Representing talent



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ENTERTAINEMENT LAW OUTLINE- Fall 2004


REPRESENTING TALENT




    1. A BUSINESS OF INTERMEDIARIES

  • Although many creative talents are also adept at handling the business aspects of their professional lives, professional reputation is a hallmark of the entertainment industries, in which most of the business dealings are undertaken by intermediaries.

  • Established artist will usually have a team of advisors (agent, personal manager, a business manager, an attorney).




  1. Agents

  2. Personal Manger

  3. Attorney


“BIG THREE AMONG TALENT AGENCIES”


  1. Creative Artists Agency

  2. William Morris

  3. ICM

**A number of former agents (Ovitz and Meyer) have moved from “agent” status to “player” status.



ATTORNEYS


  • Legal interests:

    • Transactional: negotiating and doing the contracts, either contingency fee or hourly rate (5% is typical)

      • Predominant dealmakers in the record and music publishing industries

    • Advice re: Potential claims & K interpretation

      • Avoiding potential claims by obtaining rights & recommending changes to reduce risk.

      • Make clients aware of ambiguities of interpretation (of Ks, statutes, precedent).
  • Advocating: handling disputes, ADR.

Is an ATTORNEY an AGENT?



  • An attorney acts on behalf of a client, which can create an agency relationship, a fiduciary duty and a duty of care. But they are NOT a talent agent.

  • If an attorney seeks or procures employment, they are acting as a talent agent (diff. From general agent and can’t do this in CA w/out a license)



ETHICAL CONSIDERATIONS:

  1. Competency

  2. Loyalty

  3. To protect client

  4. Not to assume position (adverse to?) client

  5. To use skill and prudence

  6. To exercise due care

  7. Not to accept potentially adverse employment w/out disclosing the relationship

  8. Ethics in negotiation

Several phenomena that recur during the relationship of entertainment lawyers and their clients:

  1. Percentage fee

  2. Multiple Client representation

  3. Participation in business deals with clients

    • Each of these “phenomena” are subject of professional conduct rules, where lawyer’s have fiduciary duties to their clients




  1. Percentage Fees

  • Frequently an Ent-lawyer will insist upon a fee based upon a percentage of the client’s earnings, either b/c the client is short of funds at the time the lawyer is retained or b/c the lawyer has sufficient “clout” that he or she is able to insist upon a percentage.
  • Typically the fee will be 5% to 10% of client’s gross income from matters which the lawyer works


  • Sometimes the fee will be “capped

  • A percentage fee is not illegal, but always under scrutiny.



  1. Multiple Client Representation/Conflicts of Interest

GENERALLY TWO FORMS [see also chart Dougherty handed out]:



    • Direct Conflict: Representing multiple clients in same transaction where interests are actually or potentially adverse.

      1. Solution: informed written consent after full disclosure of actual or potential problems. (CA Code 3-310(c)).

    • Indirect Conflict: Legal, business, financial, professional or personal relationship with another party in a transaction, or who would be substantially affected by the transaction, or in the subject matter of the transaction.

      1. Solution: written disclosure (CA Code 3-310(b)).



  1. PARTICIAPTION IN BUSINESS DEALS WITH CLEINTS/Conflicts of Interest

      • It is always a risk for an attorney to go into business with a client where the attorney performs legal services for the venture… if the venture turns sour, the client will frequently seek to put blame on the attorney

PROFESSIONAL CONDUCT CODE:


  1. [CA 3-300 (others are similar) A member shall not enter into a business transaction with a client or knowingly acquire an ownership, possessory, security or other pecuniary interest adverse to a client, unless each are satisfied: (1) transaction and its terms are fair to the client and are fully disclosed and transmitted IN WRITING in a reasonably understood manner (2)client is advised in writing that the client may seek the advice of an independent lawyer of the client’s choice and is given a reasonable opportunity to seek that advice and (3)the client thereafter consents in writing to the terms of the transaction or the terms of the acquisition.]


  2. Bullet Point Rule:

    1. Disclose to Client

    2. Fair & Reasonable Terms

    3. Client advised in writing to seek independent counsel

    4. Written consent to terms by client



  1. Fiduciary Duty (lawyer)

Imposed by law in confidential relationships including attorney-client.

----- Can arise even where there is no formal attorney-client relationship when the person has or should have reason to believe to rely on the lawyer (the person voluntarily assumes a position of trust and confidence).

-----Lawyer bound by the duties of fairness, good faith and loyalty


    • Croce, D Lawyer purported to advise P Croce about K whereas lawyer was repping the record company. D’s introduction as a “lawyer,” his explanation to P of the legal ramifications of the contract, his interest as a principle in the transaction, his failure to advise P to obtain outside council and the P’s lack of independent representation establish a FIDUCIARY DUTY on the part of D and a breach of that duty.

STATUTE OF LIMITATIONS WHERE THERE IS A FIDUCIARY DUTY:



    • In Croce, the SOL is six years for fraud and breach
    • Continuous Representation Doctrine”- a case in NY held that for SOL purposes a cause of action against an attorney for acts arising out of the attorney’s representation of the P does not accrue during the period of representation…various activities on client’s behalf can be seen as part of the course of continuous representation concerning the same or related legal problem.





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