Question about chargebacks and finder's fees


1

My business partner and I are looking for a second opinion on this.

The story goes that we're looking for employees, so we offered someone a finder's fee to get a developer for us. She found someone, and the person she found said he'd work for us. Because it was more convenient to pay her the finder's fee early, due to driving and timing, we ended up paying her before we signed the employee. I was a little concerned about paying a finder's fee before he was signed, but we went ahead with it. Lo and behold, the employee backs out at the last second, even after having a meeting with him to get him started (the meeting occurred after paying the finder's fee for him). The paperwork wasn't ready at that point, which is why he wasn't signed at the meeting.

Note that there was never anything on paper for this, the finder's fee was a
verbal agreement.

Also, if it's relevant, the potential employee wasn't terribly qualified, and we hadn't heard from him for a few days when we paid our finder. The fee was also a significant amount of money.

So, was that our mistake, and we should swallow the finder's fee? Or would it be reasonable for us to ask for that back, as we effectively paid her by mistake?
The internet seems to be on the side of asking for it back, but my business partner, and the person we paid the finder's fee to, feel that it's outside of the norm ("not a thing", "bad business practice") to do that.

Thanks!

Employees Fees

asked Jul 20 '13 at 11:10
Blank
Boztalay
106 points

2 Answers


1

I will be crude: I was en error from your side. You should have put the agreement on paper first. The business/entrepreneurial world is hard. Pink glasses off: "mistakes are paid cash"...

I don't know the amount of the fee but honestly, don't waste your time and take it as the price of a newbie's lesson. The most important is to not forget this lesson. Next time, put everything on paper and make verbal agreements only with people that yuo know they will be ready to rediscuss afterwards (friends,...). But still, this must remain exceptionnal. The rule has to be: contracts, contracts and contracts. It is not funny, no startup-mind like but:

  • it protects you in case of troubles
  • (and even more important) the gesture of putting it on paper will oblige you to make the effort of reflection and you will make more thoughtful decisions!
answered Oct 18 '13 at 17:07
Blank
Data Smarter
1,274 points
  • I would agree that if you take the lost fee as the price of learning not to pay anything without a contract, and take it to heart as an expensive lesson, you will earn back far more than this fee in the future!! – Kamal Hassan 6 years ago

0

Apologies for replying with an answer instead of a comment, I don't yet have the necessary privileges to do the reverse.

I understand that there was no contract signed between the company and the 'finder'.

However, when she was given the money, did she sign anything else that you could maybe bring/show to a lawyer and ask for another opinion? A lawyer should be able to offer a free consultation on this matter, but pursuing this legally through them might cost you more than said 'finder's fee'.

I'd obviously ask for the fee back as well, but given that you say nothing was signed, I don't see what could convince the person to give the money back, other than maybe fear of risking getting a stained reputation for giving false guarantees and not being morally honest.

EDIT: How was the fee paid? You mentioned 'chargebacks' in the title.

answered Jul 20 '13 at 14:28
Blank
Pallandt
126 points
  • Thanks for the reply. No, nothing was signed. It was paid by check, you can probably ignore the term 'chargeback', I'm not sure that I understood it properly when I made the question. – Boztalay 6 years ago

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