Musical America Blogs

By Brian Taylor Goldstein, Esq.

Dear Law and Disorder

I am considering working with an agent, but almost every agent I speak with wants to collect my engagement fees on my behalf. Why can’t I collect my fees and just pay the agent? If an agent collects my fees, should I ask for a separate bank account? What about statements? Is it reasonable to ask for monthly accountings? When do I get paid? What’s standard?

As the artist’s representative, its quite common for an agent or manager to accept fees on behalf of an artist. Among other reasons, it allows you to focus on your performances, especially when touring, while allowing your agent to follow up on contracts, payments, and other logistical issues. However, just because a practice is “common”, that does not make it mandatory.

Should you agree to permit a representative to collect fees on you behalf, agents and managers are subject to state “agency laws” which impose certain obligations and duties. (Agency laws should not be confused with “licensing” requirements. Agency laws govern any relationship where one party acts on behalf of another and apply regardless of licensing requirements.) Pursuant to most state agency laws, when an agent or manager accepts fees on your behalf, its your money, not theirs. They must hold the money “in trust” until it can be turned over to you. As such, agents have a fiduciary obligation to treat that money separately from their own. If the parties mutually agree, the agent can deduct his or her commissions, as well as any other expenses, but the balance of the money belongs to you and the funds must never be co-mingled with the agent’s own money.

While an agent is not necessarily required to keep an artist’s money in a separate bank account, it’s a highly advisable business practice for an agent to maintain a separate trust account to hold the fees collected on behalf of all of the artists on their roster. This protects both the agent as well as the artist. For one thing, an agent is legally required to account for all money collected and held on behalf of an artist. Placing the money into a separate trust account not only makes such accountings easier, but also helps to ensure than an artist’s money doesn’t accidentally get co-mingled with the agent’s own money. For instance, when an agent collects an engagement fee, the fee should go into the agent’s trust account. If the agent is owed a commission, the agent can transfer the commission from the trust account into the agent’s personal account. This is especially important in the case of deposits. In the event an engagement is cancelled, a deposit may need to be returned. Having the money held in a separate trust account ensures that the funds are not prematurely dispensed, for which both the artist and agent could be liable.

As for whether you should demand your own, personal trust account, that’s probably overkill. Even attorneys are not required to do that. Provided the agent keeps accurate books and records, its perfectly acceptable for an agent to have a single trust account where all of the fees collected on behalf of agent’s artists are kept separate from the agent’s own business accounts. It’s then a simple matter of bookkeeping to determine which money belongs to which artist.

As for whether you should ask for monthly accountings, you should definitely ask for accountings as agents are legally required to provide them. Whether or not “monthly” is reasonable depends on the specific circumstances. If you are performing monthly, then monthly may be appropriate. Otherwise, quarterly may be more reasonable. Many agents will provide an accounting each time you are paid, as opposed to at fixed intervals.

Always remember: nothing is “standard.” Agents and managers work for you, not the other way around. You have a right to ask for whatever terms and conditions you want. Of course, that doesn’t mean they have to agree, but being able to post questions and have your concerns respected and reasonably addressed, even if you don’t get the answers you want, is key to determining whether or not to pursue an agent relationship.

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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.

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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!