Does Your Client Need To Know What They Are Signing?

lawyer-client meetingEntertainment Law clients come in all types just like other people. Most of my clients turn over contract negotiations totally to me. That is fine. That is what I do and it is not what they do. However, I do appreciate the client’s input and opinions on key issues, especially those that are proving to be troublesome in a particular negotiation.

Some clients are readily available when I want to explain what is going on in a negotiation and are willing to express their opinions on the issues. And some are not. I appreciate getting the perspective of the client on difficult negotiation issues. It helps me learn what the client values in the deal (which might not be what I assumed was most important to them). My business clients often are especially helpful by letting me know what is most important to them from a business perspective.

Even if a client declines to take my advice on a particular matter I appreciate being given the opportunity to explain why their decision could lead to adverse consequences in the future. Then if they are understand the possible negative outcome of their decision, and are willing to take that risk, I feel that I have done my job and am able to close the matter – both in the office and in my head.

On the other hand, there are the clients who not only turn everything over to me but who really do not want to know anything about contract matters other than major deal points, such as royalty rates and advances. Not long ago I negotiated a long-term exclusive recording contract for a successful artist. After prolonged and difficult negotiations were complete, it was time to explain the contract to my client and have them sign. I was told by the manager that the artist said “If Steve says it is ok I’m sure it is. Just let me sign it.”

Successful creatives are very busy. And many find business and legal matters distasteful and distracting. I get that. However, I really do not want the total responsibility of making major decisions for my clients — decisions that may affect their lives for years to come.

At a minimum I recommend having a meeting with the client to explain to them what they are about to sign. It doesn’t have to be a lenghty meeting. Just long enough to make sure the client has been told the highlights of the contract. Then they can sign. I usually am able to accomplish this by insisting that the client meet with me to sign a contract. Then I have the opportunity to point out any key elements of the commitment they are about to make.

I know some entertainment lawyers who are perfectly ok with taking total control of the legal matters for their clients and allowing them to blindly sign what the lawyer says is ready for execution. If you are one of those lawyers I welcome your comments. Or if you haven’t had to deal with this yet I also would like to know your opinion.

Songwriting Agreements and Signing Bonuses

Money in HandI received a call from an attorney who is negotiating his first exclusive songwriting agreement. I’ll get the shameless self-promotion out of the way first! He told me that he found the answer to every question he had in my book “Negotiating Exclusive Songwriting Agreements.” However, he had two concerns about the negotiation process. One I discussed in the book and one that has more to do with negotiation “style” and experience.

In this post I will discuss the matter I covered in the book, only in less detail. The agreement that the attorney was negotiating was offered by a strong independent publisher. The contract provided for periodic advances during the Term of the contract. However, the offer did not include an “execution advance”, sometimes referred to as a “signing bonus”.  This concerned the attorney as it should.  But pleas read the next paragraph twice for emphasis!

Just because the deal offer or the first draft of an exclusive songwriting agreement does not include an execution advance does not mean that it is time to walk away from the deal. Nor does the absence of this advance in the initial offer mean that the publisher is not willing to give it. Ask for that advance and ask for it with confidence. If it is not initially offered I usually will ask for it in my first mark-up or sooner if I am not familiar with the practices of the particular publisher. Why sooner? Because not only do I want to do the best job I can for my client, I also want to know that the writer will be able to pay me!

Signing bonuses are often provided in the contract so the writer will have the funds to pay his or her attorney for negotiating the deal. Both the writer and the attorney want this to be in addition to the writer’s periodic payments so that the writer’s essential income will not be reduced the first month of the deal. These advances are usually recoupable from the writer’s royalties but not in all cases. It all depends on the bargaining power of the writer.  Even in these days of relatively poor album sales, most publishers will still advance the writer’s attorney fees.  And most of them will pay this advance direct to the attorney when the contract is signed.

Other reasons that publishers pay execution advances are 1) as payment for “Schedule A” songs (existing songs being brought into the deal); 2) as payment for Schedule A demo recordings paid for by the writer; and 3) as a true “signing bonus” to entice the writer to sign with this particular publisher.

In summary, when negotiating the exclusive songwriting agreement, ask for the execution advance. And if that advance is to be used in whole or in part for attorney fees, get this matter settled early.

Shopping Record Deals (And Other Deals)

Record ContractI get a lot of email from unsigned artists wanting me to present their demo to a record label.  I don’t shop record deals.  If you are new to entertainment law that might surprise you.  I shopped artists and songwriters for recording and songwriting deals most of my career.  I only stopped a few years ago when the music industry took a downturn.  The number major of labels and major label imprints decreased.  And the number of signings also decreased.  If an exceptional, unique, talented and charismatic writer/artist with an independent sales record, fan club, etc. came to me would I shop them today?  Yes – I might.  But this type activity is no longer a regular part of my practice.  Will you shop deals?

Consider a few things.  First of all, for a young entertainment attorney deal shopping can be fun and exciting.  And if you and the artist are successful it can be financially rewarding.  It can also be heart breaking and discouraging.  It is a tough business.

Second, do you live and work in a community where the record labels and major publishers are located?  If not, deal shopping might be one of your best ways to get into entertainment law.  I moved to Nashville from my home town of Memphis, Tennessee for one reason.  I went where the work is.  In Nashville I get calls from prospective entertainment clients – I do not have to get on a plane to go find them.  When I got to Nashville I discovered that most entertainment attorneys here do not shop deals.  They spend their time doing the lower risk billable work.  My first year here one of the major music publishers referred a major label artist to me and another artist knocked on my door one day without an appointment.  In less than a year she was signed to major publisher and a major label.  But – keep in mind — when I moved to Nashville I had already developed a clientele and presence there.  I did that primarily by opening a small work office in Nashville that I visited a few days a month.

Do you have the contacts or are you willing to spend the time and expense of traveling to where the label reps are and networking?  I cannot tell you how to do meet the right people – at least not in this post.  It is not easy but it can be done.  I did it.  A&R are usually willing to listen to product being presented by an entertainment lawyer.  But it better be good or the door might not be open the next time.  Get to know the gatekeepers and take your “pitch” meetings in person.  That way even if you get a “pass” (i.e., rejection)  you will have the opportunity to learn “why” which could help you the next time around.

Do you have “ears”?  Can you recognize hit songs and do know an exceptional artist when you hear and see one?  It is not just about talent.  In Nashville we say that “talent is the common denominator”.  There are exceptional talented unsigned artists all over Nashville.  To get signed the artist must have “star quality” and so much more.

If you are already an entertainment attorney or one with aspirations in that direction, I would like to hear your thoughts about deal shopping.