The retainer, and what it is really for
A retainer is not a deposit against the fee in the way a builder takes one. It buys exclusivity in both directions: the firm agrees to work your brief properly and you agree not to run the same role through three other agencies at once.
That exclusivity is the whole reason retained search can reach people who are not looking. A recruiter paid only on placement cannot afford to spend three weeks approaching a candidate who may say no.
The milestones
Thirds are the convention: engagement, shortlist, offer accepted. Some firms bill in halves, a few bill monthly against a fixed project fee.
What to look for is whether the middle payment is tied to a defined deliverable. "Shortlist" should mean an agreed number of candidates who have been interviewed by the firm and who have confirmed interest in your role at your package. Without that definition it means whenever the firm sends an email.
The uplift clause
If the agreed package rises during negotiation, most contracts recalculate the fee on the final number. It is defensible in principle and it creates an incentive worth naming: the firm advising you on the offer is paid more if the offer is higher.
You can cap it. A clause fixing the fee against the package in the brief, with any uplift charged at a lower rate or not at all, is a normal thing to ask for and is often agreed.
The guarantee
A free replacement if the hire leaves inside a period, typically three to twelve months. Read what voids it. Redundancy usually does, a restructure often does, and a resignation for a better offer sometimes does.
A replacement guarantee is worth less than it sounds, because the cost of a failed executive hire is almost never the fee. It is the two quarters.
The off-limits clause
The firm agrees not to approach people it has placed with you, and sometimes your wider staff, for a period. One to two years is normal.
Ask what it covers. Some firms limit it to the individual placed, which leaves the rest of your team addressable by the same firm that just spent three months learning who they are.
Questions
- Should I pay a retainer at all?
- For a hard-to-fill or senior seat, yes: it is what pays for an exclusive process. For a role with a deep, visible candidate pool, a contingency arrangement or a direct approach usually gets you there for less.
- What should the shortlist milestone actually require?
- A named number of candidates, interviewed by the firm, who have seen your package and confirmed interest. Write that definition into the contract rather than leaving it to be argued about later.