Guide
Executive search agreement: the terms worth negotiating
Updated
The engagement letter is a short document that determines a great deal. These are the clauses experienced clients read first.
The commercial clauses
- Fee base and calculation
- Exactly what the percentage applies to, stated in figures where possible, and how it reconciles if the agreed package differs from the indicative one. Cap any variable element at target rather than maximum.
- Instalments and triggers
- What each instalment is due on, and whether a milestone instalment is triggered by a date or by a deliverable such as the presentation of a shortlist. Deliverable-linked staging aligns interests better than calendar staging.
- Expenses
- Included, capped or at cost with prior approval above a threshold. Advertising, assessment, screening and candidate travel are the usual items.
- Guarantee or rebate
- Length, whether it runs from acceptance or start date, whether it covers resignation as well as dismissal, whether it is a free replacement or a sliding scale refund, and the exclusions. The exclusions are the clause.
The clauses that are not about money
- Off-limits. Which parts of your organisation the firm agrees not to approach, and for how long. A firm that has just mapped your sector knows exactly where your people are.
- Exclusivity and its limits. If you are retaining a firm, what happens to a direct applicant or an internal candidate, and whether a fee is payable on someone the firm did not introduce. Agree this before it happens, not afterwards.
- Team and continuity. Who actually runs the search. Being sold by a senior partner and served by a researcher is a familiar complaint and a resolvable one.
- Reporting cadence. What you receive and when: longlist, progress reports, market feedback. Market feedback from a serious search is often as valuable as the shortlist.
- Data protection. Candidate data is personal data, and both parties have obligations. The agreement should be clear on roles, retention and what happens to unsuccessful candidates' data.
- Termination. What is payable if you withdraw the mandate, and whether work in progress is chargeable.
The regulatory backdrop
Executive search firms in the UK operate as employment agencies within the meaning of the Employment Agencies Act 1973 (legislation.gov.uk), with detailed conduct rules in the Conduct of Employment Agencies and Employment Businesses Regulations 2003 (legislation.gov.uk). Gov.uk summarises the practical effect for agencies and hirers, including the prohibition on charging work-seekers for work-finding services and the requirement to obtain sufficient information from the hirer before placing anyone (gov.uk). These rules govern conduct, not fee levels between agency and client.
Two questions worth asking every firm
- What happens if this search does not conclude in an appointment? The answer tells you what you are really buying and how the firm thinks about risk.
- Who will I be dealing with in week six? Ask for the working team by name, and put it in the agreement.
This page describes commercial terms commonly seen in UK search agreements and the statutory framework as it stood on 14 August 2026. It is general information rather than legal advice: have any engagement letter reviewed before signing if the mandate is material to you.