What the agreement has to establish before a single resume moves
A contingency fee agreement should do more than set your commission. It must clarify who is the client, who is the candidate, and which position counts as "the role." Put full names and business entities on the agreement. Avoid using only a brand, a subsidiary, or a person, spell out the legal party that actually pays your invoice.
List the job title, department, and any location requirements. If a client says "account manager" but has three teams, distinguish which one you are working on. This avoids confusion when another recruiter submits for a similarly titled job.
The agreement should specify when the search starts. Some recruiters use the date the client signs, others the day after kickoff. This date matters for candidate ownership windows and for the guarantee period. State clearly when your work is authorized to begin, and when it ends.
If you are submitting candidates to multiple contacts, outline who can provide feedback or make decisions. This prevents delays and finger-pointing later. You do not need a long list of stakeholders, but you should note whether HR, a hiring manager, or an owner can close out a candidate or position.
Keep reading: Retained, Engaged, and Contingency Search: How Each One Pays
Fee basis: a percentage of what, and what counts as first year compensation
The heart of any contingency agreement is the fee clause. Most boutique firms charge a percentage of first year compensation, but how that compensation is defined decides what you actually get paid. Spell out what is included: base salary, guaranteed bonuses, signing bonuses, and sometimes commissions or allowances.
For straightforward roles, "base salary" is enough. If the role includes quarterly or annual bonuses, clarify if those count toward your fee. For example, if the candidate is promised a $70,000 base and a $10,000 guaranteed annual bonus, your fee should be based on $80,000 if you want the bonus included. Write the formula in the agreement: "X percent of first year base salary plus any guaranteed bonuses."
Do not assume "OTE" (on-target earnings) is clear to the client. If commission or incentive pay is part of the package, break down whether you are paid on expected or actual earnings. Many firms exclude variable compensation unless it is guaranteed. If you want to include it, spell out "all guaranteed compensation, including salary, signing bonus, and any fixed allowances."
Some clients try to cap the fee base, especially if perks or allowances are unusually high. A clear clause avoids arguments later. If a car allowance or housing stipend is part of the offer, decide at the outset whether these are included in your calculation.
The introduction clause: how candidate ownership is defined and how long it lasts
The introduction clause protects your right to a fee if your candidate is hired. It defines what counts as an introduction and how long your "ownership" of a candidate lasts after submission. This is where disputes start if language is vague.
What is an introduction?
Most agreements say a candidate is "introduced" when you send their resume, profile, or details to the client. Specify the method: email, portal upload, or live shortlist. Decide whether a verbal introduction or informal name-drop counts. To avoid confusion, put in writing: "A candidate is introduced when their resume or profile is submitted via [method] to [contact]."
Candidate ownership window
Set an ownership window. Many firms use a window of six to twelve months from the date of introduction. If your candidate is hired for any role, sometimes even a different department, within that period, you are owed a fee. State the time frame: "The firm is entitled to a fee if the candidate is hired within X months of introduction."
If a client claims they already knew the candidate, require prompt notification, typically within five business days of your submission. If they fail to respond in time, you retain ownership. Put this in the agreement: "If the client is aware of a candidate prior to introduction, they must notify the firm in writing within five business days. Otherwise, candidate ownership remains with the firm."
Some roles drag out for months or candidates return for later rounds. Tie the ownership window to the date of final contact or last interview if you want extra protection, but keep the language simple. Complexity rarely helps in a dispute.
Keep reading: Eight Submission Mistakes That Cost Recruiters the Placement Fee
Guarantee, replacement, and refund language that clients will actually sign
Guarantee clauses are where many deals get stuck. Clients want protection if a hire leaves, but recruiters do not want to work for free. The key is balancing what you can afford with what the client expects.
Guarantee period
Most boutique firms offer a guarantee of 30 to 90 days. This means if the candidate quits or is terminated for cause within that time, you owe a replacement or refund. If you can, stick to a replacement search rather than a monetary refund. State that the guarantee applies only to the same role and location.
Write: "If the candidate's employment ends for any reason other than layoff, role elimination, or material change to duties within X days of start, the firm will conduct a replacement search at no additional fee."
Replacement and refund process
If you cannot fill the replacement, some agreements offer a partial refund, usually prorated based on time worked. Be specific: "If a suitable replacement is not found within 60 days, 50 percent of the original fee will be refunded." Define what a "suitable replacement" means, generally, an accepted offer for the same or similar position.
Clients may ask for a full refund, but boutique firms rarely agree unless the fee is unusually high or the risk is low. If you offer a refund, set clear exclusions: layoffs, restructuring, or if the client changes the role after the candidate starts.
Make sure the guarantee applies only if the invoice was paid on time. If the client delays payment, the guarantee is void. Write: "Guarantee applies only if payment is received within X days of invoice."
Invoice trigger: offer acceptance, start date, or first paycheck
The invoice trigger determines when you get paid. There are three common triggers: offer acceptance, start date, and first paycheck. Each has pros and cons for cash flow and risk.
If you invoice on offer acceptance, you get paid sooner, but there is a risk the candidate backs out. Many firms prefer start date, which balances speed and certainty. In some industries, clients insist on waiting until the candidate is on payroll or after the first paycheck clears.
Choose the trigger that fits your practice and cash flow needs. Write: "Fee is due within X days of candidate's start date." If the client insists on waiting until after the first paycheck, negotiate a partial upfront fee or a shorter payment window.
Include a clause that the fee remains due even if the candidate resigns or is terminated after the guarantee period. Spell out late payment penalties or interest if payment drags on. State: "Invoices not paid within X days are subject to interest at Y percent per month."
See how ShortlistLoop handles this for recruiting
Backfills, fallback fees, and what happens when a role is cancelled mid search
Even with a solid agreement, searches sometimes end early. The client may cancel the role or fill it internally. If this happens after you have invested time and submitted candidates, your agreement should cover what happens next.
Backfills
Backfill language applies when a candidate you placed leaves during the guarantee period. The standard is a one-time replacement search for the same role, at no extra fee. Make it clear if the backfill is limited to one attempt and whether it expires after a set period. For example: "One backfill search will be provided within six months if the original candidate departs during the guarantee period."
Fallback or cancellation fees
Some firms charge a fallback fee when a client cancels the role after significant work has been done. If you want this, set a threshold: "If the client cancels the search after at least three candidates have been submitted, a cancellation fee equal to 15 percent of the anticipated fee is payable." Not all clients will accept this, but it can protect against sunk costs.
If the client fills the role with a candidate you introduced for another position, clarify that you are owed a fee. Avoid disputes by including: "If the client hires any candidate introduced by the firm for any position within X months, a full fee is due."
If the search is paused, specify whether you are still entitled to a fee if your candidates are hired after the pause ends. Define a window, often three to six months, after which ownership lapses.
Off limits periods and non solicitation of the people you placed
Clients often want assurances that you will not recruit away the people you have placed. Recruiters, meanwhile, want to avoid being blamed if a previous placement moves on.
An off limits period bars you from soliciting, directly or indirectly, the candidates you have placed for a certain time. Most firms agree to six to twelve months, but rarely beyond two years. Phrase it simply: "The firm will not actively solicit the candidate for other opportunities for a period of X months after placement."
Non solicitation should not prevent you from considering the candidate if they approach you first. Add: "This restriction does not apply if the candidate initiates contact without solicitation." This protects you from being liable if a placed candidate seeks you out for a new role.
Some clients ask for broader protection, like off limits for entire teams or departments. Be careful with these requests. Limiting yourself too much can hurt future business. If you agree, name specific roles or teams, and keep the duration short.
Getting it countersigned: the short email that closes the terms conversation
Once the agreement is drafted, the final hurdle is getting it signed. Keep the request simple and direct. Long explanations can invite delays or renegotiation. Attach the agreement and send a brief email:
"Attached is our contingency fee agreement for the [role] search. Please review and countersign so we can proceed with candidate introductions. Let me know if you have any questions."
If the client comes back with edits, focus on the clauses that matter most: fee base, ownership window, and guarantee terms. Avoid late-stage negotiation on minor points. Once signed, confirm receipt and remind the client when the search will begin.
A countersigned agreement is your best defense in a dispute. Store a digital copy where you can access it quickly. If multiple decision makers are involved, make sure the person who signs has authority to bind the company. If in doubt, ask for confirmation in writing.
Online shortlist and tracking tools can help keep communication clear. A live candidate shortlist, with automatic stage tracking and a record of client feedback, provides an audit trail if a dispute arises. This kind of tool reduces confusion about who was introduced, when, and what feedback was given, which is why many boutique recruiters now rely on platforms built for this workflow.
