Monday, January 12, 2009

Recruiters: Poach at your peril.

Most placement professionals try to stay away from taking employees from their company clients and in many instances it is prohibited by contract. More importantly, it can be bad business.

In a lawsuit filed in New York, JP Morgan Chase Bank v. IDW Group, Inc., JP Morgan brought suit against a firm that previously provided placement services and allegedly poached JP Morgan employees. It claims this was in violation of its contract with IDW and a breach of fiduciary duty. Here's blogger Kenneth Vanko's take on the case. It seems hard to believe that a business relationship evolved into a fiduciary duty relationship (very difficult to prove in Texas) but nevertheless, it is a claim.

Assuming there is no contractual provision in place, there is little a client can do to prevent a placement professional from soliciting its employees. Nevertheless, do you really want to have a reputation for poaching? Obviously, the facts and circumstances will vary and require individual analysis. Remember, there is little barrier to filing a lawsuit, basically a lawyer and a filing fee, and an irate client may seek legal redress like JP Morgan.