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!

Entertainment Law – Go Where The Work Is!

Travel the Globe

I was practicing entertainment law in my hometown of Memphis, Tennessee when an older (and undoubtedly wiser) man came up to me after a regular meeting I attended and said:  “I don’t understand why you are here.  Why don’t you go where the work is?”  Memphis had had a great run of artist signings in the early to mid 80s — there was a lot of rock and R&B talent being signed to major and independent record deals.  But by the ‘90s the buzz on Memphis rock/pop bands had waned and a lot of the R&B talent had or was moving to Atlanta which was fast becoming a recording mecca for that genre of music.  I actually had a young R&B trio (my clients) call me from Atlanta one day and tell me they were there for a visit and were not coming back!  I assume they came back to get their personal belongings but it was clear that they were going to continue their career in Atlanta – not Memphis.

I was 45 years old when the man came up to me after that meeting. When I was asked why I didn’t go where the work is it was as if a light bulb lit up!  The big “DUH!” Suddenly for the first time I related entertainment law to any type of work.  For example, if I wanted to build automobiles then it would probably be best if I moved where automobiles are built.  So, the way I saw it I had three choices: (1) Expand my practice to areas other than Entertainment Law and stay in Memphis; (2) spend more time (a lot more time) in one or more of the entertainment business centers (then LA, NYC, Nashville and to a lesser degree Atlanta) and stay in Memphis; or (3) relocate to where the work is.

My first boss in entertainment law was Joel Katz, in Atlanta.  Joel is my model for the number (2) choice above.  In the two years I worked for him it seemed to me he was living in hotels in New York, Los Angeles or Nashville every week.  He must have been gone as often as he was in the office if not more.  He was (and still is) a great deal maker, rainmaker and relationship person.  Because I didn’t feel like I had the personality or skill set to be like Joel, I ruled out number 2.  I also ruled out choice 1 because I had never done anything but entertainment law and I wanted to keep doing it.  I was already making regular trips to Nashville and over the next couple of years I began to make more trips there and opened a small branch office in a building owned by a client.  In 1995 I moved myself, my associate and my assistant to Nashville and opened an office on Music Row.  I loved it from day one.  Over the next few years I became a part of the industry in Nashville.  And for me it definitely turned out to be where the work was and still is.

I am not so foolish as to believe that every lawyer must take my path to be an entertainment lawyer.  I didn’t move to Nashville until I had a good client base there.  I grew where I was planted and expanded my client base with travel and networking.  If you have had a different experience then please let me (and my readers) know about it.  I would never insist that my way is the only way!