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MANA is doing its part to remind representatives and principals that from the moment the partnership is formed and throughout the time sales activities are conducted, both parties are best served by focusing on a win-win relationship. Any time that win-win relationship tips out of balance it puts at risk the success and profitability of both parties.

Principals who perceive themselves as the dominant partner are probably not MANA members, so this message is not addressed to MANA manufacturer members. But MANA representative members will from time to time represent a manufacturer less enlightened than most MANA manufacturer members, and it is those situations that today’s article addresses.

When encountering such a (usually non-MANA member) principal, some representatives find that a response to a request for past due commissions is delaying tactics, excuses, or even “collect it if you can.” Such principals count on it being cost-prohibitive for the representative to come to the home state of the principal, hire an attorney, and file a lawsuit based upon the laws of the principal’s jurisdiction to seek justice.

The contract that the representative signed often specifies that disputes be tried based on the laws of the principal’s home state in a court in the principal’s home state. The representative who signed that contract now seems to have his or her hands tied by the choice of law and choice of venue in a contract that may have been too eagerly signed without guidance from counsel.

This principal takes encouragement and this representative’s spirits fall based on this apparent barrier to collection.

The fact of the matter is that if a sales representative has to go to another state (or even another country) to file a legal action based upon the law of that foreign jurisdiction, it is fighting an uphill battle and often will forego the effort. The cost alone may be prohibitive. Hiring out-of-state or out-of-country counsel unfamiliar with the sales representative industry and its applicable laws, the cost of accommodating witnesses and experts in the principal’s locale, and the pre-trial cost of collecting supporting testimony and documents from afar can all be daunting and more problematic than it would be if the sales representative were forcing the issues in its own home state.

But sometimes the apparent barrier seemingly created by a representative agreement’s choice of venue clause is no barrier at all, and representatives have MANA to thank for that.

Through many of its legislative efforts on behalf of its members, MANA has in some states successfully lobbied for commission protection acts that not only provide for double or treble damages on unpaid sales commission plus attorney’s fees, but also allow the representative to pursue his or her claim in the representative’s home state according to that state’s commission protection act, regardless of any choice of venue clause in the representative agreement.

Thanks to MANA, many such statutes enable the MANA representative member to stay home, file, and have its legal claim determined under the laws and by the courts of the representative’s home state. This means that just because the contract with the principal says that the law of another state applies to your contract and just because your contract says that you’ll have to go to the home state of the principal to enforce your rights, such may not necessarily be the case.

MANA member sales representatives are the most hard-working, organized, dedicated, efficient, and focused group of individuals that I have ever had the pleasure of serving as clients. They know their goals and strive hard to achieve them. Unfortunately, most of a representative’s workday requires the representative to constantly and continuously focus on generating sales on behalf of principals in search of the consideration promised. As a result, a sales representative may not be intimately familiar with all of the tools available in the event that what has been promised is not forthcoming.

To learn more, MANA members can log onto the MANA website and see for themselves the various sales representative protective statutes, many of which MANA itself has been instrumental in enacting. Also available on the website is a list of MANA qualified attorneys adept at representing the MANA members. These MANA member attorneys meet annually at a MANA-sponsored conference and discuss various issues related to the sales representatives that they have as clients. All are qualified.

These attorneys are very familiar with these statutes and can give the MANA member further explanation and advice as to their meanings and enforceability in light of the applicable facts. At more than one conference I’ve heard a MANA attorney repeat the story of how they were able to resolve such non-payment of commission issues by highlighting the statute of their client’s home state to the past-due principal. Knowing that they are subject to paying multiples of the past due commissions plus attorney’s fees is a good motivator, but even more motivating is the fact that non-payment will require the principal to defend itself in the home state of the sales representative. Faced with this possibility, many principals will often work to resolve the issue in order to avoid this exposure.

Even if the home state of the sales representative does not have such a statute, all is not lost. Depending upon the facts of the issue, it is very possible that the contractually designated law of the principal’s home jurisdiction may have such a law enabling the sales representative with the possibility of procuring multiple damages (if not the choice of law and venue).

Such existing legislation may be unknown to many principals, sales representatives, and even attorneys who do not focus on the sales representative industry, as many such laws get obscured into lesser obvious laws. Also, depending on the facts and circumstances of such claims, the MANA member attorneys may even be willing themselves to travel to the venue of the principal and go through the process of getting authorized to practice law in the state of the principal in order to present, advocate and pursue the claim of the wronged client.

These tools are there. As a MANA member, you could, and should, use them. Seek MANA qualified counsel (even before you contract with a principal), and know your rights.

MANA welcomes your comments on this article. Write to us at [email protected].