Published on March 1st, 2012 by Alan L Sklover
Question: I represented in Colombia one of the largest consulting engineering companies in the USA for 28 years through a Memorandum of Understanding (“MOU”).
One-and-a-half years ago they sent one of their Vice Presidents down here, who kept using me for more than 10 months gathering information on the country and helping him to establish a local office. He hid from me that he was doing this.
Afterward, this same man told me (not in writing) that the company decided to end the MOU. In short, three months ago they got a US$13 million contract, and terminated my services.
Do I deserve to be compensated for what I did for them to establish their office down here, and for later on getting that large contract? I really did much more for them than was my job. Thanks in advance for your help. Best regards.
Answer: Dear Jaime, Your question is a very good one, both because many people ask that question, and because it gives me a chance to answer it. Here are my thoughts:
1. The first place we would look – for what is written in it, and for what is not written in it – would be your Memorandum of Understanding (MOU). When people go to the trouble of preparing and signing a document, it probably says some important things about what each of them expects, and how each of them expects to be treated. In your Memorandum of Understanding, I would look for one most important thing: what, if anything, did the MOU say you would do for the company? And, also, I would look for whether or not it said anything about (a) helping it establish a local office, or (b) helping it win a large contract.
2. If your MOU said you would perform, for example, “40 hours each week of any kind of services the company asked for” and you did exactly that, then you would not seem to have a strong argument that you were unfairly unpaid. If you did exactly what you were supposed to do – anything they asked for during 40 hours each week – and you were paid exactly what you agreed to accept for those 40 hours, then it would seem you were paid precisely for the amount of work you did.
3. On the other hand, if the MOU said you would perform “engineering services,” but you also provided “administrative services” and “business development services,“ it would seem that you are owed extra monies. In this case, it would seem you performed services “over and above” those services that you promised to perform, and, so you are due compensation “over and above” what they agreed to pay you in the MOU.
Let me give you an example: If I was hired for $500 to write a contract for a client. But then she said to me, “Can you also write a will for my mother,” and I did, and then sent her a bill, she could not claim she thought it would be included in the same $500.
4. In business relations, the law presumes that any service performed is to be fairly paid; it does not presume it was a favor, or a gift, or a courtesy. It is the same thing if you go into your favorite restaurant and eat a meal; you cannot claim that you thought it was a “present” or a “gift” from the restaurant owner. It is totally different if you go to a friend’s home and are given a meal: at his home, if your friend demanded $20 for the meal, he would be seen as wrong, to say the least.
5. And, too, even if “the law” is not on your side, there is nothing wrong with making a respectful written request to the top officers of the company, especially in light of your 28 years of service to them. I am a big believer in the importance of relations in business affairs, and in the wisdom of doing the right thing when those relations end, for any reason. If the company enjoyed your business relation for 28 years, surely it found your services to be of value. Though people sometimes forget to end relations well, when reminded, smart people correct themselves, and make amends.
6. I encourage you strongly to write to the top officers of the company, and in a respectful fashion put forth your “legal” arguments, as well as your “business” arguments for a “success fee” for the (a) opening of the office, and the (b) US$13 million contract. I would not in this letter threaten legal action in Medellin, but I would respectfully mention that the law supports the notion that “extra services cost extra money.” I also would not threaten to damage their reputations, but I would respectfully remind them that many people associate you with them, and may ask you questions regarding whether they are good business partners. I would also respectfully mention that, if for any reason (i) their new office needs help, or (ii) if they close down their new office, you would be there for them again, as you were for the past 28 years. I would also respectfully specify the number of US dollars you believe is a proper fee for the “extra services” performed, because it is good and effective negotiating to lay out what it is you want.
7. If “honey” does not work, well, then maybe you should then try “vinegar.” If these suggestions do not work, you might consider a bit of a more “pointed,” or “threatening letter,” suggesting that, unless you and they reach an understanding and resolution, you would have no choice but to hire an attorney in Medellin, and ask a Jury in Medellin what they think.
To obtain a Model Letter entitled “Demand for Unpaid Employment Compensation” that you can adapt for your own use, simply [click here].
8. I also encourage you to consider this “life lesson” the next time you enter into an MOU. The “life lesson” is simple: When negotiating a Letter of Intent, Memorandum of Understanding, or Employment Agreement, try to get into the document a provision like this one: “Services outside of these services will require compensation outside this compensation.” It’s never to late to improve yourself, or your “negotiating smarts.”
Jaime, even the best of friends have disagreements. Smart and successful people, though, don’t end relations with anger, or disappointment, but rather – if at all possible – with a handshake. You are only asking for an “honorable discharge” for all of the years you helped them. For the extra services, you deserve extra respect, extra appreciation, and extra compensation, as well.
These are the kinds of suggestions I give my own clients, and ones that usually end with success. Who knows? They may just realize how valuable you have been, and decide to pay you – and ask if they could extend the MOU. When a positive gesture is made, it is often followed up with a positive gesture, in return. You have nothing to lose, and everything to gain.
Thanks for writing in from Colombia. If my memory is correct, you are our first blog visitor to submit a question from your wonderful country. Good health to you and your family!
My Very Best,
Repairing the World –
One Empowered and Productive Employee at a Time ™
© 2012 Alan L. Sklover, All Rights Reserved.