Words matter, and they matter a lot. Or as someone remarked (and I’m paraphrasing), “The difference between the right word and the almost right word is the difference between a lightning bolt and a lightning bug.” Here’s a case from Houston that reminds us about this lesson.
Deal Goes Bad
USPLS is a recruiting firm that places lawyers into new firms. Gaas and Shank were lawyers who wanted to leave their firm, so they looked to USPLS to help them find new jobs. Here was the agreement between them:
This confirms that the undersigned . . . agree to work with [USPLS] exclusively in connection . . . for legal employment with a new firm. [USPLS] will be [your] exclusive agent with respect to all firms with which we engage in employment discussions for the period of one year from the date hereof, except those firms listed below . . . [USPLS] has advised [you] that its sole compensation is a contingent fee paid by its law firm client. [Editor’s note: In other words, the law firm where the lawyers are placed.]
So, USPLS contacted a number of law firms. While the firm was doing this, Gaas and Shank—without using USPLS—contacted a law firm on their own. Love bloomed, and that firm was where they landed. USPLS wanted to get paid, however, and it asked the new firm to pay up. The firm said no way: It didn’t have an agreement to pay a recruiting fee. Hmm? Other pockets? The money could only come from one place—the lawyers who entered into the agreement. And a breach-of-contract lawsuit ensued.
The Missing Link
The trial court tossed out the lawsuit, and a Houston appeals court agreed. I’m sure you have heard of the “missing link” from biology class or a TV special. It’s the link between us and our pre-historic ancestors. Well, the contract had a legal missing link. Can you think of what it was?
The contract spoke only of USPLS as an “exclusive agent” and didn’t say the firm was an agent with an “exclusive right to sell.” Therefore, Gaas and Shank had to pay a commission to USPLS (their agent). Why? Because they promised the agent that only it could sell them, and they broke that promise by doing so themselves. USPLS, P.C. v. Gaas and Shank (Tex. App. Houston (1st District), August 30,2022).
Bottom Line
Look over your contracts involving selling activities. Determine the result you desire and configure the contract language to reach that result. In fact, pay a lawyer a flat fee to review all of your contracts involving work-related matters. (And recall that your noncompetes are included in this bucket.) Remember: Doctors have scalpels, and lawyers have words!
Michael P. Maslanka is a professor at the UNT-Dallas College of Law. You can reach him at Michael.maslanka@unt-dallas.edu.