Five Reasons to Mediate MLM Legal Disputes

Posted by David G. Eisenstein on Jun 21, 2017 9:02:47 AM

     Reason #1--If you are a company owner or executive, when you get challenged by a distributor you have confronted for not following the company's policies and procedures, your first inclination usually is to use the company's superior cash flow to throw the biggest law firm in town at the distributor and her lawyer.  You think, "Let the David v. Goliath" battle begin."  We'll make an example out of the errant distributor.  

       But your lawyer tells you her firm's fees and the costs of transcripts, experts and the like are going to probably run into six figures.  Mediation is a one day procedure and costs 10% or less of what it costs to litigate (Judge will decide) or arbitrate (a binding decision by private attorney) after multiple days of sworn testimony preceded by depositions of witnesses under oath.

      Reason #2--Or, you're a key distributor of the you’ve been done in by a jealous distributor in your company who envies your success.  The “deep throat” distributor, under a promise of confidentiality, spills the beans and rats on you to the company compliance director, or, worse yet, to the company CEO.  The CEO, who never particularly liked you anyway, eagerly pounces on the allegations against you to first suspend and then terminate you without disclosing what, if any, evidence exists to support the hearsay charges.  

       You talk to three or four attorneys, none of whom know much about direct sales, network marketing, and/or MLM.  They will without fail consider your case a complex commercial litigation which none of them would seriously consider taking on a contingent or percentage fee basis. They all tell you they would require you to pay an hourly rate with a hefty up-front retainer in order for them to represent you.  Mediations resulting in a settlement by the parties are consummated by a written agreement between both sides which is legally enforceable. 

       Reason #3--As legal counsel for the company or the key distributor--you can earn legal fees for the preparation  and appearance at the mediation with your client and, if the mediation is successful, you can set your client free to do what they do best...conduct their own business without expending massive amounts of money or months, even years of negative energy and worrying while their lawsuit or arbitration progresses to a final result.  You, their attorney, may not be their "knight in shining armour" but you'll score points for keeping the client's best interests at heart and be more likely for them to use you for future legal needs by demonstrating to them you have put their interests first and foremost, ahead of your firm's financial incentive to maximize its fees while running up the costs to the client.

     Reason #4--At a mediation, both sides get to have their "day in court" without going to court--by that I mean that in most mediations, after the mediator welcomes the parties and their attorneys to the mediation and gives a short intro to the mediation process, the lawyers and  the clients are given an opportunity to talk, get "something off their chests."  

       This is the stage of their dispute where the parties get to (briefly) tell their side of the story, as painful as that might be to the other side sitting across the table. This has a powerful cathartic effect on the person baring their soul about how they really feel about the other side's actions or inaction which resulted in the legal conflict.  

       So, after participating in and enduring this part of the mediation proceeding, both sides can feel that they have said to the other party as well as the attorneys and mediator sitting in the same room why they believe they are right in this dispute.  That allows them little less of the emotional overlay they were burdened with at the start of the day and to get to the next step in the process--to listen to the other side's offer of settlement and evaluate it with a better understanding of the case and why the other side feels the way they do about what caused their conflict, thereby making a resolution between them much more likely.

       Reason #5--Mediations are only binding where both sides agree to resolve the dispute--otherwise they are NON-BINDING, confidential, and off-the-record giving each side the option of carrying the litigation further--What the heck, it's worth a shot isn't it? 

       What can it hurt?  It doesn't cost that much to try, and clients can see the value of mediating for a day in hopes of freeing themselves up from the anxieties and grief of going to court or going in front of an arbitrator.     And, the mediation could be the first real step toward a subsequent reasonable settlement of the dispute, now that the parties are more familiar with what motivates and moves the other.


Learn More

Now it’s time to ask you, my Reader, what do you think?  

Mediation---UP or DOWN?




KevinThompsonMLM Attorney.jpg

Kevin Thompson, MLM Attorney:

     "I highly recommend mediation when there's an impasse between a company and a distributor. When both parties are willing, I recommend David Eisenstein

     "Seriously, I always recommend mediation before litigation. When it comes to choosing mediators, David has that part of the market cornered."  


Keep Current with MLM Legal Issues

Sign up Below for Updates:

     Mediations, while less formal than court trials and arbitrations, are still opportunities for attorneys for the parties to summarize the important factual considerations, and even some abbreviated legal arguments.


  • The attorneys need to have some knowledge of the network marketing industry in order to be effective in mediations
  • The mediator should be well-informed on MLM issues as well so he/she can facilitate the parties reaching a settlement 
  • To see more timely blog articles about the MLM industry, the legal issues that face it, as well as the value and methods of mediation toward a resolution of a network marketing legal dispute, subscribe to this blog and we'll keep you regularly informed and updated!
  • Learn More

Subscribe to Email Updates

Recent Posts

Posts by Topic