Entertainment Law Practice – Don’t Ignore the Small Clients

Lawyer and ManOnce upon a time in Tennessee I got my first client that was paying me six figures in legal fees every year.  My firm consisted of me, an associate and an assistant.  I didn’t have a strong desire to get much larger – I like the solo and small firm life.  I proceeded to aggressively represent my number one client and along the way learned a few lessons.  One such lesson is undoubtedly common sense to many of you but apparently not to me.  Or perhaps I just forgot to slow down and think.

The first lesson I learned was to approach my practice with this in mind:  Everything Changes.  Isn’t that a law of nature itself?  But there are things that I can do to increase the chances of change being in a positive direction rather than negative.

I had some wonderful years with that big client and a respectful number of others.  However, what I did not foresee was that the client, a music business legend, would begin downsizing.  And as he divested himself of companies and stress causing activities, I too began to downsize — but not on purpose!  Eventually the annual fees paid to me by that client leveled off at about twenty percent of what they had been at the highest.

I remember setting in my office one day and thinking that I didn’t have much to do.  And there was a lot less money left at the end of the month.  My associate was handling the bulk of the work and my main job had become reviewing and revising his work.  I was discussing the situation with an advisor.  I have never forgotten what told me.  He said that I had been focusing totally on the needs of the large client and had ignored the smaller clients.  Then when the large client fees dwindled I did not have a good stable of other clients keeping the business healthy.  He spoke as though I was not the first to stumble into this trap.  This all immediately made sense to me.  I did not need convincing.

I took action. I no longer needed an associate.  I let him go.  I also no longer needed a full-time assistant, a luxury for most solos.  I let her go and hired a part-time assistant.  I began to pay attention to all clients big or small.

Today my business is healthier than it has ever been.  If I don’t believe I can give a prospect the needed attention and service then I do not accept them as a client. I have large and small clients.  My assistant is still part-time.  I engage independent contractor attorneys to assist with the work load on an as-needed basis.

Again – the lesson:  I remember when things are going well that everything changes.  However, the change can be for the better if I pay attention to all aspects of my business.  And take care of all my clients – large or small.

Playing the Hollywood Game

Gordon FiremarkMy friend, Gordon Firemark, is a west coast entertainment attorney, specializing if visual medial. I am both honored and pleased that Gordon is the first guest blogger at Solo Entertainment Lawyer. Following is Gordon’s post, “Playing the Hollywood game”.

I first got interested in the entertainment industry when I was about 12. In Middle school.

I’d started hanging out with a group of kids that were always getting into one kind of trouble or another. For some reason, the school principal spotted me and asked me to run the lights and sound for the school’s annual variety show. This was all it took to divert me and set me on the path that’s led to where I am today.

Through school, I did the sound for the school shows, plays, musicals, band concerts, etc. (I was also in the band, but didn’t display any real talent as a saxophone player). By the time I finished high school, I was working in professional theatre around my hometown.

I grew up in a small town-feeling suburb of Los Angeles, and while it was an affluent community, there were relatively few hollywood types around. This was the kind of place where the streets get rolled up at night. In college, I majored in Radio, TV and Film, and graduated expecting to work in production. And I did, but before long, the Writer’s Guild went on strike, and the work opportunities dried up for a while, so I went to law school.

You’re going to be a lawyer? Are you crazy?

In law school, I focused on the entertainment fundamentals: Copyrights, trademarks, Music Law, Entertainment Law, contracts, and what-have-you, and during my 2nd summer and 3rd year, I worked at internships in a couple of major hollywood studios.

But after graduation, the In-House business affairs job I’d coveted just didn’t materialize. In fact, I graduated law school into a really tough time in the legal marketplace. Similar to what it’s like these days.

Eventually, I found a job working in a small litigation boutique, and quickly confirmed that litigation is not my cup of tea. So, after a relatively short stint there, I decided to quit my job, even though I didn’t have anything else lined up.

And so, a solo law practice begins

After a few weeks of looking for my next job, my phone began to ring with former colleagues from the production business who had small collection matters, or simple contract drafting projects for me to do. After a few months, it became evident that I had a practice in the making. So, with the help of some cash from my grandfather, I rented an office in a high-rise executive suite, bought furniture, and hung out my shingle. That was 1993. I’ve been in solo or small partnerships ever since.

But that takes clients

So, now I needed to find some more clients. To do this, I had to become a “hollywood guy”. Here I was, a highly trained, well educated, skilled lawyer who really understands the business (or so I thought at the time), I had all the tools, knowhow and credentials. What I didn’t have was the contacts. Connections. So I set out to make them.

Breaking in

Hollywood is a small community within a large city. The trick to becoming an insider in Hollywood seems to depend on being seen. A lot. That means being out at the clubs, parties, events, and so on, on a pretty regular basis. You don’t get invited to the parties and events until people know you, so that meant I spent a lot of time in the clubs around town, making contacts, and passing out business cards. Well, being a heavyset, balding guy, I wasn’t getting comped into the clubs, and nobody was buying me drinks, so this got expensive pretty fast. Not only that, but it meant lots of late nights.

I was also working hard to network with other professionals, and that often meant breakfast meetings, lunch meetings, etc. And, because I did have a little work to do, and needed to earn the money to support this lifestyle (such as it was), I had to be in the office (or in court) early every morning.

It wasn’t long before I was exhausted… and it showed. But, I was making connections, right?

Why quality is more important than quantity.

Well, what I learned is that it wasn’t about the quantity of the connections, it was about their quality. Having a big contact database full of people who barely know you isn’t that valuable. Better, I think, to have a handful of people who really know you well, like you, trust you, and think of you first when it’s time to make a referral or hire a lawyer themselves. The key is to make FRIENDS, not just contacts.

But, you do need to target the kinds of friends you seek. You remember the old line “you don’t have to marry a rich person to be happy, but it doesn’t hurt”?  Well, as long as you’re setting out to make friends, you might as well find folks who have other friends who fit your target client profile. That way, your friends will become your referral sources.

Things changed for me pretty rapidly when I moved into an apartment building in the flats of Beverly Hills. It was a dump of a 1-bedroom, but the building was filled with other industry folks. Some of my neighbors were working in the talent agencies, some in management, some in other areas of the business. These became some pretty good connections. They were low-level, but so was I, and we were positioned to move up the food chain in Hollywood together.

Networking

Around this same time, I got involved with a couple of industry-oriented groups, and started networking with other groups as well. I joined the board of directors of the Friars Club (which catered to comedians) and increased my involvement with the local Bar Association’s entertainment law section. (I eventually became chairman of that group).

I was still hitting the clubs, so I’d be visible, and perceived as a “player”, but I didn’t have to try so hard. I had a “wingman” everywhere I went, and that more than doubles your effectiveness at networking. Instead of always having to introduce yourself, you can introduce each other. Believe it or not, that alone takes a lot of the stress out of this kind of situation.

Being authentic

But the other thing I learned from networking with my friends and neighbors first was to let down my guard and be authentic. The guy who lives next door knows a bit about who you really are, so you can’t keep up pretenses around him. Assuming the real you is someone people like, they’ll make those introductions, referrals, etc.

Be good. Be really, really good.

But being “real” isn’t going to be enough just by itself. To succeed means building trust, too. Trust comes from being true to your word, scrupulously honest, doing really good work and doing it consistently. If you get a referral from a friend, and you deliver sloppy work, or you deliver good work late, he’s going to hear about it. He may give you a second chance, but he may not, and he’ll be more wary about referring to you next time. So, you have to do good work, and you have to do it all the time. Steve Martin describes his formula for success as “Be so good that they can’t ignore you.” I think this applies equally to professions as it does to the artistic trades.

Takeaways

So, here’s my recipe to making it in your chosen field.

- Care about people - Help people (clients)

- Share your knowledge freely - Demonstrate your expertise, but don't show off or make it all about you

- Be so good they can't ignore you! (Steve Martin) - Reputation counts! Guard yours vigilantly.

- Show others (especially clients and opposing counsel) courtesy, cooperation, trustworthiness, and reliability.

- If you're taking something on, take it on with a commitment to effectiveness, efficiency, and enthusiasm.

- Be grateful, and share your gratitude. There's no better way to attract the good stuff.

- Be good, and be persistent, without being pushy, and above all else, be real.

What game?

When you’re good, you get noticed. When you get noticed (for being good), you attract opportunities. Pretty soon, you might just find you’re winning the “game”, without realizing you’re even playing.

Here’s to your success!

Great post Gordon. Thank you again. Gordon’s blog and website are one and the same:  http://firemark.com. He is also the co-host of the podcast  Entertainment Law Update at http://entertainmentlawupdate.com.  Gordon can be found on Facebook, LinkedIn, and Twitter. His handle is gfiremark.

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.

Unauthorized Practice of Law – Entertainment Lawyers?

LicenseMost entertainment attorneys represent clients from states where the attorney is not licensed.  Isn’t that the unauthorized practice of law?

Recently I received an email from an attorney interested in entertainment law.  The question essentially had to do with whether he, an attorney licensed in and practicing in State A, can represent an individual who lives in State B in negotiations with a record company in State C.  This is an excellent question and I dare say there might be some difference of opinion as to the answer.

If one really wants to be thorough the I would suggest that research of the laws and cases in all three states is called for.  The unauthorized practice of law statutes are generally focused on the protection of that state’s citizens and talk about whether an unlicensed person is practicing law in their state for valuable consideration or soliciting their citizens for such legal representation.

Reality:  I do not know any entertainment attorneys who only represent clients who live in the state in which the attorney is licensed and has his or her primary law office.   Most have a national clientele.  As one very successful entertainment lawyer replied when asked the question: “I am practicing law in Tennessee regardless of where my client is”.  In truth he was.  He was even sitting at his desk in Tennessee when he answered the question.  He was not going into the jurisdiction where his client lives to practice law.  The client either comes to Tennessee to see him and/or conducts most if not all of his or her business with the attorney by telephone, email, video chat, text message or some other form of electronic communication.

Caveat.  I am not talking about making a court appearance in a foreign jurisdiction.  Clearly one not licensed in that jurisdiction may not do that (with some exceptions like small claims court, etc.).  However, most states make arrangements for an attorney from another jurisdiction to appear in their courts if properly introduced to the court by an attorney licensed in that state.

The question of traveling to another state to solicit clients is probably risky as is physically going into another jurisdiction to negotiate the terms of an agreement.  To the best of my knowledge most of the entertainment attorneys I know do not do either of the foregoing – but some do.  In my case (and the case of most of the entertainment lawyers I know) my out of state clients have initiated the contact with me in my home state, either in person or by some electronic medium, and all negotiations and transactions are conducted while sitting at my desk in my office which is in Tennessee.

I do not claim to be an expert on this subject.   If you are concerned I would suggest that you conduct your own research on this question and confer with a knowledgeable professor if you are still a student or know any law professors.  And I definitely will appreciate it if any practicing entertainment attorneys who read this would also comment and confirm what I have said or correct me please!