Is it advisable for headhunters to sue their clients?

The client is always right, particularly if the client is one of a diminishing number of investment banks. But what happens when the client (allegedly) won't pay?

As we noted last week, headhunter Hogarth Davis Lloyd is bringing a court case against Nomura after it allegedly failed to pay fees of anything from 40-90m following the recruitment of around 600 former Lehman bankers.

Nomura says the number is "commercially absurd" and observers say many of those Lehman bankers would have gone to Nomura anyway. However, Hogarth Davis Lloyd is claiming that that it was seeking to prise bankers out of Lehman on behalf of Nomura prior to the Lehman blow-up, and that it's therefore entitled to at least something.

Putting aside questions of how wealthy HDL's three founding partners are likely to become if their claim is successful, is it really wise to publicly pursue a longstanding client in the courts?

One senior City recruitment figure says not. "You need to settle these things quietly. Once you've gone through this process in the courts, you have to question whether people will be happy to work with you again."

The head of one City search boutique says most banks remained good payers throughout the dark days of 2008, although it's become common to pay a smaller retainer and most of the fee on completion. "Payment terms are generally 30-60 days. You have to chase, but banks are pretty good," he says.

In this context, threatening non-payers with court action may be rational. David Durham, managing director of hedge fund search firm Durham Consultants, says he's done it twice without any disastrous repercussions: "Put it this way - a client is someone who pays for services rendered. If they don't pay, they're not a client."