just contracts. They don’t know what good looks like. Therefore, when an LLM model throws them a document, they go, “Great, that must work.” They only then find out it doesn’t work when they come to us six months later.
Sharon: When there’s a problem.
Barry: Asking us to go and recover some money for them.
Sharon: It’s that classic thing, isn’t it? Whatever area we’re talking about, whether it’s law or marketing, there are always going to be times when you don’t know what you don’t know.
Unless you go and have a conversation, and you talk to someone who does know and is the expert, things then get highlighted, don’t they?
Barry: Yes, it’s the little things. There are some really easy wins for having your terms. For example, most people are going to have conditional fee rebates. If you’re a perm recruiter, if a candidate drops out in the first two weeks, we give you 80% of your money back. Some people even 100%. Then, there’s a tapered-off rebate. That’s all pretty standard.
What’s also pretty standard within most recruitment terms is that those rebates are conditional. They’re often conditional on the client paying the bill on time or the client telling you that they’ve hired the person. They can’t backdoor me and then get a rebate as well. You’ve got to pay your bill on time.
All of these little conditions that are attached to these rebates are useful for several reasons.
Number one, it can stop you from having to pay a rebate. Number two, it can be a really good credit control lever. You might be on 14-day terms, and your fee rebate might be conditional on payment on time. You’re on day 16, and your bill hasn’t been paid.
What you could do to your client at that point is say, “Hey, look, just so you know, because you’re late on your invoice, that rebate provision, if this doesn’t work out, won’t apply anymore, I’ll tell you what, if you get it paid today, or get it paid by the end of the week, I’ll reinstate that for you.
I’ll still honour it if you get it paid by today, tomorrow, or this week. It’s a credit control lever. You’re showing them the stick but giving them a way out. That’s a nice business-as-usual way of levering these things.
Another one that we don’t see enough of, and I shout about this one from the rooftops, is conditional fee discounts. If you’re in the UK as a contingent recruiter, many people can probably count on one hand the number of times you’ve done a deal at standard rates. With our client coming back and going no, we can’t work at 30, we can’t work at 25, how about 15, how about 16, 17, 18?
Whatever your particular space, you generally won’t be working on full rates. If you have a conditional fee discount provision within your terms, you’re effectively saying, “Our standard terms are 25%; we’ve agreed to discount those to 20% for you on condition that—” much like the rebate—”you pay the bill on time. You tell us when you’re hiring somebody.”
All of these conditions, because then if they don’t tell you, why should a client get a discount if they’ve backdoored you? Why should clients get a discount if they’ve not paid the bill on time?
Having those conditions in there means what you can then do is turn around to this guy and go, “I’m sorry about that. That £100,000 placement, £20,000 fee, it’s not £20,000 anymore,” or £15,000 anymore, “it’s back to £25,000 because you didn’t pay on time.”
Again, you can use that as a lever if it’s a good relationship. “Look, technically, you owe us full fees, but if you get it paid today, we’ll honour the discount.”
You’re showing them a big stick that you’re being a good girl or a good guy who’s going to them, “Actually, do you know what? I’m going to look after you because this relationship means
Sharon: Exactly. That was the thing I was thinking about. It made me think about there rather than getting into tension and friction, which impacts the long-term relationship.
What you’re offering here is a way of preserving that so the future business will also come. I guess also things happen on the client side, let’s say, the recruiter’s client side. We always know that people are human, mistakes are made, and there are genuine things, but even those genuine things cross lines, don’t they?
If somebody’s on holiday; I was talking to somebody yesterday, and their finance person who was meant to be covering, something had happened, nobody covered, so of course, their invoices had not been paid. They had to wait another week for said financial person to return from holiday. That will potentially impact contracts and rebates and everything else.
Barry: Imagine their temps. You’ve got a £100,000 invoice on temps, £80,000 of which you’ve got to pass on to somebody else for doing the work. Now that you’ve not been paid on time, you’ve still got to pay those temps. If you’re self-funding it, and some people do self-fund their temps, that’s a lot of money you’ve got to find, right?
I’d say that’s massively important. Something else that goes with that is the conditional fee discount, which doesn’t work for everybody. This doesn’t work for everybody because some people’s accounting systems won’t let them do it.
For other people, it might cause them VAT reporting challenges. Check with your accountant and finance team whether it’s possible before you do this, but you might be able to put that discount on the invoice itself.
Use my example: £100,000 placement, 25% is your standard, so it’s a £25,000 fee. You do that, placement of Jane Bloggs, and £25,000.
The next line on the invoice is “Timely payment discount, minus £10,000.” The total on the invoice is £15,000 (£15,000 + VAT), but that timely payment discount is included.
I’ll tell you why that’s useful as a practical tip is this: if your client has a proper accounts payable team, even if they don’t, even if they use a bit of software for accounts payable, what normally happens is your email with the invoice, the invoice gets stripped off the email and gets shoved into an accounts payable system.
Then you’ve got an accounts payable clerk or whatever their job title might be, going through the invoices and going, “Who should I pay today?”
They’re not going to look at the email; they’re not going to look back at the terms of business; they’re not considering anything other than the invoice in front of them.
If that invoice in front of them says, “Pay this one by the 11th of April,” picking today’s date, “and it costs you £10,000 less,” guess what? That’s the one getting paid today, not the one that doesn’t have it. Even though the other one might have the same power and the same consequence of being late, they will look at that one and be more likely to pay it faster.
It also stems from another thing my training partner told me many years ago: “If you ever give a client a discount, remind them at every opportunity.”
You give them a quote; they want a discount; when you do your contract, clarify there’s a discount in the contract. When you raise your invoice, make sure it’s clear there’s a discount. It doesn’t just become normal because they know they’re getting it.
They come to expect and understand that you’re doing them a favour by giving them discounted rates.
Sharon: Yes, and the reality is, I think, in our industry—well, not just our industry—people love a discount, don’t they? That’s a great bit of advice.
I wonder how many people do that currently.
Barry: I was out in November, and I saw a client. I’d not spoken to you for ages. I said, “Why haven’t we seen you for ages?” Basically, “Where’s my work? Why haven’t you given us any work?” He said, “You know what you said about putting discounts on your invoices?” I went, “Yes.” He said, “Nobody’s not paid since because they see that, and they pay the invoice.” I said, “Hang on, I should stop telling people this. I’m doing myself out of work.”
Thinking about how humans deal with this, what’s their motivation, and what’s their driver? It’s a bit like, you know if you call a call center, it’s a massive, big call center bank, right? You’re calling because you’ve got a problem with your phone and bank account and need it fixed. On the other hand, the human doesn’t care about fixing your problem. Their motivation is to get you off the phone as quickly as possible because that’s another stat of a call answered and got rid of. Do you see what I mean?
Yes, so that’s useful. Then, look, next, it becomes training humans. Get your terms right, and then train your humans.
Sharon: To implement the terms?
Barry: Well, not just to implement, but to understand them. Understanding them is the starting point. Because, I tell you what, I’m trying to come up with a stat, and I’m not going to be able to come up with it all on the fly.
Let’s say the overwhelming majority of disputes that our team has to deal with when it comes to fee disputes are caused by the humans in the process, not by the contract, not by anything else. Often, that comes about. I love and hate this, but we often say, “Oh, I knew him well, so I didn’t send our terms.” It’s like, “What? What?
Do you want me to sue someone on a contract they’ve never seen?” “Okay, yes, let’s give it a go.” This is going to be fun.
In my experience, most people don’t send terms or don’t talk about terms with their clients because they’re scared of them. They don’t understand them because some lawyer has written them in what we call legalese, ridiculous words that no human has ever actually spoken.
They don’t understand their meaning, so they’re uncomfortable talking about them. They’re not comfortable negotiating them. They’d much rather pretend they didn’t exist.
Training your people and ensuring they are comfortable with understanding the terms, how they work, what points should be negotiable, what points should be red lines, what they should be pushing up to more senior people to get sign-off, that sort of thing, massively powerful.
If your people know what your contract means and how it works, their clients will be much more accommodating and think, “Actually, I’m dealing with somebody who knows what we’re talking about here.”
That would be my next bit: get the terms right, then train your people to use them properly. Then, the next step is to train them on how to resolve and handle disputes.
There’s a problem within some parts of the recruitment industry: People jump off a cliff very quickly. They go from a perceived grievance to full throttle and a heavy-handed approach.
They’ve been backdoored. They pick up the phone to the candidate, “I can’t believe you’ve done this to me, all that work I did for you,” blah, blah, blah, then they’re banging an invoice over to the client and say, “If you don’t pay in seven days, I’m going to sue you,” all that sort of thing.
Then, if they just chilled out for a minute and remembered that resolving disputes is just like sales, it is a sales process, yes? You need to identify the problems and then find solutions. You won’t find out what those problems are by having a go at someone. You need to open your ears.
We were all taught this, Sharon. I imagine you were taught the same. You have two ears and one mouth.
Barry: Use them in that ratio. I would prefer if we had ten ears and one mouth and used them in that ratio.
Listening is much more important than talking in a dispute, like in a sales process. You’ve just got to listen to everything said and everything that’s not said and identify the issues. I’ll give you a case in point. Sorry, go on.
Sharon: Before you gave the example, I was going to say that this reminds me of what you described right at the beginning when you were talking about shareholder contracts and things.
It’s a business relationship, like a marriage, and marriages break up. What it’s making me think about is, in the law world, there’s mediation, isn’t there?
You can go through mediation if you’re breaking up a marriage. That’s the process that a lot of people will go through. What you’re talking about here is dispute resolution, but it makes me think it’s the same thing. It’s asking questions to understand what the issue is and its consequences. Before then, we think about solving it, as you say. I never considered it as it mirrors the sales process, but yes.
Barry: For example, I have a client who is a tech recruiter. They’ve placed somebody, and the fee was, I want to say, £19,800 and change. They had been banging their heads against a brick wall trying to get this money paid for nearly six months.
They contact us and ask us to take over. We do. I send a friendly email. One of my colleagues sent it and said, “Our client has instructed us to come and get this money.
We understand there’s an issue. Let’s have a chat.” Let’s have a chat. Let’s figure it out. See if we can figure it out.
We got on the phone. It was the head of HR and the HR director for this tech business. I came on the phone. I said, “Look, yes, I’m a lawyer. Yes, I’m instructed to recover this money, but I completely understand that I’ve only one side of the story now. I would love to hear from you about the issue here. Why the fee isn’t payable.” Then I just shut up.
It was music to my ears because she turned around, the loveliest woman in the world who’d been fighting tooth and nail with my recruiter for six months, and got on the phone. She was as nice as pie and said, “Do you know what, Barry? I’m quite embarrassed by this situation because I know your client should be paid.
I know we owe this money, but the problem is that my CEO won’t sign it off because he has a problem with them about something else. Because he has a problem with them about something else, he’s not willing to sign off on this invoice.”
I said, “Oh, that’s a shame. Does he have to sign off on all the invoices?” I was surprised because they were quite a big business.
She went, “No, no, no, it’s just because of the threshold. The invoice is over £15,000, so he has to sign it off because it’s over £15,000.”
I said, “Oh, that’s a pain. If it were less than £15,000, you’d be able to sign it off yourself.” She said, “Yes, it wouldn’t be a problem.” I said, “I think I’ve got a plan.” She went, “What’s that?” I said, “I’m going to get that invoice credit noted.
Then I will send you two invoices for half the amount each. Then you can sign those both off, can’t you?” She thought about it briefly and said, “Yes, that works. Can you do me a favour, though?
Can you do them a week apart so it’s not quite so obvious if anybody–” “Yes, fine.”
Straight back to my client, went, “There you go. Credit note that one-off. Give me two more invoices a week apart. Let’s get it done.” Sent them over. They were paid within the week.
Barry: It is all about listening.
Sharon: It’s looking to understand.
Barry: Most people jump in and start sending nasty letters.
So, get your terms right. Train your people to understand how to resolve disputes. Knowing when to push things upstairs is equally important because sometimes, you can converse like your consultant can with the hiring manager and get nowhere.
Then you could push up to a manager or a team leader, and they could speak to a mid-tier person at the client and have that conversation again.
If that still doesn’t work, then you could go up to a more senior position, like an associate director or a director. Those escalation points are really valuable.
I talk about how it isn’t easy to un-press the big red button.
If you hit the big red button of, “I’m going to sue you,” it’s very difficult to de-escalate from there. In contrast, regular contact and escalation, not pressure of sorts, but in a calm way, can get you where you need to be a lot more easily because eventually, you get to the right level of person where they get it. They’re willing to engage and resolve it.
They’re empowered to make a decision. The further away from the humans involved in the original situation, the less emotional baggage there is.
Your consultant and their hiring manager probably feel strongly about it.
Whereas your manager or associate director and their director care less about right and wrong emotions, they care about the solution and the money.
Having an escalation process, understanding here’s what we do, a playbook, if you will, “In a dispute, here’s what we do. If that doesn’t work, we move in this direction. If that doesn’t work, we move in this direction. If that still doesn’t work, you come to recLAW, and we will go and do it for you.” There you go, shameless plug.
Sharon: Do you know what, half an hour has flown by? There are some absolute gems in there for everybody that will be listening. Thank you for that. Is there any last little gem that maybe you’ve not mentioned that you think, “Do you know what, there’s just one thing I want to leave people with”? What might be that one extra thing?
Barry: I like that. I like that. Beyond using your ears more and listening and not assuming it all?
I’ll mention a product we’ve got, which is probably the right thing for it. Apologies for this, but we’ve got a product called RecProtect. It’s a site called RecProtect.net that gives you the best-in-class terms. It trains your salespeople. It also does all the debt recovery letters and everything else. It’s a subscription service. I’m describing it as an out-of-the-box legal function for recruiters.
That’s well worth checking out because we’ll fix the terms, train your people, and complete all your debt recovery tasks. We even host legal clinics so recruiters can ask questions they want advice on without having to go to lawyers every time.
They come to lawyers because they’re coming to us, but they don’t have to go and get a bill from a lawyer every time. It’s all part of the same subscription.
Sharon: There was a question that I thought about as you were chatting. We’re seeing increasingly more clients going out into markets outside the UK. I was talking with a client this morning who concentrates on Germany and a particular state in the US.
I know this trend is growing, and people want to expand. Of course, I guess then that will have implications when it comes to T’s and C’s.
What’s the general advice if you’ve got a UK-based company that is providing candidates in other markets? They may have a legal entity in another market, or they may not. They may have a UK-based client that’s got an operation in, let’s say, America. Of course, they’re providing a candidate for that business operating in the States.
Barry: No, I get that. The starting point is not to let the legal tail wag the commercial dog.
I would love to say, “Oh, the law says this, the law says that, do this, do that.” The reality is I and my team only deal with that small element of dispute that needs a lawyer, gets a lawyer in England and Wales, and comes to us.
I’d love to say that’s every dispute under the sun, but it’s not. We get a small sliver of it, meaning most disputes are resolved before a lawyer is involved and anybody even looks at a contract. If the commercial opportunity is brilliant, then you may be willing to take more commercial and legal risks around it because of the return on investment.
That’s the starting point.
Commercials should drive the decision, but then you should get legal to do what it can to mitigate and minimise any risks.
What I would say, and what we’re predominantly talking about here, is the law that governs the contract and the jurisdiction that decides any disputes.
You must consider whether you would be happy to take a client to court or defend yourself in that foreign country. If you would, because you might have the operational backbone and legal support in Germany or the East Coast or wherever it might be, and you feel comfortable, then that’s fine.
If you don’t, it’s tough enough going to court in England, let alone going to the court in a foreign country in a foreign language, which is often how it will play out.
That’s what to be aware of—not wary of, but aware of. We often get clients who go to the US and say, “Oh, do we need a new version of our terms for every state in the US?”
No, no, no, you choose where you do your business from. You’ve given two examples there, right? UK-centered recruiter operating ad hoc in other countries. Generally speaking, English and Welsh law, courts of England and Wales, and then trade that way.
You’ve got a legal entity in the country, and you might have people in the country. There might be a commercial expectation that you’re holding yourself out as a German entity in a German business; therefore, your client might expect to see German contracts.
That’s the commercial decision, right? The commercial decision is that we will potentially get more business because we’re using German contracts for our German entity. Therefore, you commercially might say, “Therefore, it’s worthwhile doing that.” Just be aware you may have to use German lawyers, a German process as Germany was the example.
You have no legal obligation to say, “I’m placing into Germany; therefore, it must be a German contract.”
Sharon: Listen, thank you so much for your time. Lots of gems that you shared there. It was also a great way to do it in a client’s life journey. People can pick up lots of different things. I’m sure it makes some people think that those who aren’t in the start-up stage have some of those things in the way they need to have.
To learn more about how Barry and his team can help you, visit recLAW.
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