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Fee Split Dispute

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This is a series of five e-mails to resolve a fee-split dispute. Harriet Samara is the consultant, a subcontractor to us. The client is Dawson Company. When this was settled, we returned to the original 80%/20% fee split, and the project continued another year. The fact is, the consultant and I are best friends, and will remain so. But even best friends can have disagreements.

Here is the dispute: CareerLab received 20% of the fee for finding a corporate client who paid us $12,000/month. For delivering the services, our subcontractor received 80%. The $12,000 fee worked for six months, but was too high for the corporate client to continue.

Thus, we knew we would have to lower the fee for the next calendar year. Our subcontractor abruptly announced that she wanted to take on the assignment herself and eliminate CareerLab from the equation. In passing, she suggested a 10% split for us. Notice that I used an industry standard (20-30%) referral fee to add force to my reply.

E-mail #1


I don't understand how you decided our fee split should automatically go to 90%/10% just because the assignment is continuing on different terms. Normally, a placement fee is 20%-30% of first year compensation, and this is essentially what we're doing for Dawson Company.

Using your 90/10 split, the numbers would look like this: [I showed a chart showing three options: A, B, and C.]

I would avoid option "C," your working variable hours for variable fees. That just confuses everyone.

Let me know how you'd like to proceed.


E-mail #2

From: Harriet Samara
Sent: November 27, 20— 5:49 PM
To: Bill Frank
Subject: Fee dispute

I got the impression you were angry when you wrote to me last.

If I have offended you by my proposition I sincerely apologize, that was not my intention.  Your friendship is very important to me and I would never intentionally do anything to hurt you.  Again, I am sorry for all this.

E-mail #3

Hi Harriet,  

You surprised me when you came in the other day. I was not prepared to talk about Dawson. I had other issues on my mind.

You said you wanted Dawson as an anchor client in 20— and wanted to eliminate CareerLab from the equation. (Those may not be your exact words, but that was the message.)

I didn't know what to say. When I didn't answer, you pressed me for what percentage I would want going forward. I had no clue, because we hadn't run any numbers about any scenarios or prices.

When I still didn't answer you suggested 10%, and I accepted because it sounded as if you wanted it decided on the spot.

After you left, I had the thoughts I e-mailed you last week, namely: "I don't understand how you decided our fee split should automatically go to 90%/10% just because the assignment is continuing on different terms. Normally, a placement fee is 20%-30% of first year compensation, and this is essentially what we're doing for Dawson."

Harriet, I have known for a while that we would need to adjust our pricing for Dawson in 20—. But we have never looked at any numbers. I can create a spreadsheet showing different scenarios and percentages, and then we can sit down to decide what's best for everyone: Bill, Harriet, and Dawson Company. 

Would that work for you?


E-mail #1

[Now, Harriet is vacationing in Mexico.]

Hola Bill!
This sounds like an excellent solution.  Thank you for being understanding.  I probably got carried away, as I am known to do.  

We are HOT down here in Mexico and thinking of you and sending warm thoughts.

E-mail #5

Have fun—see you when you return.

Diga me algo en espanol.*

*"Tell me something in Spanish." One of the few phrases I remember from high school, along with "¿Dónde está el baño?" [Where's the bathroom?], and "Yo quiero otra cerveza" [I want another beer].

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William S. Frank, M.A.,
25 Reasons I love consulting.
by William S. Frank
  1. Brand. You are your own brand, and you can define it any way you want. For many years, I provided outplacement to the ex-employees of Schlumberger, the world's largest oilfield service corporation. When departing employees left the company, they didn't request outplacement in their severance package. They said, "I want Bill Frank."
  2. Demand. The world will always be full of terrible problems that need solving.
  3. White Hat. I can be a helper and get paid for it.
  4. Pay. I can be paid to do things I'd gladly do for nothing.
  5. Variety. Every day is different.
  6. Happiness. At this stage of my career, I only work for people I respect and care about. If a client micromanages me or is otherwise no fun, I complete the assignment and replace them.
  7. Talent. I'm using 110% of my talents and stretching myself to the max.
  8. Change. I can change my focus any day I want. If you're a McDonald's franchisee, you don't say, "Hey, I've got this great idea for a meatball sandwich—let's try it out today." In consulting you can adjust your focus hour-by-hour, as long as your clients still understand and appreciate what you do.
  9. Income. No one else would pay me as much as I pay myself.
  10. FUN. I can't think of anything I'd rather be doing.
  11. Retirement. I can write and consult as long as I am physically and mentally capable. Peter Drucker worked into his 90s, and when asked which book was his best, he said: "My next one."
  12. Job Security. Although clients come and go, no one can come into my office and say, "Pack up your stuff . . . You don't work here anymore." In 29 years, I've only had one employer: ME.
  13. Travel. I don't have to travel unless I decide to. I travel if it's both FUN and profitable—or at least FUN.
  14. Commute. I live five minutes from my office, a corner office in an upscale six-story tower. In winter, I leave a heated garage at home and drive to an underground heated garage at work. There's seldom time to hear even one song on the radio.
  15. Vacation. Consulting is more fun than vacation (except on Wailea Beach in Maui).
  16. Friends. I have developed hundreds of close acquaintances and several lifetime friends.
  17. Time. I can work as much or as little as I like: four-hour days or 18-hour days. (Of course, my income will reflect that.)
  18. Employees. I can work with employees, subcontractors, partners, or alone—I've done it all.
  19. Passive Income. I've developed several products that provide "mailbox money." I earn while I'm sleeping.
  20. Ethics. I've never had to violate my values or personal code of ethics. I've never had to lie, purposely deceive or harm others, or promise things I can't deliver. I go to bed with a clear conscience. That doesn't mean there's never any conflict. But the conflict is conducted according to generally accepted business practices.
  21. Virtual. My career is fairly portable. With the Internet, e-mail, cell phone, and FedEx, I can work nationally, even internationally from my office—or anywhere in the world.
  22. Purpose. I make a difference in peoples' lives every day. I see it in their faces, hear it in their voices, and read it in their thank-yous.
  23. Experience. Every painful or joyful life experience makes me a better consultant. So does every person I meet or book I read. Grey hair can be good in consulting.
  24. Structure. I have to work very hard, and the clients expect superb results—but I get to structure my days, weeks, months, and years.
  25. Boss. Most of the time, I love my boss.
As I was posting these letters online, I realized I want to communicate my love for consulting. It's just a great business. The single letters, taken together, may create a picture of enjoyment, but in a burst of creativity I listed some of the reasons consulting is such a good fit for me—and perhaps for you, too. They are not prioritized; this is just how they came out.