The Case
The Fifth Circuit affirmed the opinion of a magistrate judge in the Southern District of Texas that found a law firm owed a search firm for the introduction of a group of lawyers the firm hired. Essentially, the search firm made the initial introduction, but a deal was not reached until some time later.
The search firm argued that it was entitled to a fee because it made the initial introduction. The Court agreed. The opinion is interesting because it discusses whether or not the search firm was a “procuring cause” of the hiring. The Court’s definition of procuring cause:
cause that in the natural and continuing sequence, unbroken by any independent intervening cause, produces the [hiring], without which the [hiring] would not have occurred
The Court noted that though there was testimony that the hiring was independent of the search firm’s work, there was also sufficient evidence to show that the search firm was a procuring cause and was entitled to a fee.
Lessons Learned
The takeaway for search firms and recruiters on this opinion is to continue to monitor and follow their clients after negotiations. A deal may be looming in the near future.
