Solicitors - A cautionary tale (Part 1)

Sadly my mother died recently of Alzheimer's. This introduced me to the world of actually fulfilling my role as an Executor. Carrying out the role of Executor isn't some black art and there are many sources of online support which can easily help navigate you through the process. Having said that we have now learnt that the average 'cost of dying' has increased 7.1% over the last year and now amounts to over £7,000.

I may well write a number of posts on my experience of dealing with the legal profession but today I will just deal with a few which address elements that have been at the centre of me purchasing and procurement career since the 70s, namely, Invitations to Treat, Offer and Acceptance, when a contract is in place and value analysis.

I have studied contract law in many forms over the years and thought I had a reasonable grasp of some of the principles, yet I now see the world slightly differently - here's a cautionary tale (Part 1).

My belief was always that there had to be certainty regarding the contract before it is valid. I met with the solicitor, and after that meeting questioned what was actually going to be delivered. I wrote:

Can you help by identifying what all [the firm] plan to do - my brother and I are concerned that this isn't overly complicated given that we're so far below the Inheritance Tax Threshold and we've managed to handle all my mother's affairs up until now. 

I received this response - worth nothing is the lack of clarity on what was to be delivered and how much it may cost:

Staggering from Burgergate to Zimmergate

Retailers buy on consumers behalf beef which is to be of a suitable quality. The retailers have a supply chain and rely on third parties to provide the beef. The quality is set out in a specification, and behind that there is an assumption of risk management and contract management. The beef turns out to be wrongly labelled and we have a national scandal. The 'Godfathers' of the mafia are cited as potentially at fault, then we discover it, as much as it may be attractive to export blame, the finger starts to point locally.  Most of us are aghast and the fear is our health may suffer. We give it a name 'Burgergate'.

But substitute some of the words: Social services buy on the needy's behalf personal care which is to be of a suitable quality. Social services have a supply chain and rely on third parties to provide the care. The quality is set out in a specification, and behind that there is an assumption of risk management and contract management. The personal care turns out to be wrongly labelled and we have a national scandal. Potentially your father and mother are the victims, the finger starts to point locally.  Most of us should be aghast and the fear is our health may suffer. That's what I'd call 'Zimmergate'.

What's worse Zimmergate, for want of a better description exists as the Care Quality Commission has now found. 26% failure to meet the quality standard, reluctance to complain, failure to listen to the families who tried to raise concerns. Of course this isn't the first time we have considered the dependency of the elderly on good procurement. Is it right we could it be more concerned about the content of 'cheap burgers' and call that a scandal in need of urgent attention?

Let's leave the last word to The National Pensioners Convention General Secretary, who seems to have some useful suggestions for public procurement:

"Local authorities have a responsibility to start commissioning services on the grounds of quality - rather than for the lowest price. Contracts should only be awarded to those who can guarantee that staff are properly trained and qualified to do the job - and the idea that services can be provided in blocks of 15 minutes at a time has got to stop."

The unprincipled Agent

On whose behalf does the agent work?

The procurement world is one immersed in the legal and economic world of Agents. The Chief Procurement Officer is an Agent of their organisation (the Principal) when they represent the organisation in negotiations. The CPO is required to act in the best interests of the organisation and not for their own personal benefit. Equally those dealing with the buyer can be expected to accept that the buyer has the authority to  make commitments on behalf of the buying organisation.

When the CPO lets a contract, as part of a recruitment process, for someone to run an assessment centre, who is the Principal and who is the Agent? To me the Principal is the buying organisation and the provider is the Agent. The provider will be paid by the buying organisation and not by the successful candidate - indeed the provider can expect payment whether or not a successful candidate is found.

When the organisation lets a contract though for intermediary services, say, Executive Search or interim placement services, who is that Principal and who is the Agent? 

Let's assume a headhunter contacts the CPO and asks if they would be interested in a potential new role, who is the Principal?  Is the Principal the CPO who will be represented by the headhunter or the organisation seeking the new CPO who will pay for the headhunter when a shortlist of potential candidates is provided? 

When the scenario is the placement of an interim CPO, who is the Principal and who is the Agent? The assumption of the buying organisation is that the 'interims' provided have been checked by the placement agency and that they have completed the relevant due diligence. Isn't it?

These questions were triggered by a report in today's Financial Times on Page Executive's approach. Page are alleged to be now taking a more cautious approach to the organisations they place candidates with. Not, it appears, to protect the buying organisation, the 'headhunted' or the interim. but to protect Page's financial investment should the buying organisation, which may be among those who, in Page's eyes "live week by week", default on Page!

If an organisation wants an interim CPO, perhaps because they realise they need a financial 'turnround', it implies Page will managing Page's risk exposure and not those who may have assumed they were the Principals, who have a lot of 'skin in the game'. Is this yet another change to the world of procurement as a result of the financial crisis?  Either way, it strikes me that before you jump to the conclusion that you are the Principal and the Agent is working on your behalf, perhaps reading the small print may prove advantageous and recalling: 'caveat emptor'.