Focusing

Focusing on the Reps Major Legal Concerns from Agency Sales Magazine, 2003

Our panel of attorneys familiar with rep law responded to a second query, which follows.

What is the most important legal concern that manufacturers’ representatives must be aware of today?

 

“Know your state law. Again, so many reps think they are powerless, with no rights. This is not true. Over 30 states have enacted sales rep legislation, all of which was born out of legislative recognition that there is a gross disparity in bargaining power between reps and manufacturers, and most states have taken some action to level the playing field. You can locate applicable rep laws on the Internet. Databases like “Findlaw” are sure to have them, and if you’re a MANA member, you may access them from the MANA Member Area at www.manaonline.org.

 

“Next, organize! This is not a ‘concern,’ but readers of this article should be aware that reps in many states, like Minnesota, have successfully organized and lobbied for the passage of strong legislation limiting a manufacturer’s ability to simply cut a sales rep out of a territory. The Minnesota statutes forbid a manufacturer from firing a rep with a phone call… without some substantial problem with that rep’s performance…and then only after 90-180 days’ prior notice. This movement is spreading slowly. Wisconsin recently adopted similar legislation. Because the Minnesota statute covers Minnesota ‘residents,’ our clients in neighboring states who have some business here have been incorporating in Minnesota — thereby arguably becoming ‘residents’ — to take advantage of this law.

 

“Then recognize and embrace the fact that you know little about the legal field and profession. Find an attorney who is committed to giving you ‘business advice,’ meaning they are dedicated to giving you the information necessary for you to make a good business decision regarding how you deal with a problem. No attorney should recommend that you enter the civil litigation arena lightly — avoid the guy who tells you to ‘sue them now, sue them today!’ While I truly believe this is a small number of attorneys, any client should interview a couple of lawyers. Expect to pay for the consultation, but it is worth it. To find a knowledgeable attorney, contact other reps and trade associations. Watch out for the guy who is a ‘buddy’ of your neighbor, and has no experience in the sales and distribution business. Again, you don’t want to pay for this guy to go to school. If you have a business attorney or estate planner or a neighbor who just happens to be a lawyer but does not practice in the area, ask him or her to do a simple Westlaw search for sales representative cases in your state (remember, you should
pay for this service), but this will immediately give you a list of attorneys who have handled substantial sales representative cases.”