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The Damaging Truth About Cancellation Damages

Thursday, March 12th, 2015

By Brian Taylor Goldstein, Esq.

Dear Law and Disorder:

A presenter wants to breach our engagement contract by cancelling. Our cancellation clause says that, in the event of cancellation, we get 50% of the engagement fee or actual damages. They are offering 50%, but at this stage want the full fee.

If you have an engagement contract that has a cancellation clause, and a presenter cancels, then the presenter is not breaching your contract. A contract breach only occurs when someone fails to do something the contract requires (such as pay a deposit) or does something the contract does not permit (such as record a performance). In this case, if your contract has a cancellation clause, then you have given the presenter the right to cancel. So long as the presenter complies with the terms of your cancellation clause, then they are not in breach. They are merely exercising the right you gave them to cancel. If you don’t want them to cancel, don’t give them the right to do so.

According to your cancellation clause, if a presenter elects to cancel, they have to pay you either 50% of the engagement fee or actual damages. However, your actual damages may or may not be the full engagement fee. To determine whether or not you are entitled to the full engagement fee, you first have to calculate your “actual damages.” Actual damages are simply that: your actual out-of-pocket losses from the cancellation of that particular engagement. No more. No less. Calculating “actual damages” involves taking the full engagement fee and subtracting any costs or amounts you saved or did not incur as a result of not having to perform.

In some instances, the “full engagement fee” might include the performance fee as well as other costs, such as the value of travel and/or hotel that the presenter was covering. However, for the sake of simplicity, let’s assume that the full engagement fee was $5000, of which you needed $2000 to cover costs such as travel and equipment, leaving $3000 for profit. If by cancelling, you did not have to incur the travel and equipment costs, that means you saved $2000, and your “actual damages” are $3000. You would only be entitled to the full fee of $5000 if the engagement were cancelled too late for you to save or recoup any of your costs.

However, “actual damages” can never exceed the total value of the full engagement fee. As we all know, sometimes a single cancellation in a larger tour can also have residual implications. What if you were counting on the travel and hotel from a larger presenter to “underwrite” the costs of a smaller engagement fee from another presenter or run-out? If the larger engagement gets cancelled, that may necessitate the cancellation of the smaller one as well, or even the entire tour. Sadly, those losses are not “actual damages.” That’s just called bad planning.

Just because you were counting on something to make an entire tour break even, does make the loss “actual damages.” If the loss of a single engagement will trigger a domino effect, such as the cancellation of the entire tour, then, in addition to “actual damages”, you have suffered “consequential damages.” I know, that doesn’t make sense, but lawyers came up with these concepts hundreds of years ago and contracts still use the same broken terminology. This is the risk inherent in using contractual language you copy from someone else or don’t fully understand. You may inadvertently be using language that makes sense to you, but has a different legal meaning. The solution is simple: use English and be specific—even if it means (perish the thought!) using more words. For example, rather than write “we get 50% or actual damages” write what you mean:

If you cancel the contract, we get either a minimum of 50% of the engagement fee or all of the damages we actual incur as a result of the cancellation, including the cancellation of other engagements and/or any additional costs we must incur for travel, hotel, or other tour expenses, whichever is greater.

Wordier? Yes. Clearer? Indeed. An even clearer solution? Specify at the outset that the engagement is non-cancellable.

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For additional information and resources on this and other legal, project management, and business issues for the performing arts, visit ggartslaw.com

To ask your own question, write to lawanddisorder@musicalamerica.org.

All questions on any topic related to legal, management, and business issues will be welcome. However, please post only general questions or hypotheticals. GG Arts Law reserves the right to alter, edit or, amend questions to focus on specific issues or to avoid names, circumstances, or any information that could be used to identify or embarrass a specific individual or organization. All questions will be posted anonymously and/or posthumously.

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THE OFFICIAL DISCLAIMER:

THIS IS NOT LEGAL ADVICE!

The purpose of this blog is to provide general advice and guidance, not legal advice. Please consult with an attorney familiar with your specific circumstances, facts, challenges, medications, psychiatric disorders, past-lives, karmic debt, and anything else that may impact your situation before drawing any conclusions, deciding upon a course of action, sending a nasty email, filing a lawsuit, or doing anything rash!

Tags:breach, cancellation, cancellation clause, contract, Contracts, damages, engagement contract, engagements, losses, presenter, risk, Tour
Posted in Agents, Artist Management, Arts Management, Contracts, Law and Disorder: Performing Arts Division, Liability, Presenters, Touring | Comments Closed

The Divine Right To Cancel

Thursday, February 12th, 2015

By Brian Taylor Goldstein, Esq.

We were in the process of booking one of our singers with an orchestra, when we encountered the following Force Majeure clause in the orchestra’s contract: “If, as a result of any event beyond the control of the Orchestra, including, but not limited to, war, national calamity, strike, labor relations, lack of funds, poor ticket sales, or other Acts of God or force majeure of any kind or nature, Orchestra determines it necessary to suspend, cancel, or terminate the giving of any of the performances specified herein, then the Orchestra, in its sole discretion, shall have the right to do so by giving notice to the Artist. Upon such notice, the Orchestra and Artist shall be relieved from any further obligations under this Agreement without any liability of either party to the other for any damages arising from such suspension, cancelation, or termination.” We asked if they would strike the reference to “lack of funds” and “poor ticket sales”, but we were told that their contracts must be approved by their board of directors and, as such, nothing can be changed. Have you encountered this before? Do you have any advice on how to respond?

Telling someone that a contract cannot be changed because their board of directors says it can’t be changed is the equivalent of a parent telling a child “because I said so.” As I am frequently reminded when faced with the manifest irrationalities of my own parents: do not engage and back away.

I actually don’t doubt that the orchestra’s board of directors did, in fact, suggest and recommend such language. It’s just the type of thing a poorly formed board of wealthy corporate donors with no actual arts experience would come up with. (It brings to mind an occasion when I was called in to consult with a board of directors who was insisting that no season could be planned or programmed unless the artistic director was willing to guarantee exactly how many tickets would be sold to each performance!) Regardless, such language is absurd and quite frankly, insulting and unprofessional.

It is absurd because, as I have previously written, a force majeure clause is supposed to be limited to events truly beyond anyone’s control: floods, snowstorms, terrorist attacks, etc. Ticket sales and funding are not determined either by serendipity or the intervention of divine energies (though I often suspect many strategic plans are based on such notions.) I find it insulting and unprofessional because the orchestra’s board of directors is trying to obfuscate a cancellation provision under the pretext of a force majeure clause. By defining force majeure to include “lack of funds” and “poor ticket sales” the orchestra is attempting to give itself the luxury of being able to cancel at any time for any reason with no liability or consequence. Contractually, this would render the Agreement terminable at will by the orchestra and, thus, meaningless for the Artist.

As a compromise, I would propose amending the force majeure clause and adding to the agreement a proper cancellation clause whereby, if the Orchestra felt that it needed to cancel due to “lack of funds” or “poor ticket sales” then they would have the right to do so by paying a specific, pre-determined cancellation fee. If the orchestra refuses such a reasonable alternative, then I would simply thank the orchestra for its time and walk away.

I realize, of course, that, in practical terms, artists are not always in a position to walk away. Just like good art always requires risk, occasionally this applies to deals and negotiations as well. Perhaps the artist is young and needs engagements. Or perhaps the engagement presents an artistic or resume-building opportunity to the artist. Those might be reasonable reasons to take a risk. However, such risky transactions must be entered into with eyes wide open as opposed to wide shut. As the artist’s manager, it falls to you to make sure the artist understands the risks and that both of you understand that, should the orchestra avail itself of its contractually unfettered right to cancel, you will accept that and, whilst reserving the right to swoon, sway, and cry foul, resist the temptation to threaten a frivolous lawsuit.

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For additional information and resources on this and other legal and business issues for the performing arts, visit ggartslaw.com

To ask your own question, write to lawanddisorder@musicalamerica.org.

All questions on any topic related to legal and business issues will be welcome. However, please post only general questions or hypotheticals. GG Arts Law reserves the right to alter, edit or, amend questions to focus on specific issues or to avoid names, circumstances, or any information that could be used to identify or embarrass a specific individual or organization. All questions will be posted anonymously and/or posthumously.

__________________________________________________________________

THE OFFICIAL DISCLAIMER:

THIS IS NOT LEGAL ADVICE!

Tags:acts of god, artist, cancellation, cancellation clause, cancellation fee, contract, Contracts, damages, engagements, flood, force majeure, negotiation, poor ticket sales, storms
Posted in Acts of God, Artist Management, Arts Management, Contracts, Law and Disorder: Performing Arts Division, Liability, Non-Profits, Presenters, Venues | Comments Closed

Presenting: What’s In A Name?

Thursday, December 18th, 2014

By Brian Taylor Goldstein, Esq.

I work for a small performing arts organization which performs each year in a tax-payer funded, non-traditional space. The venue makes itself available for rental as an event space. In the past, we have been allowed to pay them a reduced rental rate in exchange for a full-page ad in our program and recognition as a lead sponsor. Additionally, we regularly receive glowing reviews in local and national media that prominently feature color photos and positive mentions of the venue, which our audiences and reviewers (and we!) view as critical to our work and to our experience. This year they have asked for additional money in order to cover what they claim are increased maintenance costs. This would be a significant burden for us, as we are a small non-profit and we are already cutting expenses. We did not budget or anticipate an increase rental fee. They have suggested that they will waive the fee increase if we agree to bill them as a “presenter.” We are certainly open to the idea, but would like to understand what “presenter” typically means in this context. What would that word represent to our audiences and other organizations? What could we reasonably ask of them, financially or otherwise, in exchange for such billing? The venue does not produce, and rarely hosts other arts performances.

“Presenter” is one of those performing arts industry terms that can take on many different connotations and meanings depending upon the context and whom you ask. Legally, on its own, it is not self-defining. Like terms such as “hold”, “commission”, or “cancellation”, there is no official grimoire of terms or official definitions that are “industry standard.” Contractually, it means whatever the specific parties agree it means.

The better, or, should I say, more meaningful question is what implications listing them as a “presenter” would have in the minds of third parties critical to you and your organization, such as your audience, reviewers, and donors. In this context, the term “presenter” becomes more of a branding or marketing issue than anything else.

For most folks within the performing arts industry, being a “presenter” carries a curatorial implication. A presenter is usually perceived as an individual or organization that has used its own artistic judgment to select a production or performance that reflects its mission, has artistic merit, and meets the standards expected of the presenting venue or institution. However, the general public typically approaches this far differently.

Many venues produce and present performances as well as rent their spaces out to others. Most people do not realize this, much less make a distinction—or even care. Whether the Vienna Philharmonic performs at Carnegie Hall or Applebees, the average audience member, rightly or wrongly, usually assumes that wherever they are physically sitting at the time is the entity that is responsible for producing or presenting the performance they are watching. (Chicken wings and Mozart—what a concept!) Its sort of like blaming the waiter for over-cooking your steak—whoever presents the meal will enjoy the credit or the blame.

If your venue is asking to be billed as a “presenter” then it probably means they want to be seen as having discriminating tastes in deciding whom to allow to pay their rental fee. Perhaps they want to leverage some artistic credibility for marketing purposes or perhaps they are simply trying to justify their public funding by showing that they are more than just a commercial rental space. Either way, they obviously want to ride your coat tails. Fine. You wouldn’t be the first entity to leverage a little artistic integrity in exchange for survival. By acknowledging them as a lead sponsor, your audience has probably been giving the venue credit for the success of your performances anyway. Just make sure that your program, credits, billing, and other marketing materials continue to emphasize that it is you and your artistic team that are responsible for your work. And make sure that your written agreement with them clearly specifies the exact wording of the billing they will receive. Leave nothing to misinterpretation or chance. You might even ask to have approval over any marketing or publicity the venue issues on its own.

As for what you could reasonably ask of them, financially or otherwise, in exchange for such billing: There is nothing to “ask.” They have already set the price. You would agree to credit them as a presenter in exchange for letting you rent the space for a lower fee. Now is not the time for counter offers to try and get further concessions from them. Your immediate goal should be to avoid having to find a new venue or spend money you didn’t budget for, not win a negotiation challenge on “The Apprentice.”

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HAPPY HOLIDAYS

We will be taking a short break from the blog until January 7, 2015.

Please click on the photo to enjoy our gift to you.

Presenting the Dancing GG Arts Law Holiday Elves: Brian, Robyn and Ann

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For additional information and resources on this and other legal and business issues for the performing arts, visit ggartslaw.com

To ask your own question, write to lawanddisorder@musicalamerica.org.

__________________________________________________________________

THE OFFICIAL DISCLAIMER:

THIS IS NOT LEGAL ADVICE!

Tags:cancellation, distinction, interpretation, marketing, negotiation, presenter, publicity, venue
Posted in Artist Management, Arts Management, Contracts, Law and Disorder: Performing Arts Division, Presenters | Comments Closed

“Leave Here and You Die!” Unenforceable Non-Compete Agreements

Thursday, November 13th, 2014

By Brian Taylor Goldstein, Esq.

Dear Law and Disorder:

The management company where I work has asked me to sign a non-compete agreement saying that, if I ever quit or am fired, I would be prohibited from working as a manager or agent anywhere in the world for one year after I leave. The owner also contends that the names and addresses of all venues belong to him and that I cannot contact any presenters or venue where I booked an artist for him. Do I have to sign this? Is this reasonable?

You never have to sign anything. Can an employer require an employee to sign a non-compete or be fired? Under certain circumstances, yes. Are the terms you describe reasonable? Hardly. More importantly, even if you signed it, I doubt very much that such an agreement would be enforceable.

In most instances, parties can use a contract to negotiate and agree to just about anything: how and when artists are paid, how commission are calculated, how rights are transferred or licensed, who files and pays for visa petitions, how royalties are calculated, whether the artist gets still or sparkling water in the dressing room, liability, insurance, benefits, salaries—the list is practically endless. However, there are certain instances—albeit rare—when a contractual term will be rendered void or unenforceable. Such instances include:

(1) When a contract either requires a party to do something which would be illegal or refrain from doing something which they have a legal obligation to do.

(2) When a contract term violates an existing law or policy which courts have decided cannot be altered.

Contracts are governed by state laws. In this case, most state laws (particularly the State of New York) will not enforce a non-compete agreement which a judge determines to be “unreasonable” or “over-reaching”—even if the parties agree to it. Reams and reams of case law have determined that prohibiting an ex-employee from working with current clients of the employer is reasonable, but only for a reasonable amount of time—such as a year or two (sometimes longer depending upon the specific circumstances.) However, unless an ex-employee was also the CEO or President of the company, prohibiting an ex-employer from being able to work in the industry in which they earn a living is considered inherently un-reasonable and never enforceable. Simply put, no employer ever has the right to force an ex-employee to move to a different state, change careers, or be rendered unemployable. If the situation were otherwise, too many employers could use the threat of termination to induce or force employees to sign unreasonable non-compete agreements.

As far protecting the confidential or propriety information of an employer, a court will enforce such an agreement provided the information was confidential or proprietary to begin with. Under the Law of Agency, when someone represents someone else, all information belongs to the person they represent. With regard to the arts and entertainment field, any information pertaining to an artist—engagement agreements, the names and contact information of any venues or presenters a manager or agent has contacted on behalf of the artist, the terms of any engagements under negotiation or discussion, etc—all belong to the artist, not the artist’s manager or agent. Moreover, names and addresses are never “proprietary.” The term “proprietary” refers to something unique created or invented by an employer and specific to that employer—such as the colonel’s secret chicken recipe, internal operating procedures or budgets, mark ups, etc. Simply because a manager or agent writes down the name and address of a venue does not make it proprietary. To be sure, an employee, much less an ex-employee, is never permitted to take the physical property or download the files of an employer. However, if something such as names and addresses can be found elsewhere—such as on the internet, in a published list, or is otherwise publically available—then you are free to compile your own list of such information.

As for not being able to book or contact any venues or presenters where you booked artists for a former employer, once again, whether or not this would be enforceable would depend on the “reasonability” of the restriction. If were are talking about a prohibition against contacting particular venues in a particular region for a reasonable period of time, that would probably be enforceable. However, if enforcement of such a restriction would prohibit you from being able to book any artists at any venues in the United States or world-wide that would never be enforceable.

It’s frustrating enough when an artist leaves a roster—its even more so when a trusted employee quits and takes an artist with them. In a highly competitive and risky business, its understandable that artist managements and agencies are looking for ways to protect their interests and livelihoods. However, draconian contracts, strong arm tactics, and paranoia, though frequently embraced, are never appropriate or productive solutions.

Just because an agreement may be unenforceable does not mean you should sign it anyway. An angry and emotional ex-employer may still try to enforce it, requiring you to spend legal fees and court costs getting a judge to throw it out of court. You never want to enter into any agreement knowing at the outset that it will lead to a lawsuit—even if it’s a lawsuit you believe you will win. Certainly, if you are ever asked to sign such an agreement as a condition of employment, run away. However, if your current employer is insisting that you either sign or face unemployment, and a calm discussion offering reasonable restrictions and alternatives falls on deaf ears, you may have no choice but to run the red light and tear up the ticket later.

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For additional information and resources on this and other legal and business issues for the performing arts, visit ggartslaw.com

To ask your own question, write to lawanddisorder@musicalamerica.org.

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THE OFFICIAL DISCLAIMER:

THIS IS NOT LEGAL ADVICE!

Tags:agent, Agreements, artist, artist management, contract, Contracts, engagements, lawsuit, management company, manager, negotiation, New York, presenter, work
Posted in Agents, Artist Management, Contracts, Employees, Law and Disorder: Performing Arts Division | Comments Closed

Whose Lawsuit Is It Anyway?

Thursday, October 30th, 2014

By Brian Taylor Goldstein, Esq.

Dear Law and Disorder:

I’m dealing with a presenter who wants to cancel two weeks out due to poor ticket sales. While it’s not a huge engagement fee, my artist has already contracted its performers and paid out expenses for the date as its part of a bigger tour. I have a cancelation clause in my contract and I’ve explained what canceling would mean and that the presenter will be on the hook. However, he still wants to cancel. Its been a rough year and I can’t afford legal counsel. Do you have any suggestions?

At least the presenter is not trying to claim that poor ticket sales constitutes an act of God. While I am familiar with many organizations whose strategic plans require some degree of divine intervention to stay operational, God rarely takes an interest in ticket sales.

If you have a cancellation clause in your contract, then that will govern the legal remedies for the situation. Contractually, the presenter either has the option of either proceeding with the engagement or cancelling and abiding by the terms of the cancellation clause (which, I am hoping, spells out how much the artist is owed in the event of cancellation). If the presenter elects to cancel, but refuses to honour the terms of the cancellation clause, that would constitute a breach of contract…which really just gives the artist the right to sue the presenter, obtain a judgment, and, hopefully, collect the judgment. Whether or not attorney fees, interest, or court costs would also be part of the judgment depends on the terms of your contract as a judge has no authority to awards such costs unless the contract requires them. However, regardless of the terms of your contract, a lawsuit should always be the last resort under any circumstances.

Have you tried discussing with the presenter any solutions for increasing ticket sales or promoting the performance? Does your artist’s shows typically sell at the last minute? Has the artist ever performed in this market before? Don’t presume the presenter knows its own market or how to sell your artist in that market better than you do. You may have ideas for selling tickets that the presenter has not considered.

Is the person you are dealing with the final decision maker in the organization? If not, don’t hesitate to go over their head. Don’t threaten—just do it! If the presenter is a non-profit organization, then even the president or executive director reports to the board of directors. Contact the board president or an officer of the board. Often board members are far less cavalier about breaching contracts than an organization’s administrative staff. Its very possible that the board doesn’t even know about the situation as many presidents and CEOs are quite proficient at keeping their boards on a need-to-know basis.

If the presenter refuses to honour the cancellation clause, resist the urge to scream, threaten anyone’s reputation, or toilet paper the venue. While tempting, those options rarely work and will almost always make the situation worse. Ultimately, the decision as to whether or not to file a lawsuit, along with costs and expenses of filing the lawsuit, belong to your artist, not to you. Regardless of whether or not you signed the contract, if the contract is between the presenter and your artist, then all legal claims belong to the artist and only the artist can file a lawsuit and appear in court. You should not be paying or incurring any legal fees out of your own pocket. Unless you, too, are operating as a charitable institution, if the artist wants to pursue a lawsuit, that is their cost burden to bear, not yours.

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For additional information and resources on this and other legal and business issues for the performing arts, visit ggartslaw.com

To ask your own question, write to lawanddisorder@musicalamerica.org.

__________________________________________________________________

THE OFFICIAL DISCLAIMER:

THIS IS NOT LEGAL ADVICE!

Tags:act of god, administrative staff, artist, board member, board members, breach, breach of contract, cancellation, cancellation clause, Contracts, judgment, lawsuit, performer, poor ticket sales, presenter, reputation, venue
Posted in Acts of God, Agents, Artist Management, Arts Management, Contracts, Law and Disorder: Performing Arts Division, Liability, Presenters, Venues | Comments Closed

When Non-Payment Is A Crime

Wednesday, September 24th, 2014

By Brian Taylor Goldstein, Esq.

Dear Law and Disorder

Our group got a bad check from a venue for a performance. We called them and they sent us a new check, but that bounced, too. Now they won’t return our phone calls. Is there anything we can do?

Many venues, especially smaller non-profits, wrongly believe that if they run out of money and can’t pay their debts, then that is simply the unfortunate consequence of “doing the best they can in a difficult economy” and they are “judgment proof.” I once even had an artistic director of a deadbeat presenting organization tell me that, although they were unable to pay the money they owed my artist, the artist had already been paid ten-fold in goodwill and the joy they brought to the audience. Try to pay a landlord with love and goodwill and see how far that gets you!

Almost every state has a statute that allows a person who receives a bad check to sue the issuer of the check and not only receive two to three times the value of the check, but to recover attorneys fees and court costs as well. While its true that suing an organization that has no money is often a waste of time and money, passing a bad check falls into a category of its own. Its bad enough not to pay an artist for a performance (which is always a crime in my book), but most states also makes it a criminal offense to write a bad check. The value of the check will determine whether the crime constitutes a misdemeanor or a felony. You will want to do some research on the laws in your particular state.

Writing a bad check is also considered a personal tort (legalese for “offense” or “a bad thing which you can be liable for doing”) and the person who signed the check is NOT protected from liability or prosecution even if they were acting on behalf of a corporate organization. In other words, the individual who signed the check can be personally sued…or even arrested…even if they were an officer, employee, board member, or volunteer or the organization.

While these can be important tools, your first step should never be to file a lawsuit or run to the police. Besides, both civil and criminal laws require some form of “intent” on the part of the issuer of the check such that there is no liability for inadvertently writing a bad check or where the check merely crossed with the available funds. However, the issuer must immediately provide payment upon notice that the check was returned.

If the venue is not returning your calls, then write them a formal letter. (I am always surprised by the number of artists, agents, and presenters who believe that email—or even text messages—is an appropriate method for conducting business communications of a contentions or delicate nature. Step away from the electronic device!) If necessary, send letters to the Chairman of the Board or to individual officers. You may want to remind them of their exposure to personal as well as criminal liability. If they continue to ignore you or fail to make payment, then you have written proof of their intent not to honour the check. You will now need to consider whether to contact a local attorney, file a claim in smalls claims court, or contact the prosecutors office in the city or town where the venue is located. Also, in the future, especially when dealing with venues with whom you have never worked before, I would urge you to ask for deposits that are at least sufficient to cover your actual costs and out-of-pocket expenses in the event of cancellation or non-payment.

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For additional information and resources on this and other legal and business issues for the performing arts, visit ggartslaw.com

To ask your own question, write to lawanddisorder@musicalamerica.org.

__________________________________________________________________

THE OFFICIAL DISCLAIMER:

THIS IS NOT LEGAL ADVICE!

Tags:agent, artist, Brian Taylor, cancellation, debts, Goldstein, judgment, lawsuit, Liable, money, payment
Posted in Agents, Artist Management, Arts Management, Contracts, Law and Disorder: Performing Arts Division, Liability | Comments Closed

Opening Pandora’s Box

Thursday, September 4th, 2014

By Brian Taylor Goldstein, Esq.

Dear Law and Disorder:

Loved your recent Musical American newsletter article on ethics. As a manager, I was very interested when you wrote: “Indeed, the time is long overdue to start considering changes to the long standing paradigms and business models between managers and artists that, for many reasons and for all parties, are no longer viable.” Any chance I could get you to expand on that comment a bit?

Must I? It’s only going to get me in trouble! Oh, well, here goes….

It’s hardly a secret that everyone throughout the arts industry is working harder and harder and earning less and less—and searching for both solutions and as well as excuses. Managers and agents are increasingly becoming frustrated with artists who they perceive as making unreasonable expectations and demands in exchange for paltry commissions. Artists are increasingly becoming frustrated with managers and agents who they perceive as earning large commissions but are unable or unwilling to provide the additional skills and services that they feel are necessary in today’s arts and entertainment marketplace.

While some managers are exploring different options (ie: fixed retainers, hourly rates, reduced commissions for more successful artists, etc.) others are wedded to the strict commission model. As I sit here typing this on my computer keyboard surrounded by my collection of quills and antique ink wells, I am the first to admit that I am a staunch traditionalist, resistant to change, and have even been described as “a walking ritual.” However, change is inevitable and merely continuing to claim that what worked in the past will work in the future, ignores the present realities. Assuming that there is some sort of “industry standard” that has and will survive the test of time is both unrealistic and short sighted.

Under the traditional agent or management relationship, managers and agents literally advance their services on the expectation that they will be compensated with an engagement commission at some point in the future and that, if the artist sticks around long enough and is successful, the agent or manager will recoup the initial investment of their time and efforts. While it’s intended to be a mutually beneficial partnership, is this still the case? Are the risks still equitable? While most certainly there are issues to consider far beyond mere economic and business challenges, being an impresario doesn’t always pay the bills. Part of what makes the performing arts industry so unique is the personal passion most agents and managers share for the work of the artists they represent. Nonetheless, even where the goal is to introduce an artistically important artist to new audiences and perpetuate critical art forms, selling tickets, booking engagements, and discovering new programming opportunities are all commercial enterprises. If the end result is that managers and agents simply cannot afford to stay in business, then everyone loses.

One often overlooked factor is that agents and managers are not used to thinking of their time as a valuable commodity. However, like attorneys, doctors, and others who provide personal services, managers and agents are primarily “selling” their time, expertise, and experience and the traditional commission model doesn’t often adequately compensate for the value of the time actually spent. Similarly, because artists think in terms of results, they often don’t have a realistic understanding of how much time and effort it takes to provide them with the services and results they require and often conclude they can find better deals elsewhere or on their own. In other words, a manager’s own success can often undermine the perception of how hard they are actually working.

It’s one thing for an agent or manager to advance their time, but I’m also increasingly seeing agents and managers advancing their own money to cover artist expenses with the expectation of being reimbursed by the engagement or tour fees. When did an agent or manager’s business plan including being a bank? I’ve even seen many managers and agents advance costs for airline tickets or tour expenses, including visas and taxes, out of their own pockets only to have the tour cancelled or an artist leave the roster. At what point is a tour or artist not worth saving?

All of this leads to some important questions: is a demanding artist actually “worth” the time and effort that they require? How do you deal with a demanding client base without killing yourself? Is the commission model still viable? What services do artists really want, need, or expect? (Remember, at least from a legal perspective, the “client” of an agent or manager is always the artist, never the venue.) Is there a more efficient or cost effective way of providing those services? Are managers and agents spending too much time learning new skills at the expense of focusing their time on those areas where they already have expertise? While in many instances, the traditional an arrangement is the only way a new or young artist can afford management or an agent, does this arrangement continue to make sense with more established and successful artists? Does it ever make sense for an agency or management company to become overely dependent upon commissions from top artists to underwrite the less successful artists on the roster? Are there other viable options to earning revenue than simply charging higher commissions? Hourly rates? Retainers? Fixed fees? Merging smaller agencies and companies into larger and larger behemoths? Are there different arrangements that might better serve artists as well as agents and managers?

While I obviously have my own thoughts and opinions on these topics, they would hardly be dispositive or universally applicable. There is never going to be a single solution that works for everyone and, ultimately, each agency or management is going to need to develop different solutions that work for them, their business plans and goals, and their artists. Still, I’d love to see more serious consideration and exploration of these topics on multiple levels. Frustratingly, whenever I am a party to workshops and discussions about “new business models”, it almost inevitably winds up being a discussion of how to “sell” artists to presenters and, rarely, if ever, an honest assessment of the field of management and artist representation itself. In other words, the focus of exploration tends to be outwards—how to sell better, package better, market better, and, in short, reach venues and presenters in different ways. While those issues are unquestionable important, there remains a perception that it’s the marketplace that needs to fixed. If you really want to examine new paradigms in a changing environment, agents and managers, as well as artists and presenters, will also need to look inwards and examine themselves as well.

Have a great season everyone!

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For additional information and resources on this and other legal and business issues for the performing arts, visit ggartslaw.com

To ask your own question, write to lawanddisorder@musicalamerica.org.

__________________________________________________________________

THE OFFICIAL DISCLAIMER:

THIS IS NOT LEGAL ADVICE!

Tags:agent, artist, Brian Taylor, commissions, engagements, Goldstein, management company, manager, Paradigm, personal services, presenter, risk, Tour, venue, work, young artist
Posted in Agents, Artist Management, Contracts, Law and Disorder: Performing Arts Division | Comments Closed

Is Ethics Only In The Eye Of The Beholder?

Thursday, July 17th, 2014

By Brian Taylor Goldstein, Esq.

Dear Law and Disorder:

An artist we have been representing for over 10 years just told us that he is leaving our roster and will be joining the roster of another management company. We didn’t have a written agreement, but we’ve never needed one as we’ve always believed that if you act ethically and professionally, others will do the same. While we think the artist is making a mistake, we are not interested in arguing his right to leave and want to make the transition amiable. The artist has agreed to honor our commissions for the dates we have booked. However, the question has come up as to whether we are obligated to give the artist all of the leads and contacts we have been pursuing on his behalf that have not been booked yet. That doesn’t seem fair. We have been working on some presenters for years, have invested a lot of time, and consider that to be our proprietary information. If we turn all of that over to his new manager, that’s just going to be a gift to the new manager who will follow up on all of our work and take the commissions. Are there any laws about this? If I am legally required to turn over all of my work, is there a way I can still refuse unless the artist agrees to pay me?

I’m glad to hear that you are “not interested in arguing his right to leave” as, without a written contract, there is nothing to argue. The artist has the right to leave whenever he wants. As for the issue of the artist’s right to the leads and contacts you have been pursuing on his behalf, even if you had a written agreement, it wouldn’t help you get the outcome you want.

Yes, there are laws that govern this scenario, but be forewarned: you aren’t going to like them.

Legally, anyone who represents someone else (attorneys, realtors, accountants, employees, artist agents and artist managers, etc.) are all considered “agents”. The people they work for are called “principals.” The Law of Agency governs the relationship between agents and principals. While the Law of Agency imposes duties on both agents and principals, for purposes of this discussion, there are four key concepts:

(1) An agent works for the principal and, while the agent can advise the principal, the agent must follow the instructions and directives of the principal.

(2) An agent can never put his or her own interests above that of the principal.

(3) All of the “results and proceeds” of the agent’s work on behalf of the principal belongs to the principal.

(4) Any contractual provision, written or oral, that contravenes rules (1) – (3) is null and void.

In short, when a manager represents an artist, the manager has no proprietary information. In other words, those aren’t your leads and contacts, they are the artist’s. While your leads and contacts may start out as your own, once you contact someone on behalf of an artist, the artist is legally entitled to know anyone you have spoken to on his or her behalf, including the details of such conversation. Moreover, unless there is an agreement to the contrary, the artist is also free to contact anyone directly on his own behalf. While I realize, at the outset, this might seem unfair, bear in mind that the Laws of Agency were designed to protect the agent in that, by complying with such laws, an agent is not liable for the actions of the principal. That’s important if an artist decides to cancel a date or breach a contract you negotiated. It is also important to know that, when entering into a relationship with an artist, the Laws of Agency do not prohibit you from negotiating whatever fees and payment terms you believe will compensation you for your time. You are not limited to seeking commissions on booked dates. Assuming the artist agrees, you can ask for commissions on potential dates as well as confirmed dates, repeat clauses, hourly fees, retainer payments, or any formula or terms that the parties agree to. (Indeed, the time is long overdue to start considering changes to the long standing paradigms and business models between managers and artists that, for many reasons and for all parties, are no longer viable.) However, if all you ask for is commissions based on booked dates, and there is no agreement, written or oral that entitled you to anything else, then there is no right to commissions based on dates “in the works” regardless of how much time and effort you have spent.

Despite a legal requirement to turn all leads and prospective dates over to the artist, you ask whether or not you can nonetheless “refuse unless the artist agrees to pay me.” Sure. You can always just refuse and force the artist either to spend the time and money to sue you, pay you for disclosing the leads and contracts, or sulk away angrily letting you keep what you believe—albeit, incorrectly—is rightfully yours. People refuse to honor legal obligations all the time. In fact, you may yourself be familiar with presenters who cancel dates and refuse to honor full-executed and legally binding engagement contracts claiming such things as “poor ticket sales” or “lack of funding.” Over the years, this blog has been replete with such tales and you can imagine the cries of “unethical” and “unprofessional” that arise from the managers who booked those dates.

You seem to be suggesting that, while you believe in acting ethically and professionally, you are also more than willing to consider acting unethically and unprofessionally if it is to your advantage to do so. I’m all for self-delusion, in fact, its one of my own cherished survival skills, but don’t confuse that with ethics.

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For additional information and resources on this and other legal and business issues for the performing arts, visit ggartslaw.com

To ask your own question, write to lawanddisorder@musicalamerica.org.

__________________________________________________________________

THE OFFICIAL DISCLAIMER:

THIS IS NOT LEGAL ADVICE!

Tags:agent, artist, artist manager, attorney, breach, Brian Taylor, commissions, contract, Contracts, contractual provision, engagement contract, Goldstein, lawsuit, legal obligations, Liable, management company, payment, poor ticket sales, presenter
Posted in Agents, Artist Management, Contracts, Law and Disorder: Performing Arts Division | Comments Closed

When Is A “Work For Hire” Not A “Work For Hire”?

Thursday, July 10th, 2014

By Brian Taylor Goldstein, Esq.

Dear Law and Disorder:

An orchestra commissioned one of our artists to make an arrangement of a work for them to perform. We agreed that it would be a “work for hire.” Now, the orchestra wants to record their performance of the arrangement and has come to us asking for the artist’s permission. It was my understanding that a “work for hire” meant that the orchestra owned it. Is that not the case? If they own it, why are they asking us for permission? If they record it, can the composer still ask for royalties even though the commission agreement stated it was a “work for hire?” What am I missing?

You’re not missing anything. You are absolutely correct that when a commission agreement expressly states that the commissioned work will be a “work for hire”, then the commissioner owns it. In which case, the composer isn’t entitled to anything beyond the commission fee.

Apparently, however, the orchestra doesn’t understand what a “work for hire” means. The orchestra was either using a commission agreement template they didn’t understand or believed that the term “work for hire” meant they were hiring someone to do work. Regardless, playing with templates and “legalese” is like self-medicating—someone always winds up in the ER.

If the orchestra has come to you of its own volition asking for the artist’s permission, then I would offer to grant permission in exchange for a mechanical license or other appropriate royalty. If they agree, then you have just obtained royalties for your artist that he or she would not otherwise be entitled to. Just because the orchestra legally owns the arrangement doesn’t mean that it can’t make a subsequent and legally binding agreement to pay royalties to your artist even though they are currently under no obligation to do so. Would you be taking advantage of the orchestra’s misunderstanding if the rights it already has? Perhaps, but I would submit that keeping any royalty to the statutory minimum and allowing the artist to obtain what should have been negotiated in the first place mitigates the karmic debt. Besides, rationalization and self-delusion are among the vital cornerstones of the arts industry.

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For additional information and resources on this and other legal and business issues for the performing arts, visit ggartslaw.com

To ask your own question, write to lawanddisorder@musicalamerica.org.

__________________________________________________________________

THE OFFICIAL DISCLAIMER:

THIS IS NOT LEGAL ADVICE!

Tags:artist, Brian Taylor, composer, Goldstein, license, mechanical license, music, orchestra, permission, royalties, royalty, work
Posted in Artist Management, Arts Management, Contracts, Copyrights, Law and Disorder: Performing Arts Division, Licensing, Music Rights, Publishing, Recordings | Comments Closed

But I Don’t Want To Be A Producer!

Thursday, June 19th, 2014

By Brian Taylor Goldstein, Esq.

Dear Law and Disorder:

We have booked one of our artists to perform at a venue. As we are the agent, our booking agreements are always between the venue and the artist, and we sign on the artist’s behalf. However, the presenter is insisting that, if we want to sign the contract and receive the engagement fee, as we do, then the contract must be between them and us. Is this correct?

If you are “producing” the artist—that is, you are being paid a fee by a presenter or venue to hire the artist and produce the performance—then, yes, the presenter is correct. However, if, as you say, you are the artist’s agent, then you are absolutely correct and the presenter is…well, confused.

Producers are paid a fee to provide the services of an artist. Typically, the producer will either accept a fee, use a portion of that fee to pay the artist, and pocket the difference; or invest his or her own money to hire the artist, and then keep the box office or other profits from the performance. Either way, a producer accepts a substantial amount of risk in exchange for a greater return. However, merely accepting payment on behalf of an artist, deducting your commission, and then paying the balance to the artist does not make you a producer. It doesn’t matter whether or not you use the word agent or producer in the contract. Rather, it all comes down to how the booking contract is phrased:

X is a Producer:

“Venue X enters into this Agreement with Agent Y to produce and provide the services of Artist Z”

X is an Agent:

“Venue X enters into this Agreement with Artist Z for Artist’s services, by and through Artist’s Agent Y”

Anyone who books a date on behalf of an artist, whether as a manager or as a booking agent, is working for the artist. The artist is your client. In legal parlance, the artist would be referred to as the “Principal” and the agent would be referred to as…get ready for it…the “Agent.” Under the Law of Agency (not to be confused with various state licensing requirements for booking agents—that’s something completely different), agents (ie: someone who acts for and on behalf of someone else) owe a variety of duties to their principals, including duties of loyalty, duties of care, and fiduciary duties. In exchange, agents are not liable for the contractual breaches of their principals, even if the agent negotiated the contract on behalf of the principal. This is important. If the artist decides to cancel at the last minute or otherwise causes damages to the venue or presenter, the agent is not liable whereas a producer would be liable…provided, however, that the agent did not inadvertently make themselves a party to the contract and agree to “present or produce” the artist. A booking contract, then, should always be between the presenter/venue and the artist. As the artist’s agent and representative, you can absolutely sign on behalf of the artist as well as accept money on behalf of the artist. However, the contract is between the presenter/venue and the artist.

I suspect your presenter is either suffering from the “That’s the way we have always done it” disease or the more common affliction of “I don’t know what I am talking about but will insist I am right.” It also could be a fatal case of “We are affiliated with a large university and must abide by arbitrary and inflexible rules that do not apply and no one understands.” Regardless, if they insist on having the artist sign the contract, I really don’t have a problem with that. In fact, in many ways, I actually prefer it as it eliminates the ability of an artist to come back to you later and claim they never approved the terms of the engagement. However, even if the contract is between the venue and the artist, the contract can still provide for you to receive all of the payments on behalf of the artist. Some battles aren’t worth fighting.

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For additional information and resources on this and other legal and business issues for the performing arts, visit ggartslaw.com

To ask your own question, write to lawanddisorder@musicalamerica.org.

__________________________________________________________________

THE OFFICIAL DISCLAIMER:

THIS IS NOT LEGAL ADVICE!

Tags:agent, Agreements, artist, booking agreement, breach, breaches, Brian Taylor, contract, damages, fiduciary duties, Goldstein, Liable, manager, payment, presenter, risk, university, venue
Posted in Agents, Artist Management, Arts Management, Contracts, Law and Disorder: Performing Arts Division, Liability, Venues | Comments Closed

Musical America Blogs

Archive for the ‘Contracts’ Category

The Damaging Truth About Cancellation Damages

The Divine Right To Cancel

Presenting: What’s In A Name?

“Leave Here and You Die!” Unenforceable Non-Compete Agreements

Whose Lawsuit Is It Anyway?

When Non-Payment Is A Crime

Opening Pandora’s Box

Is Ethics Only In The Eye Of The Beholder?

When Is A “Work For Hire” Not A “Work For Hire”?

But I Don’t Want To Be A Producer!

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