The Tentative Man
By Chris Bradley
My first job after law school was in sales. Perhaps I earned some credibility
with colleagues as a sales representative and a lawyer, and this, I surmise,
is why one of my first clients came to me with a problem regarding unpaid
sales commissions. At the time I took the case, I was building our website
(still a work in progress), and my law partner Jeremiah Neville was filing
papers with the secretary of state for Bradley|Neville Law Firm, LLC. I
had always wanted to start a business and practice law with my name on the
letterhead, and now it began: my first employment and contract law case.
It started with a soft knock on the door (figuratively speaking). The man
who would later be my client approached me with a problem I’d never
encountered before. I was tentative at first. I did not want to take on
this man’s problem. I was not sure I could do it. So I turned him
down. When he asked me again, a pending birth and a wife’s bed rest
forced my hand: I needed to practice law. When we sat down to sign the contingent
fee agreement, I was mute on the fact that as a new lawyer I hadn’t
encountered most problems. As it goes, competence follows experience.
I went home that night with an honest-to-God case and a flesh-and-blood
client. I had a stack of manila folders in my desk drawer for the occasion.
I went downstairs to my makeshift basement office, pulled one out, and scrawled
my client’s last name in felt-tip black on the cover. I did a quick
conflicts check just to be sure: yes, the other folder had a different last
name.
I opened the new file, put the executed agreement inside, closed the cover,
and closed my eyes. What next? My client had already sent numerous
emails. I opened my Google account and began running through them. Much
of it was the extraneous gristle that sharp legal minds cut away, leaving
enough for fact patterns and precedent. I cut off what I could and discovered
that my client had been shorted thousands of dollars in commissions.
My client told a passionate story of grievance, unfair treatment, and Lady
Justice. At the outset, the deal appeared quite large and outside
his assigned business segment. Management encouraged him to pursue
the deal anyway. He spent an extraordinary amount of time
and energy on his work and closed the deal. It was worth thousands
of dollars to the company (and thousands of dollars in earned commissions).
Suddenly, the payout set in the compensation agreement looked too
high, and the company decided to pay my client much less than his
due. The company cited a provision in the agreement stating that
its internal review board had final say as to how much he would
ultimately be paid, on the basis that the deal was over a certain
dollar-value threshold.
Sales representatives have a job that often requires as much “right
place, right time” circumstances as preparation and hard work. Employers
reward sales representatives handsomely for exceeding quota and driving
growth for the company. But “right place, right time” circumstances
are not contemplated under many agreements when signed—and thus not
worthy of full commissions payment.
I asked experienced sales representative and friend Chad McDonald for insight,
and he explained that sales is the lifeblood of any organization,
but it’s
very easy to decrease earned commission payments by one percent
and add more to the bottom line. A company must attract high-caliber sales
representatives with lucrative pay, but not so much that the company can’t
turn a profit. My client closed the deal and expected his due, but the company
disagreed, and a dispute was born.
Brozo v. Oracle Corp.1 represents the issue well. On appeal, the majority stated that employers can
determine (to a point) how much employees are paid, even if the amount
of commissions paid differs from the agreement.2 In
his dissent, Judge Lay writes that any contract granting an employer sole
discretion to determine how much to pay employees—after the deal
has closed and the work is finished—is an illusory contract.3 The
tension lies between allowing companies discretion in awarding compensation
and granting to sales representatives the benefit of the bargain originally
struck in the agreement.
A company that wants more control over commission payments should
include a provision in the agreement allowing for sole discretion
to retroactively change commissions in prescribed circumstances.
Make sure the provision contains express language to this effect.
When Joe Closer really “kills it” (greatly exceeds
quota in sales parlance), the company can prevent paying sales
representatives too much money and minimize disputes.
Joe Closer should keep an open line of communication with management. Great
deals are usually closed through plain hard work. Occasionally, companies
will attempt to characterize the deal as windfall, or some other untoward
business event, thereby warranting retroactive discretion to alter commissions.
Joe Closer should confirm with the boss that he will be paid properly under
the agreement as he works to close the deal.
This I learned after thorough legal research, demand letters, and negotiation. Fast-forward to several months later. I drove to the bank in Uptown and let my thoughts wander. I recalled scrawling my client’s last name on the manila folder in felt-tip black, drinking coffee at 11 in the evening, scratching the tension off my head, and thanking my wife for her sympathy. I reached the bank and parked the car. No longer the tentative man, I strolled inside, retrieved my law firm’s tax identification number, and sent it to opposing counsel so he could cut the settlement check.
I suppose I did just fine.
Chris Bradley is an editor at FindLaw,
building websites for lawyers, and is the author of BradleyScribe, a blog of words. Chris can be reached at 651-808-0791 or cbradleylaw@gmail.com.
© Copyright 2008, American Bar Association.
