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.
A fee schedule, written out
This is what a normal retained schedule looks like on a £150,000 seat at 30 per cent. Ask for yours in this shape before signing; a firm that will not produce it is telling you something.
| Trigger | Amount | What must have happened |
|---|---|---|
| Engagement | £15,000 | Brief signed, target company list agreed in writing |
| Shortlist | £15,000 | Four to six candidates interviewed by the firm, package seen, interest confirmed |
| Offer accepted | £15,000 | Signed contract, not a verbal yes |
| Uplift, if any | 30 per cent of the increase | Only if the final package exceeds the brief, and only if uncapped |
| Expenses | Capped, or inside the fee | Agreed in advance, itemised |
What happens if you cancel
Most contracts are silent on this, which means the firm keeps what has been billed and you owe the next milestone if it has been reached. That is a bad position to discover in week five when the business changes its mind.
Ask for a cancellation clause. A reasonable one: you may stop at any milestone, you owe what has been triggered and nothing further, and the market map you have paid for is handed over. That last part is worth asking for explicitly, because you paid for it.
The clauses people skip
- Assignment. Can the firm pass your mandate to another office or a partner firm? If so, your off-limits list and your named consultant both change.
- Confidentiality, in both directions. If the search is discreet, the firm's obligations should be written, including what they may say to a candidate about who is hiring and when.
- Data. Candidate CVs are personal data and you become a controller of them. Agree what happens to the records of people you did not hire.
- Introduction period. Many contracts claim a fee if you hire anyone they introduced within twelve or twenty-four months, including for a different role. Check the window and the scope.
- Payment trigger versus invoice date. On offer accepted or on start date are different by up to three months of cash.
When the fee is not a percentage at all
A percentage is convention, not law, and there are four situations where it is the wrong instrument and a good firm will say so.
| Situation | Why a percentage fails | What is used instead |
|---|---|---|
| Board and non-executive | A percentage of a £40,000 NED fee funds nothing | Fixed project fee, low tens of thousands |
| Non-profit and public sector | Salaries will not carry a market percentage | Fixed fee, often with a public tender |
| Fractional and part-time | First-year earnings are a fraction of a full seat | Flat fee, or a fee on engagement value |
| Multiple seats at once | Paying full rate twice for one market map | A project fee for the programme |
What a project fee should contain
If you are quoted a fixed fee, the risk moves: the firm now has an incentive to finish quickly rather than thoroughly. Three things to fix in writing.
- The deliverable, not the time. A named number of interviewed, interested candidates, not a number of weeks of work.
- What happens if the first slate fails. A second slate inside the same fee is normal and should be written down.
- The scope boundary. What counts as a new search rather than a continuation, because that is where a fixed fee becomes two fixed fees.
Two clauses worth adding yourself
A stop point. The right to end the search at the shortlist if the shortlist is not good enough, without owing the final third. Firms resist it and frequently agree it.
A definition of failure. If no hire is made in sixteen weeks, what happens: a free re-run, a partial credit, or nothing. Silence means nothing, and nothing is the default you will get.
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.
Common 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.
What happens if I cancel an executive search?
Most contracts are silent, which means you owe every milestone already triggered and nothing is returned. Ask for a cancellation clause that lets you stop at a milestone, and ask for the market map you have paid for to be handed over.
What is an introduction period in a search contract?
A clause charging a fee if you hire anyone the firm introduced, often within twelve to twenty-four months and sometimes for any role rather than the one searched. Check both the window and the scope.
Can I stop a search after the shortlist?
Only if the contract says so. A stop point at shortlist, with no final third owed, is worth asking for and is more often agreed than refused.
More of them, on hiring, contracts and what a fractional engagement costs, on the fractional executive FAQ.