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).
Several phenomena that recur during the relationship of entertainment lawyers and their clients:
Multiple Client representation
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
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.
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.
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.
Solution: written disclosure (CA Code 3-310(b)).
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:
[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.]
Client advised in writing to seek independent counsel
Written consent to terms by client
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).
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.