Login with Google“The £20k Lesson” – Why Recruiters Lose Fees (and How to Stop It)
“The £20k Lesson” — Why Recruiters Lose Fees (and How to Stop It)
Recruitment is one of the few industries where you can do great work, deliver the result, and still end up arguing about whether you deserve to be paid.
And the frustrating part?
A huge chunk of disputes aren’t caused by “bad terms” or “dodgy clients”.
They’re caused by humans doing human things:
- “I knew them, so I didn’t send terms.”
- “If I sent terms first, I’d lose the opportunity.”
- “I sent the candidate first and figured I’d sort it later.”
That thinking is exactly what creates fee disputes, messy fallouts, and expensive legal clean-ups.
In a recent RecTalk episode, Barry Cullen (Recklaw) breaks down the patterns he sees week after week — and why the agencies that win more disputes aren’t necessarily “more aggressive”… they’re just more systemised.
Here’s what to take from it.
1) The #1 Reason Agencies Lose: “We Didn’t Agree Terms”
Barry’s view is simple: most terms disputes aren’t really about the terms.
They’re about whether you can prove the terms were part of the introduction.
And when agencies lose, it’s usually because someone chose to skip the process:
- no terms sent,
- no disclaimer,
- no evidence trail,
- and no system preventing the recruiter from “going rogue”.
If your team can introduce a candidate without triggering terms, you’re leaving your revenue exposed.
2) The Fix: Take Terms Out of Human Hands
The best agencies don’t rely on a consultant remembering to do the right thing.
They build the process so it’s automatic.
One practical example Barry shared:
Add a disclaimer into the CV branding (or the email that carries it) that states:
- introductions are made subject to your terms
- and provides a link (or “available on request”)
Why this matters:
If it ever goes legal, your lawyer can point a judge to the document itself and say, “They were on notice.”
This isn’t about being awkward.
It’s about building a paper trail that protects you when things get contested.
3) The Other Big Dispute: “You Didn’t Cause the Hire”
The second most common line from clients is:
“You didn’t cause the engagement.”
This is where things get messy — multiple agencies, direct applicants, internal TA outreach, LinkedIn approaches, “we knew them anyway”, etc.
At common law, if you’re paid on an outcome, a client can argue you must have caused that outcome to deserve the fee.
So you win this in one of two ways:
- A) Evidence
- You can prove your introduction led to interviews, offer, start date.
- B) Contract Protection
- Your terms are written so the client can’t wriggle out via “effective cause” arguments.
The point isn’t to encourage cowboy behaviour.
It’s to stop the “coin-toss” situations where a judge is forced to choose between two stories.
4) Restraints Myth: “They’re Not Worth the Paper They’re Written On”
This one is everywhere in recruitment.
Barry’s response: keep telling people that… because the courts absolutely do enforce them.
He shared a real-world example:
- two recruiters left together,
- gave undertakings to court,
- then breached them,
- and the judge was furious — close to jail, ultimately a £20,000 fine.
The takeaway isn’t “be scary”.
It’s: don’t build your agency on myths.
If you’re an owner, you need to understand restraints properly — both when enforcing them and when hiring from competitors.
5) Prevention Beats Repair (Even if the Industry Doesn’t Think That Way)
One of the most honest parts of the conversation was this:
Some agency owners will happily pay a larger amount to fix a problem once it explodes…
but won’t pay a smaller amount to stop it happening in the first place.
That’s recruitment culture:
- short-term urgency,
- “deal/deal/deal” mentality,
- and a false sense of security because the system “usually works”.
But one dispute can wipe out months of profit.
And if you ever want to sell your business?
Your controls, disputes history, and processes affect valuation, warranties, and earn-out risk.
The boring stuff becomes very expensive later.
6) A Simple Mindset Shift: “Don’t Spend It Until You Can Fold It”
There are three stages to revenue in recruitment:
- “We did the deal”
- “We invoiced the deal”
- “We got paid”
Only one of those is real cash.
If your culture celebrates stage 1, you’ll always have:
- weak credit control,
- poor dispute readiness,
- and a team that thinks invoicing = winning.
Closing Thought: Buy Your “Talisman”
Barry ended with a brilliant habit:
When you win a fee dispute and the money lands, take a small chunk and buy something for the office — something you wouldn’t normally buy.
A reminder that:
- you’re worth paying,
- your work has value,
- and you don’t need to tolerate clients taking liberties.
Call it a trophy. Call it a talisman.
But it reinforces a crucial truth in recruitment:
you’re not begging for money — you’re enforcing value.