Cullen: Looking to head off disputes before they occur
A solicitor and former recruiter, and founder of a law firm which works entirely for recruitment consultancies, has launched an online platform to protect them from disputes.
Barry Cullen, founder of recLAW, said he was in the middle of raising £600,000 in seed funding for recPROTECT, which launched last month and has nine clients, ranging in size from recruitment firms employing fewer than 10 consultants to those employing more than 50.
He said that, as far as he knew, recLAW was the only law firm in the UK which works solely in this niche.
“A very significant percentage of recLAW’s revenue is resolving fee disputes for recruiters when their clients don’t pay.
“We’ve come to realise that there are a number of problems within recruitment businesses which generally cause these disputes to occur.
“The idea is to build an ecosystem where clients of recLAW can fix problems before they become disputes, whether they relate to the legal structure of the business, the people who work there or the processes.”
According to recPROTECT, recruitment agents write off more than £860m a year in unpaid fees and pay £2.5bn in invoice factoring costs annually.
Mr Cullen said the platform worked in partnership with recLAW, which provided “outward-facing services”, such as legal advice, legal training and sending debt recovery letters.
The platform also has a service to detect ‘backdoor’ hires. This analyses the data of candidates introduced by recruitment firms and can “flag any instance” where candidates are working for organisations and the recruiter has not been paid.
Recruiters are estimated to lose 4-7% of their net fee income annually due to backdoor hires.
Clients pay for recPROTECT through a monthly subscription, which he did not specify but depends on the size of the business.
Mr Cullen spent five years as a recruitment consultant before training as a solicitor at a high street firm in East London. After qualifying, he worked at another law firm in Brighton for two years as a civil and commercial litigator.
“When the phone rang and people needed help, it was always my friends in recruitment. It was then I realised that this was a niche.”
He went on to work for fee-share law firms, mainly on litigation involving recruitment consultancies, often relating to fee disputes or restrictive covenants.
For four years he combined this work with a part-time position as general counsel at the LHi Group, a large recruitment company.
He ended up hiring two employees to work with him for fee-share law firms, until he realised that the amount of fees taken by the firms “far outstripped” the amount of money he needed to set up his own law firm.
He launched recLAW, based in Brighton, as an alternative business structure in 2021. The other, non-lawyer, partner is his wife, Tallulah Cullen, who runs the operational side of the business.
The couple have funded the development of recPROTECT, which shares an office with recLAW, along with two of the platform’s four part-time staff – chief product officer Seth Richardson and chief finance officer David McNally.
The seed funding round aims to raise a further £600,000, mainly for sales and marketing. It closes at the end of this month.
Mr Cullen said recPROTECT aimed to have 20-25 clients by the end of this calendar year, and 80-100 by the end of next. With 35,000 recruitment companies in the UK, it was a “vast market”.
As a “longer term goal” for the future, Mr Cullen said the platform would work with law firms in other jurisdictions, particularly the USA and Germany.
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