[Editors note: In my third newsletter (27 Nov 00), I invited alternate perspectives to the issue of recruiters. Bill Sanders took my challenge (and a bunch of work off my hands) and wrote the following. - cl]

Recruiters - Another View by Bill Sanders

We all want to control our own contracts - and if you spend as much as I do on keeping your competency up, you deserve both your full hourly rate and whatever deductions the current tax code permits. It's easy to complain about incursions against either the percentage recruiters take or the lost deductions. Here's an attempt to see two other perspectives.

Recruiter Percentage
Most contractors begrudge every set of fingers (fed, state, insurance, recruiter) that has access to their pay before they do. You probably think your work is worth more than you receive for it - I know that's my gut reaction. Well, guess what: so do taxi drivers, steelworkers, lawyers, even headhunters. And recruiters frequently do contribute more than we give them credit for. Let's itemize:

- It's almost impossible to break into contracting without contacts. Some of you have contacts from previous employment; I didn't. My first contacts came through recruiters.
- Recruiters know about some jobs we never hear of. Some will keep your unique skill set in mind as they look; I've even had one recruiter's sales rep try to market my specific skill set!
- They can (and should, and often do) compare job requirements to contractor credentials. I've gotten at least one contract (and I think two or three) primarily because of the recruiter's recommendation.
- They've never paid me late, much less stiffed me. On direct contracts, I'm down about $4K.

Most importantly, I'm a lousy marketer. Remember, marketing expenses are tax deductible, but marketing time is lost forever. It takes nearly a fifth of my time to get mediocre results and drain me psychologically. Virtually any recruiter percentage I can negotiate is better than that. There are many levels of recruiters; and those at the top of the food chain can't be described using the same words you'd use for those at the bottom.

Tax Considerations
In addition to taking a percentage, recruiters often compete with us for IRS deductions. As employers, they can normally itemize expenses similar to ours and claim similar deductions. The IRS, justifiably, says we both can't have the same deductions; but they also say that looking for line item duplications would explode their oversight budget.

So far, it's a case of rights in conflict, but then there's also abuse - both by some recruiters, and by more than a few of us. Cynical IRS investigators see primarily the abusers and miss the fact that most recruiters and contractors are pretty straight. A triangle of mutual distrust.

The IRS often goes after the entity with the deeper pockets. Because of this many recruiters are paranoid about whether we really do file our tax returns honestly. I can sympathize with their paranoia when it's sincerely held and not just posturing. I know at least one company that changed its policy from analyzing each contractor individually to a policy of 1099 arrangements after getting burned by an independent. Their horror stories are undoubtedly often magnified; but sometimes they are very real.

Conclusions
So what's the answer? If your skills are rare enough and you're better than I at marketing yourself, go completely independent from the outset. If not, these policies have worked for me:

1. Register with several recruiters (technical only, not general) and give preference to 1099s whenever possible.

2. Deduct only easily justified items - and keep records to prove honest intent. Examples:
- Register your company and get a credit card in its name.
- Go through each bill for the company phone line and delete anything that isn't legit.
- The spare bedroom you're deducting better look like a well used office and nothing more.
- Only keep work-related software on the deductible computers and try to make it a laptop.
- Only frugal meals, and no drinks.
- If the car doubles as personal deduct mileage only, not repairs or insurance.

3. As your stature improves, jettison less desirable recruiters (those working W2 only; those taking larger cuts, if you can determine that; those that don't know enough about your skills; etc.)

4. Compile a portfolio of materials which demonstrate your skills, and a list clients who will vouch for your abilities.

5. Belong to two or more professional organizations. Attend and contribute to their activities, and keep records to prove it. Pay your way to conferences; better yet, present at one or two.

6. Each time you sign a contract, email every recruiter on the lookout for you that you're not available. Their time is as valuable as yours; don't waste it.

7. Show your appreciation to your favorite recruiters. Help match them up with colleagues: both parties benefit. Brief them on the specifics of your technical expertise: you'll sound knowledgeable, and they'll do a better job matching you. Take them to lunch: I guarantee you, that one will blow their mind. [Back in early 95, when employment brokering on the Internet was brand-new, my wife and I researched the current state of the art and shared it with a recruiter. What we learned was directly beneficial to us, and in 96 the recruiter got me a year-long contract.]

I don't rely on recruiters nearly so much these days, but they helped me at a critical time. I firmly believe that, taking a backseat to only my diligence and good education, recruiters were instrumental in my turn-around.It's constructive for me to remember that: 
- in mid-94 I was sorting mail and stacking Pepsi at just above minimum wage.
- by late 97 I had secured by first out-of-state client and national speaking engagement.
- now both clients and speaking engagements are on both coasts and in between. [If you're tech writer, sign up for my presentation at the STC annual in Chicago next May.]

Now, more than half my contracts are self-found, but a few favorite recruiters are on the lookout for specific types of work: information architecture under someone who can take me to the next level in XML, for example. Any recruiter who finds that package can have 15% of my income for as long as they want it. And lunch.

Bill Sanders (bsanders@scribble-count.com) is a partner in Scribble & Count LLC (www.scribble-count.com), a Denver-based information services company specializing in hypertext. S&C has clients and speaking engagements nationwide. Bill is also Dir. Information Management for Technology Extension Consulting, Inc. (www.tecslt.com), a Houston-based IT consulting firm.

[Editors footnote: If you'd like to discuss this newsletter, we invite you to do so in our General forum where we've started the topic. We welcome guest newsletters. Your perspective helps us expand our professional knowledge and horizons.] - cl