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Contingency vs. Retained Legal Search: The Differences and Why They Matter
by: Joanna Herman of Major Lindsey & Africa  -  Major Lindsey & Africa Articles
Wednesday, February 15, 2023

In a job market impacted by remote work, changing corporate priorities and candidate shortages, securing in-house legal talent has become a challenging and labor-intensive feat. Even if companies have internal talent acquisition resources, most do not possess the expertise to vet candidates efficiently and effectively. Enlisting an external search firm can take the hiring burden off the hiring manager and HR’s shoulders, streamline the process, and prevent the costly fallout of a bad hire.

There are two primary models of recruiting: a contingency model and a retained model. If you are considering working with a recruiter for your next in-house search, it is important to understand the difference between them.

Contingency Search

A contingency search (sometimes referred to as “no-win” or “no-fee”) is when a recruiting firm work to fill a specific role but are not compensated until a suitable candidate has been placed. In other words, you only pay for results—typically one-third of the hire’s total cash compensation for the first year. There is no exclusivity involved with contingency search. In fact, organizations often bring on more than one recruiting firm to help expedite the process.

One notable benefit of contingency search is zero up-front investment. Since the recruiter does not get paid until a placement is made, and they may be competing with other contingency firms, this model can sometimes be a quicker route to hiring.

But there are marked drawbacks to the contingency approach. In their haste to fill a position, recruiters may skip over certain steps of the search process to rapidly qualify a candidate for submission or overlook required qualifications. This puts the onus on internal resources to ensure candidates are properly screened. And, if your company is working with multiple recruiters, managing those relationships, as well as managing candidate representation (and determination of fees) can also place added strain on your team.

Additionally, contingent searches tend to be more of a surface sweep of the market versus a deep dive. A recruiter using this approach will likely identify the same active candidates who actively apply to a role or are also actively being pitched to other companies. Their goal is to present as many prospects as possible and hope one “sticks.” This focus on quantity over quality can leave you with a large slate of candidates that are not quite up to par, which can create strain from a resources-perspective on your team to meet a few candidates to further limit the pool.
Lastly, the nature of contingent search makes it easier for recruiters to simply walk away. If a role proves too difficult or time-consuming to fill, a recruiter is free to shift their focus to higher paying or less challenging roles to fill.

Retained Search

Unlike contingency search, the retained search model involves an exclusive, longer-term relationship. You agree to work only with that recruiter to fill your position, and in return, the recruiter dedicates ample time and resources to find you the perfect candidate for your key position.

One big difference with retained search is that you must pay a retainer fee up front. The retainer is one of three payments spread out over the course of the search, which typically equate to one-third of the hire’s total cash compensation for the first year. The second two payment milestones are either time or performance based. This incentivizes speed to market and reduces your financial risk.

Although retained search can cost more overall sometimes, you essentially get what you pay for. This includes:

  • Specialized expertise: Retained search firms have a solid grasp on the workings of the legal marketplace. They also understand the intricacies of assembling the right group of candidates for an in-house role.

  • A trusted advisor: The exclusive nature of retained search means a firm has more “skin in the game” and is motivated to deliver outstanding results. They take the time to learn about your organization and listen to your hiring needs. They work side-by-side with you to identify the target skill set and the ideal methodology for sourcing candidates. A retained recruiter’s goals are aligned with yours: securing talent and building teams that give your organization a competitive advantage.

  • A more selective and thorough search: Instead of snapping up only the low-hanging fruit, a retained legal recruiter taps into their vast networks to build a premium slate of candidates. This includes reaching out to highly qualified passive candidates who are not currently seeking new opportunities.

  • A favorable experience for job seekers: A retained search firm takes on the legwork of engaging, screening, and communicating with candidates. Certainly, this saves you time. But a smooth, smartly managed search experience will also go a long way in making a winning first impression with shortlist candidates.

  • Confidentiality: Retained legal search firms can approach the job market with the maximum degree of confidentiality for both clients and candidates if needed. This is important for senior and executive positions that must be kept confidential or under the radar.

Using a retained recruiter does not mean shutting out your own talent acquisition people. Instead, the firm serves to complement your HR team, combining its robust market knowledge with your team’s understanding of organizational culture, to find the right talent and ultimately to help close the chosen candidate to ensure an acceptance.

Contingency search has its place in the world of recruiting, and it can work well for junior-level roles. But if you are looking for that “diamond in the rough” to strengthen your legal department, retained search is the gold standard. Working with an established recruiting firm can give you access to a broader swath of talent you might not otherwise be privy to. And with a partner that really “gets” you and your hiring needs, you stand to save time and money in the long run, too.

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