“I have an existing client. I need to take them from contingency to an engaged or retainer relationship. I know they will fight it out, but need a strategy.” Rich, Boston, MA

When I switched from mostly contingent to almost all engaged/retained I grandfathered my best performing contingency clients.   Provided that they were a really high-performing contingency client, I didn’t change their fee structure because we had an exclusive with them. These good clients worked well with us and 80 to 90% of the time we filled the positions, so I wasn’t going to ruffle any feathers by changing the structure of the relationship.

My assumption with you Rich is that is not the case here.  My instinct tells me the client is not working tightly with you.  In that situation it makes sense to switch to an engaged fee to have them put some “skin in the game”.  For example, I had one client that gave me four openings and they were a good client for years.  All of a sudden they cancelled all four of them and then they called me back three months later and they gave me four more openings in four different cities.  This meant we had to start all over again.

Based on this I said “Well, look. You know what? We worked together for a long time on contingency and here’s what happened last time. Last time, I put together all these lists and I did all this work,” and I went into an amazing amount of detail as to the level of effort I put in, the calls, the candidates we surfaced, etc.  And I said, “We ate over $30,000 in overhead and lost opportunity costs.  Bluntly, I can’t afford to do that again.” And they said, “Don’t worry, that will not happen this time.  That was a one off event, don’t worry about it!”  I replied:  “Mr. Client is there any doubt I am going to make these placements with you?” They replied…   “Well, no,” . . I didn’t change their fee . . . I said “So, I am going to stay at our 25% fee, I am not going to raise the fee. Send me $5,000 now as a good faith deposit in your ‘don’t worry this time’ promise.  The average guy you are going to hire will be at about a $100,000 salary. The fee will be $25,000 less the $5k deposit means you will pay $20,000 at the time of hire and you will pay $5,000 as a good faith deposit now. So, it is the same fee. If you really have no hesitation that I am going to find you great talent, I don’t understand what the obstacle is.”

Honestly, they fought it.  I said “The fact that you are fighting it tells me that you are not as sincere as filling these as you said you were. Because you have said you want me to do it exclusively. You said I’ll make the placement. So, the only thing holding you back must be the .001% interest rate you are going to make on the $5,000 over two months. If you want, I’ll discount that off the final fee. I’ll take a hundred bucks off to cover your financing.  Are you having a cash flow problem that I need to know about?”  Their reply: “No, we are not having a cash flow problem.”

The key here is that 1) they acknowledged that they were serious about filling the positions. 2) They said I was their “guy” to fill the positions and 3) they had no cash flow problems.  Now, it logically made sense to them and I successfully converted them to an engaged and BETTER behaving client.

The best strategy is to find a scenario where you have done work and you have not been paid on work you have done with a good client.  The logic above is the “spring board” to switching the relationship from contingency to engaged/retained.