Finder's Fee 2

[plasgears]

I am consulting on the side, and I have opportunities to engage other specialties for mutual benefit. The ideal situation is to charge a nominal 10% finder's fee for locating an opportunity for another specialty. It was recommended that disclosure of the opportunity should be accompanied by a simple written agreement between the other party and me. I don't want to act as a general contractor. Any comments?

 

[Hush]

IRstuff,

A government contract, at least where I live, has procurement requirements which make it not applicable to this scenario. I.E. you're arguing about something that doesn't even apply to the initial question. In other words ludicrous.

 

[treg]

I know that on at least some occasions, doctors have paid refferal fees to other doctors. Why is this o.k. for an M.D., but not a P.E.

 

[dik]

There can also be a liability assumed in providing a recommendation...

 

[jetmaker]

Be careful with this senario... as the word "kickback" comes strongly to mind.

The real question here is about perception. It does not matter whether it is ethical/unethical, legal/illegal, moral/immoral, it is how your actions are percived by the public that is important. The ethics courses that I have taken, required by Govenment and Company, stress that regardless of whether it is ok... how is it percived by the public. If the general public, i.e. not the engineering community, believes there to be some back room going on's, then it should not be done. Even with full disclosure to the client. Just ask a few of your non-technical friends for their opinion on the proposal.

The best option is this: get the referal fee from the client, not the subcontractor. Offer to line the client up with a sub for a small fee, or several subs from which the client can pick from. This removes any perception of colusion, and/or impropriety on the Engineers part.

It is better to err on the safe side and loose a job or two, then to lose your license and hence livelihood.

Best regards.

 

[PM]

It's facinating how these threads evolve from the sublime to the ridiculous.

Given the facts presented in plasgears's message, there is neither anything unethical or unlawful related to charging a fee for professional services. Yes Virginia, it's true that professionals gain experience that not only allows them to perform services more efficiently in subsequent assignments, but also allows them to routinely charge fees for such advice. One example of such advice is the recommendation, to their clients, of firms or individuals expert in desired fields. Not only is this got nothing to do with kickback or conflict of interest, it also carries with it a significant amount of liability (risk).

Regards,

 

[electricpete]

It's fascinating how someone can wander into a a 23-post thread and call it ridiculous. Real classy.

Given the facts presented in plasgears's message (did you happen to read it?), fees paid by the client are completely irrelevant.

 

[electricpete]

Engineering code of ethics from NSPE

http://www.nspe.org/ethics/eh1-code.asp

"4. Engineers shall act for each employer or client as faithful agents or trustees.
a. Engineers shall disclose all known or potential conflicts of interest that could influence or appear to influence their judgment or the quality of their services.
b. Engineers shall not accept compensation, financial or otherwise, from more than one party for services on the same project, or for services pertaining to the same project, unless the circumstances are fully disclosed and agreed to by all interested parties.
c. Engineers shall not solicit or accept financial or other valuable consideration, directly or indirectly, from outside agents in connection with the work for which they are responsible."

Items 4a and 4b make it clear that any finder's fee would have to be disclosed to all parties. If it is, it sounds reasonable to me.

I'm not sure what to make of item 4c.

 

[IRstuff]

4c is yet another variant of 4b, given that this section pertains to conflict of interest.

Personal financial interest in a decision making process poses a conflict of interest.

Your financial stake in a decision no longer makes it clear that you are a fair and impartial arbiter.

Your financial stake may preclude you from recommending a better or more experienced source.

We've recently gone through this exact situation; a consultant for one problem recommended someone for a different problem. We had to assume that the first consultant was providing the best available resource, but we didn't have enough time to fully explore the possibilities. The second consultant was very good, but we'll never know if there was someone even better.



TTFN

 

[HamishMcTavish]

4c is referring to bribes!

Thinking about my original comments again I think that disclosure is possibly the only way to go.

If anyone was contacted by plasgears regarding subcontract work and agreed to pay the finders fee it would most likely be incorporated into the estimate for the cost of the work.

Who would end up paying it? Most likely the original client. This means that they will have paid plasgears for his expertise twice (although maybe not by the same amounts)

No more things should be presumed to exist than are absolutely necessary - William of Occam

 

[plasgears]

I have decided that the best way to find contractors for a client is to act as his agent for a fee. The service provided is recommending the lowest cost contractor for the specified work.

Thank you for your coments.

 

[IRstuff]

I think that's a sound approach.

In this type of business, your reputation is extremely important and even an appearance of impropriety can have long lasting effects.

TTFN

 

[RDK]

I see nothing wrong ethically with the finder’s fees provided there is full disclosure and the end client does not object.

The argument about liability is a red herring. There is liability in recommending any contractor, supplier, specifying material without regard for any finder fee or commission.

However if I were the client, I would object to any finder fee. I would expect you to recommend the best source for my needs with no influences on this recommendation other than what is best for my project and me.

I would not even be pleased to be asked permission to accept a finder fee. If I could cancel your contract at that point I would and rest assured I would never give you another contract. If you are working for me, then work for me. If you also want to be paid by someone else that’s your business, I would take steps to ensure that I was not also paying you. I would gladly pay for your time in putting together the team and bringing under one roof all the suppliers necessary for the project, that is part of why consultants are hired in the first place.

If you do not have a contractual arrangement with the buyer of services but say in the course of looking for work they say that they do not need your services but need the services of a different specialty, then there would be no problem in charging that specialty a finder fee. Personally is all that is involved is a phone call, I would most likely do it for the good will that I can generate with both parties.


Rick Kitson MBA P.Eng

Construction Project Management
From conception to completion

http://www.kitsonengineering.com

 

[PM]

electricpete wrote on Sept 1:
"Items 4a and 4b make it clear that any finder's fee would have to be disclosed to all parties."

Actually, the PE is required to divulge potential conflicts of interest only to his client, and not to "all interested parties". It is the prerogative of the client to determine if a conflict exists assumming the professional has fully informed his client of the particulars. There is no expectation for a PE to divuldge his fees to anyone, but his shareholders and the IRS.

I stand by my contention that many of the assertions and declarations posted here as fact are merely opinion and unsubstantiated conjecture. It matters not whether erroneous posts are first or fortieth in the order, . . .there are many readers who rely on the responses here as authoritative, and therefore it is important for the older professionals among us to provide reliable and accurate information whenever possible.
Regards,

 

[electricpete]

Hi PM. I agree with your correction to "all parties".

A pet peeve of mine - I don't like it when someone throws out a sweeping criticism towards all the posts that came before. From my perspective, you would do better to identify which poster, post, thought process or comment you disagree with. Just my two cents.

 

[profengmen]

Electricpete,
Which post would you be referring to? Or are you making a general sweep?

(Just kidding)

My pet peeve is poeple that make long sentences and include redundancy; perhaps to appear wise.

(Just kidding again)

Sorry, was this a pet peeve thread?

 

[electricpete]

Hi profengman. That is hilarious. Quite ironic that I didn't identify who my comments were directed towards.

In my defense, there were one or two sublte context cues which could have tipped off an attentive reader. Take a close look at the first sentence of my September 15 message. It may not be obvious at first, but if you read it two or three times I think you will see what I mean. Let me know if you want a clue.

 

[profengmen]

Pete,
Oh, I got it... and if you read my pet peeve carefully... you might find me right beside you.

 

[electricpete]

ok, you got me.