Posts Tagged ‘fiduciary duties’

Are You Being Served?

Thursday, June 11th, 2015

By Brian Taylor Goldstein, Esq.

Dear Law and Disorder:

You frequently mention that the artists are our clients, but aren’t the presenters our clients, too? If an artist is acting unreasonably or is going to do something which we know will negatively impact the presenter, we can’t afford to alienate or lose a relationship with the presenter over one artist. We will need to work with them in the future.

No one can serve two masters. The artists are your clients. The presenters are your customers. When you are in the business of representing others—whether its in real estate, law, insurance, investment, business transactions, or the performing arts—this is an important distinction to understand: while you need to be polite and professional to your customers, you owe allegiance to your clients.

Think of it this way: I have a friend who manages one of the perfume counters at Saks in New York. He works directly for the perfume distributor and, as such, his job is to sell as much of his products as he can. He knows his product line, represents it well, and offers impeccable customer service. If a shopper wanders by, his job is to turn the shopper into a customer by enticing them with the signs, smells, and quality of his products. However, what if the shopper doesn’t want or like his brand? What if they are allergic to the smell of Eggplant Noir or they find the name “Evening in Hoboken” is less than enticing? My friend smiles and lets them wander over to Guerlain or Jo Malone. He remains true to his products even if it means losing a customer.

As managers and agents, it is in everyone’s interest—both yours and your artist’s—to provide the best customer service possible to presenters and venues. First and foremost, it makes good business sense. A manager’s or agent’s professional relationships are among the most valuable asset he or she provides to an artist. Second, the arts community is quite small and the shoe you step on today may be the one you have to lick tomorrow. Nevertheless, as an artist manager or agent, you legally owe a duty to the artists you represent to act only in the artist’s best interest, not your own, and to take no actions that would advance your own interests at the expense of your artist. These, among other duties—such as fiduciary duties and duties of care—are legally implied in every manager/agent relationship with an artist—even where no formal contract exist. In fact, the law considers these duties so important, that any attempt to have artists waive them in a contract are considered void and unenforceable.

Admittedly, this can often pose some frustrating conundrums for managers and agents—especially in situations where an artist directs you to withhold important information from a presenter or directs you to take action that you know could harm the presenter and harm your own relationship with the presenter. This can include anything from performing without the necessary licenses or visas to intending to skip out on a residency activity they didn’t want to do in the first place by feigning illness. Should such circumstances arise, then your duty is to advise your artist against the foolishness of his or her plans. However, if the artist persists, and you believe that your own professional relationship with the presenter would be imperiled, then your only legal course of action is to drop the artist from your roster. Anything else—such as giving the presenter a “head’s up”—would be a legal breach of duty. If you would prefer a role where you are legally allowed to act in your own best interest at the expense of all others, start a record label or become a producer.

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For additional information and resources on this and otherGG_logo_for-facebook 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!

 

 

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 otherGG_logo_for-facebook 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!

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!

 

 

A Manager’s Deposit of Trouble

Wednesday, July 17th, 2013

By Brian Taylor Goldstein, Esq. Dear Law and Disorder: We are a small classical music presenter. Several months ago, I booked an artist for a performance this fall. Recently, I received a phone call from the artist’s manager asking for a deposit. Usually, we don’t pay deposits, although, sometimes we will if it’s an artist or manager with whom we have never worked before. However, we’ve worked with this manager before and she’s never asked for a deposit before. When I asked her about it, she said that she (the manager) was having a slow summer and that she needed the money to give her some cash flow to “tide her over” until the fall. She threatened to cancel if I didn’t agree. Is this legal? As a general rule, I’m a big fan of deposits. They provide artists with some “leverage” in the event of a cancellation and they provide presenters with some assurance that an artist has, in fact, been “booked.” However, once all key terms have been negotiated and agreed upon, whether or not a written booking agreement has been signed, then a manager cannot retroactively “require” a deposit. The requirement of a deposit is a key term which needs to be discussed, negotiated, and agreed upon at the outset of discussions. If the artist were to cancel because you refused to pay a deposit you never agreed to pay in the first place, then the artist would be in breach of the booking agreement. But that’s not really the problem here. The problem is that the manager volunteered that she was asking for the deposit not for the benefit of the artist, but for the benefit of the manager herself. It would be different if the manager wanted the deposit to reserve airline tickets or advance costs to cover the artist’s out-of-pocket expenses. However, according to you, that’s not what the manager said. She said she wanted it to “tide her over” for the manager’s own cash flow purposes. Based on that statement, and her subsequent threat to cancel if you refused to pay the deposit, the manager’s actions are not only unethical and unprofessional, in my opinion, but, more importantly, highly illegal. Managers and agents are legally bound to act only on behalf of and in the best interest of their client (the artist) and not on behalf of themselves or anyone else. In legal terms, these obligations are called “fiduciary duties.” Managers and agents can take no actions which are not authorized by the artist and most certainly cannot treat the artist’s money as if it were their own—including asking for and using deposits to float themselves loans to cover their own cash flow needs. This is why, among other reasons, managers and agents are supposed to keep their own, personal operating accounts separate from their client’s (artist’s) accounts. This should not be confused with legitimate situations where managers and agents sometimes ask presenters to split an engagement fee into two payments and pay a commission fee directly to the manager or agent and the balance to the artist. While I find this to be an ill-advised and awkward business practice, it’s neither illegal nor unethical. While I suppose its entirely possible that, in this case, the manager was acting with her artist’s knowledge and authority, I seriously doubt it. This means that the manager was acting out of her own self-interest and not in the best interest of her artist, is in breach of her fiduciary duties, is no longer acting in her legal capacity as a representative of the artist, and, in the event of a cancellation, would be personally liable for the return of the deposit and any damages. Given the manager’s self-admitted cash flow problems, that’s probably a risk you don’t want to take. I’d like to think that the manager is acting out of a genuine confusion over the duties agents and managers owe to their artists. Sadly, this issue continues to confuse even experienced managers and agents who believe that their artists work for them and not the other way around. Regardless, in terms of red flags, this one is ten feet tall and on fire. Run away! __________________________________________________________________ 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. __________________________________________________________________ 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!

How Do I Draft An Engagement Agreement For My Trio?

Wednesday, May 16th, 2012

By Brian Taylor Goldstein

Dear FTM Arts Law,

I am a manager who will be writing contracts on behalf of a trio. They don’t have a corporation and there is no “leader.” They just get together and perform together. How do I handle their engagement fees so that I do not look like their employer? None of the three wants to collect the money on behalf of the others. So, that leaves me to disperse the money.  I know I must be careful not to appear as a producer or employer, so I want to be sure that I write my contracts properly, as well, handle the payment of fees.  So, when writing the actual contract, do I make it out between all three musicians and the presenter?  What if one of them is paid to his/her corporation? Does this make sense?

This makes absolute sense…and the answer is pretty easy! You want each engagement contract to be between the presenter and each of the individual members of the trio. Something like this: “Presenter hereby engages Musician 1, Musician 2, and Musician 3 to perform at ___________.” The same engagement contract would also specify that the engagement fee would be paid directly to you “as the agent of Musician 1, Musician 2, and Musician 3.” You can even sign the engagement contract, provided it is clear that you are signing “as the agent of Musician 1, Musician 2, and Musician 3.” (I know, you said you were their “manager”, but “manager” is a title that describes your duties. For purposes of determining liability, fiduciary duties, and other legal obligations, managers and agents are both legally considered to be “agents”).

Once you collect the fee, you can pay each of the artists directly. For you purposes, it doesn’t matter whether you pay an artist individually or pay the artist’s corporation. Nonetheless, you must issue a 1099 for the FULL FEE. In other words, if the total engagement fee is $3000, and you take a 20% commission, and everything is split evenly, then you would pay each artist $1000 and deduct a commission of $200 from each payment—but you would also issue a 1099 to each artist for $1000. Why? Because you are working for the artists, they are not working for you. If you don’t want to be perceived, either for liability or tax purposes as their employer or producer, then you need to set up the transaction so it is clear that it is the artists are paying you and you are not paying them. Technically, each artist should issue you a 1099 to reflect that they paid you a commission of $200. However, in my experience, as artists are even more adverse to paperwork and forms than managers and agents, it is highly unlikely that the artists will actually issue you the 1099. It doesn’t matter. You would hardly be the first person who received a payment without an accompanying 1099.  So long as you have issued a 1099 to each artist for $1000 and report your commissions on your income taxes, you are fine. It may drive your accountant a bit nuts, but they’ll deal with it!

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For additional information and resources on this and other legal and business issues for the performing arts, visit ftmartslaw-pc.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. FTM 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.

__________________________________________________________________

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!