Partial Indentured Servitude Contract - Legally Enforceable?
Hi All,
Haven't had a reason to post on here recently but wanted to solicit opinions & better understand my current situation.
For reference, I'm a junior with an SA26 offer at a BB. This bank does direct placement, and the group I'll be joining in a few months is fairly lean but highly-regarded. But here's the situation – when recruiting for the group last year I signed an agreement with an associate that in exchange for his referral/support/advocacy, I'd pledge a small percentage of future income to him. He is my school's only presence in the group and I had no shot in even getting an interview otherwise.
These were roughly the terms I signed onto last Jan:
2026 SA Stint: 20% of pre-tax earnings
If/when I get a return: 100% of signing bonus (I assume post-tax but contract didn't specify)
2027-2029: 7.5% Pre-tax
2030-2036: 3.75% Pre-tax
This only applies to W-2 base/bonus (If I were to win lottery, inherit $, hit FanDuel parlay, etc. the cash would be 100% mine.
At the time, it seemed like a fantastic offer, and part of me still thinks it is – without the deal I probably would've struck out on SA recruiting, not been on track to break into IB, & my post-grad salary would definitely be more than 7.5/3.75% lower than what I'll make in the industry. Best case I would've landed something lower-caliber, and even then my projected long-run earnings would probably be 10-25% lower than they are now. Also, those percentages seemed inconsequential to me, especially the 2030s ones.
But recently, especially as I've discussed the issue with my parents, this will probably (fingers-crossed!) add up to a significant amount of money. I guess what I'm most curious about is if the deal we made is legally binding (ie. can he take me to court if I don't go along with it). Obviously he may be hesitant resort to that, as a legal battle may jeopardize his reputation at the BB, but maybe he'll leave the role between now and then and could come after me with less risk.
Has anyone on this site entered a similar arrangement or heard of someone doing so? Would love to hear people's experience if possible. I know that there is precedent for this in other areas – for example, a lot of Latin American MLB prospects pledge a portion of career earnings to an agency for representation/support/a lump-sum payment. This probably isn't common in the finance world, but is it unprecedented? What are my options?
This is surely rage bait… but I’ll bite. Could be legally “enforceable” in a vacuum but commercial issues abound - would result in the associate and probably you getting fired if ever discovered by the firm. Talk to a lawyer about the paper but just know that any reputable firm would be allergic to one of their employees doing this. Also you really overpaid for what is essentially a placement service but with extra unethical steps involved…
Yes it's legally binding. What would make you think it's not?
This is similar to an income sharing agreement. Very odd arrangement to have gotten into but yeah I think (?) it is legally enforceable
Go ask real lawyers instead of panicking over the answers of marketing students on this forum.
I really can't tell you if it's legally binding or not, and no one here can, just book an appointment with a good lawyer, and don't ever take such a risk again. An asso at a reputable bank doing this should be a major red flag, even though it might be your only shot at a good internship.
Legally this structure is pretty hairy. Especially because the percent of pre tax income he takes is varying over time and there are notable carveouts. I would recommend a simpler structure to get you out of this suboptimal arrangement. I’m no lawyer so you should definitely check with a professional.
Create a HoldCo call it “AnalystHoldCo” that owns you.
You contribute a nominal $1 and he contributes $99 to Anayst.
Then for the rest of your life he gets 99% of your pre tax earnings while you get 1%.
In exchange he’s the majority owner of Analyst.
He gets primary control over your earnings, to how you spend your time, and all your rights under the constitution are passed through to him (he casts your vote, etc). He always gets first access to your wife, your girlfriend, and your mistress.
He’s responsible for feeding, housing you, your wife girlfriend and mistress, and any of your kids with the above at his estates, as well as providing minimum quality of life arrangements like Hampton and Aspen vacations for you and your family.
This seems like a cleaner structure both morally and economically and legally. You get to be in the industry under a construct that’s harder to poke holes in. It’s a win win win situation. Hope this helps!
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