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Is it illegal to ask for compensation from a business associate in exchange for recommending her business to another?

Asked over 2 years ago - Charlotte, NC

Business

I work for a human services company and oversee the support of one of our elderly clients. A coworker is leaving the business to set up her own, has offered me a position, and wants to land the aforementioned client. She knows that due to my relationship with the client's guardian, she would be unlikely to land the client without my association. I plan to leave our business as well (but don't want to work with her) but would like her to pay me for giving her business a positive recommendation to the client's guardian. Is this illegal? Can I put our agreement in a contract (she won't be able to pay me unless she lands the client)?

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Attorney answers (2)

George Winslow Mead

Reputation Level 10

Answered over 2 years ago. Business Attorney in West Linn, OR.

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Generally, unless there are professional restrictions (like lawyers for instance) You can put it in a contract. Be very careful about your relatioship with your current employer and the elderly person. There are guidlines about undue influence and lack of cpapacity. You are definitely in the grey area.

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Kaiser Wahab

Reputation Level 14

Answered over 2 years ago. Business Attorney in New York, NY.

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To add to the previous post, if you (or better, your attorney) determine that there are no ethical/statutory/regulatory rules against the type of arrangement you describe, referral and intriductions for compensation can and often are memorialized in contracts. You need only look to the finance and entertainment worlds for common use of such contracts that require payment to a party that made a referral to a party that invested in the business venture of the contracting party.

I hope this helps.

Disclaimer: This answer is for informational purposes only and does not constitute general or specific legal advice, nor create an attorney client relationship.

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