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Key Clauses in Management Agreements Part 3: Sunset Commissions

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Categories: Articles, Business, Management, Music Contracts, Music Industry, Royalties, Tags: , , , , , , , , , , , , , , , , , , , , , , , , , , ,

erin m jacobson, erin jacobson, music attorney, music lawyer, los angeles, music industry, managementLast time I discussed commissions in management agreements, but what may be a surprise is that management agreements often also have another kind of commission involved – one that remains after the term of the agreement is long over and the manager and artist are no longer working together.

Management agreements often have something we attorneys in the business call “sunset clauses,” which are provisions dictating that the artist must continue to pay a commission to the manager after the term of the agreement has ended. The purpose of this clause is actually for the benefit of the manager, to protect him or her from putting in a lot of work on certain projects, only to have the term end (or the agreement terminated) and not earn any commissions from those projects in which the manager invested a lot of time, effort, and possibly money. A sunset provision is not unfair in itself. If the manager has worked on certain projects for the artist, the manager should be able to share in the money earned from those projects. However like anything in life, there are limits and the sunset provision should be fair based on the circumstances.

Sunset commissions can range in the amount of the commission and the duration for which the sunset commission needs to be paid. Often management agreements dictate the sunset commission at the full rate (often 15- 20% as I explained here) and often lasting in perpetuity, which means forever. A good music attorney will negotiate this commission down both in percentage and in duration because an artist should not be paying a manager his/her full commission rate forever when the manager is not currently working for the artist anymore. Chances are the artist is probably also working with a new manager at this time and paying a full commission to that person as well. A good music attorney should also negotiate the circumstances around sunset provision and to what the commission applies.

The negotiated sunset commission may be a certain percentage for a certain period of years and then end, or start at a certain percentage for a certain period of time then reduce to a lower percentage for a certain period of time before finally ending. This is why it is called a sunset clause, because the commission tapers off and fades away just like an actual sunset. The percentage amounts, durations, and negotiated surrounding circumstances vary depending on the negotiating power of the parties and the attorneys involved, which is why you need a good music attorney experienced with negotiating management agreements.

The sunset clause often surprises artists because they aren’t familiar with the concept and become upset when they see it in the contract, or they sign a contract with a sunset provision that is longer and larger than it should be because the artist does not understand the agreement. I will reiterate, that the sunset itself provision is not unfair, and it is fair to compensate the manager on projects the manager helped to make a success. Again, having the contract drafted or reviewed by a good music lawyer experienced with management agreements is paramount to protecting one’s interests.

If you need a management agreement drafted or reviewed click here to contact me now.

If you need a DIY solution in the form of a template agreement, click here (non-CA residents click here).

 

Disclaimer: This article is for educational and informational purposes only and not for the purpose of providing legal advice. The content contained in this article is not legal advice or a legal opinion on any specific matter or matters. This article does not constitute or create an attorney-client relationship between Erin M. Jacobson, Esq. and you or any other user. The law may vary based on the facts or particular circumstances or the law in your state. You should not rely on, act, or fail to act, upon this information without seeking the professional counsel of an attorney licensed in your state.

If this article is considered an advertisement, it is general in nature and not directed towards any particular person or entity.

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Key Clauses in Management Agreements Part 2: Commissions

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Categories: Articles, Business, Law, Management, Music, Music Contracts, Music Industry, Royalties, Tags: , , , , , , , , , , , , , , , , , , , , , , , , , , , ,

erin m jacobson, erin jacobson, management commissions, management agreement, contract, music attorney, music lawyer, los angelesIn a recent article I explained the term of a management agreement, and in this article I’ll discuss management commissions; arguably the other most important clause of a management agreement.

The commission is the amount of money the artist will pay the manager under the contract. This is usually done as a percentage of the artist’s gross income. Standard percentages are usually 15-20%, with 15% being more common than 20%.  I have seen the percentages range from 10-25%, but with both extremes requiring special circumstances. Some more creative deals featuring other percentages have also crossed my desk, but again, these deals require other career aspects or services not typically included in management deals.

Aside from the percentage, it is important to know if the commission is being taken on gross or net income, and what gross or net income actually includes. Management agreements in the music industry typically have a list of exclusions on gross income that are specific to aspects of an artist’s career in the music business. This is different than management agreements in other areas of entertainment and in my experience, not all attorneys (even music attorneys) know what to exclude. It is also important to note when, if any, the manager is able to share in other income aside from the main commission.

It is also common for managers to take a commission after the term of the agreement has ended – and I’ll cover that in the next article on management agreements.

Contact me now to draft or review your management agreement.

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New Video: How Much Do Artists Earn from Spotify?

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Categories: Royalties, Streaming, Videos, Tags: , , , , , , , , , , , , , , , , , , , , , , , , , , ,

I talk about the numbers.

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Key Clauses in Management Agreements Part 1: Term

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Categories: Articles, Management, Music Contracts, Music Industry, Tags: , , , , , , , , , , , , , , , , , , , , , , ,

Management Agreement Term Length The Music Industry Lawyer Attorney Erin M JacobsonThe artist-manager relationship is one of the most important relationships in an artist’s career. The manager has to “get” the artist and the artist’s artistic vision, but also needs to have the knowledge on how to translate that vision into something that will generate mass appeal and profits. The manager also has to have the business acumen and connections to generate opportunities for the artist so that his or her career can grow. An artist needs to be able to trust the manager, feeling that not only is the manager knowledgeable, connected, and in tune with the artist’s essence, but also that the manager is at all times acting in the artist’s best interests instead of serving the manager’s own needs.

Management agreements have several important aspects that need attention and often, negotiation.

The first of these aspects is the term of the management agreement. I explained what a contract term generally means here, and for purposes of this article the “term” will refer to the length of the relationship. Traditionally, management agreements have a term between three and five years. Managers typically would want four or five years because, as they often argue, it takes a long time to create the momentum needed for an artist to really start seeing success. From a manager’s perspective, this can be true and also gives the manager the opportunity to still be representing that artist when success comes; that way the manager can receive a full commission rate at the artist’s higher income level instead of earning a percentage of the low (or no) revenues artists usually earn at the start of their careers.

On the other side of this, artists usually want to sign with a manager for the shortest amount of time possible, which allows the artist to get out of the deal faster if the manager is not delivering on promises or things just aren’t working out. There is almost nothing worse for an artist than being stuck in a bad deal that hinders the artist’s career by blocking potential opportunities while the artist waits for the deal to end.

These days I have been seeing even shorter terms on management deals, often one or two year initial terms with at least one option period attached. Both parties really need at least a year to get enough momentum going to start seeing some increased success, but it seems the management deal is following the trend of all deals in the music business by shortening terms to try to reduce risk.

What people tend to forget when thinking about the length of an artist-manager relationship is that terms can always be renewed. If the contract term length is on the shorter side, the parties can always renew the agreement at the end of the term if they still desire to work together. The parties don’t have to part ways just because a piece of paper set a time limit at some point in the past. On the other hand, if the parties feel it is time to move on, they have the freedom to do that knowing they gave it a fair chance during the time period they originally allotted.

Part 2 of this series will cover management commissions.

Contact Erin now to draft, review, or negotiate your management agreement.

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How Much Should an Attorney Cost?

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Categories: Articles, Business, Copyright, Law, Legal Issues, Music, Music Industry, Trademark, Tags: , , , , , , , , ,

Erin Jacobson music attorney music industry lawyer


An attorney’s advice could make the difference for you between a successful and a nonexistent music career.   Legal fees aren’t cheap, but they’re a worthy expense in your career progress. The cost of attorneys does vary due to a variety of circumstances, so as you plan your budget, you should keep the following factors in mind.

How are lawyers’ rates determined?

1. Experience

A lawyer with more years of experience will typically be more expensive than someone who is newly licensed. Also, an attorney with more experience in (or who devotes the majority of his or her practice to) a certain area of law will be able to charge more than someone who only dabbles in that area. Someone who’s better known in the business and has had more high-profile cases can also command a higher rate.

2. Nature of your matter (i.e., what you need the attorney to do)

One of the most important factors that dictate the amount that you will have to pay an attorney is what you actually need the attorney to do for you. A short and simple contract or a consultation to answer questions will cost less than if you require a long, complicated contract to be drafted or reviewed. If you’re starting a company, you’ll need all new contracts drafted, which will take more time and thus be more expensive than reviewing a five-page agreement. Attorneys tailor contracts to your specific situation, which takes the attorney’s time and skill to create something specific to your needs. The amount of time needed for negotiation is speculative, as it’s rare to be able to predict the other party’s agreeability to contract changes or willingness to wrap up the deal promptly.

3. Office arrangement

It may sound unimportant, but the location of an attorney’s office and the type of office that he or she has does factor into the fees charged. Attorneys in larger metropolitan areas and more expensive parts of town will charge more than those who have offices in less desirable areas. An attorney who’s part of a larger firm or who has a high-rent office will have to charge more to cover that rent. In contrast, an attorney with lower overhead costs may be able to charge less and pass those savings on to the client.

4. Extra fees

There are often other fees you’ll be responsible for when working with an attorney, such as filing fees. Copyright and trademark registrations have application fees set by the Copyright and Trademark Offices, respectively. Similarly, a trademark search company will set the fees to conduct a trademark search. In court matters, there are filing fees required and set by the court that will need to be paid to process your case. Attorneys have no control over these fees.

Other additional fees that may need to be paid to your attorney may involve things like postage or copying costs on your behalf. These are not ordinary costs in an attorney’s business. You are paying the attorney for his or her time, skill, experience, and advice, not for secretarial matters that are the client’s responsibility. These are fees that will be incurred no matter what your attorney’s fee is, but it’s important to remember that they are your responsibility so you can include them in your budget.

Fee structures

Fee structures vary greatly among attorneys. In Los Angeles, attorneys tend to range from about $250 to $750 or more per hour. Some attorneys require an upfront retainer payment, which is an advance against fees earned. Other attorneys will not require an upfront retainer payment, but will bill you after the work has been completed. In both of these scenarios, attorneys will keep track of the amount of time that they worked on your matter, and then multiply their hourly rate by the amount of time spent on your matter to calculate your total fee. There are also attorneys who will also work on a flat-fee basis depending on the task at hand.

Other attorneys work on a percentage basis where they don’t necessarily keep track of the amount of time that they worked on your matter, but will instead take a certain percentage of the amount you receive under the deal they’re negotiating for you. Alternatively, some attorneys will take a percentage, usually five percent, of your gross income. Attorneys who work on percentage usually only do so for high net worth clients, as otherwise the number of hours invested in a client may greatly exceed the amount paid to the attorney.

Some attorneys will use a client’s income and/or industry status as deciding factors in whether to represent a client. Especially at the larger law firms, many attorneys won’t accept new clients who won’t guarantee a certain amount of income to the firm.

Some litigators (attorneys who handle lawsuits in court) will take a case on contingency, meaning that they only get paid if they win your case, and then will take a percentage of the recovery from the case. However, most attorneys do not take cases on contingency, and will require an hourly rate and an upfront retainer. Again, these fees will vary based on the factors discussed above.

When you’re interviewing a potential attorney, ask about his or her rates and fee structure to determine if you can afford that particular attorney.

How much do common musician services typically cost?

It’s incredibly difficult to generalize prices of what a certain matter will cost, as it depends on all the factors explained above. I’m quite hesitant to actually name numbers since they vary so drastically, but I will do my best to give an idea of the most basic matters to provide you with a starting point. (These are general fee ranges based on examples I have seen in the industry. These numbers are not quotes of my services, an advertised fee, or guarantees of fee amounts. If you need this type of agreement drafted, it will need to be based on your particular circumstances and your attorney’s best judgment.)

1. Copyright registration

Copyright registrations are usually $35 to $55 for the registration fee, plus the time it takes for your attorney to file the application. Absent complicating circumstances and including only a small group of titles, this should usually take about an hour or less of your attorney’s time. There are also services like Indie Artist Resource that can register titles from $135 to $335, depending on the number of titles.

2. Trademark application

Trademark application fees are based on the number of categories (called classes) in which you want to protect your mark. For one class online, the application fee runs from $275 to $325. If you are registering in more than one class, multiply that number by the number of classes for which you are applying. Again, the application itself probably takes about an hour of time, but the Trademark Office usually requires amendments to be made later, which are again based on the attorney’s time spent on those amendments. The number of amendments requested depends on the mark, other marks already registered, and the attorney at the trademark office assigned to your application. A trademark search from a reputable company starts just under $800 for a word mark and just over $600 for a logo.

3. Basic music business agreements

Something like very basic agreements for management, producer, or band partnerships could cost $800 to $2,000+ depending on the agreement and details of your situation, or $300 to $400 for a template.

 

Again, all legal fees will vary depending on your specific situation, so the most effective plan of action would be to figure out what you need as completely as possible, and then ask attorneys for an estimate. If the cost of what you need is above your budget, consider a solution like Indie Artist Resource, or save up more money for the investment – and it is an investment in your career.

Disclaimer: This article is for educational and informational purposes only and not for the purpose of providing legal advice. The content contained in this article is not legal advice or a legal opinion on any specific matter or matters. This article does not constitute or create an attorney-client relationship between Erin M. Jacobson, Esq. and you or any other user. The law may vary based on the facts or particular circumstances or the law in your state. You should not rely on, act, or fail to act, upon this information without seeking the professional counsel of an attorney licensed in your state.

If this article is considered an advertisement, it is general in nature and not directed towards any particular person or entity.

Originally posted on Sonicbids.com

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How to Choose the Right Attorney for YOU – Part 8

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Categories: Business, Music Industry, Tags: , , , , , , , , , ,

Over the last several weeks, I have outlined many qualities to consider when choosing an attorney.  Once you have decided what kind of attorney you want, the next step is actually finding one

How to find an attorney?

Ask your other creative friends whom they use as their attorney.  With the wealth of information on the Internet, it is also possible to find information for the attorney of another artist you admire.  There are several attorney directories like lawyers.com and findlaw.com you can browse.  You can also search for attorneys and view their websites, or refer to networks like LinkedIn.

© 2010 Erin M. Jacobson, Esq. All Rights Reserved. If you like this article and want to share it, you may provide a link to www.erinmjacobsonesq.com or a direct link to the post for others to read it. You may not reprint this article without written permission from Erin M. Jacobson, Esq.

This site is not intended or offered as legal advice. These materials have been prepared for educational and information purposes only. They are not legal advice or legal opinions on any specific matters. If they are considered advertisements, they are general in nature and not directed towards any particular person or entity. Transmission of the information is not intended to create, and receipt does not constitute, a lawyer-client relationship between this site, Erin M. Jacobson, Esq., and you or any other user. The content is not guaranteed to be correct, complete, or up-to-date. The law may vary based on the facts of particular circumstances or the law in your state. You should not act, or fail to act, upon this information without seeking professional counsel. No person should act or fail to act on any legal matter based on the contents of this site. Unless expressly stated otherwise, no document herein should be assumed to be produced by an attorney licensed in your state. For more information, please click on the “Disclaimer” section in the top menu of this site.

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How to Choose the Right Attorney for YOU – Part 7

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Categories: Business, Music Industry, Tags: , , , , , , , , , ,

You know what they say:  “Location, location, location!”

Location

If you have to meet with your attorney or go to his/her office, you may want to make sure the attorney’s office is in a convenient location or that you are willing and able to travel to his/her office.

Next time, I’ll discuss how to find an attorney after thinking about all of the criteria I have explained over the last several weeks.

© 2010 Erin M. Jacobson, Esq. All Rights Reserved. If you like this article and want to share it, you may provide a link to www.erinmjacobsonesq.com or a direct link to the post for others to read it. You may not reprint this article without written permission from Erin M. Jacobson, Esq.

This site is not intended or offered as legal advice. These materials have been prepared for educational and information purposes only. They are not legal advice or legal opinions on any specific matters. If they are considered advertisements, they are general in nature and not directed towards any particular person or entity. Transmission of the information is not intended to create, and receipt does not constitute, a lawyer-client relationship between this site, Erin M. Jacobson, Esq., and you or any other user. The content is not guaranteed to be correct, complete, or up-to-date. The law may vary based on the facts of particular circumstances or the law in your state. You should not act, or fail to act, upon this information without seeking professional counsel. No person should act or fail to act on any legal matter based on the contents of this site. Unless expressly stated otherwise, no document herein should be assumed to be produced by an attorney licensed in your state. For more information, please click on the “Disclaimer” section in the top menu of this site.

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How to Choose the Right Attorney for YOU – Part 6

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Categories: Business, Music Industry, Tags: , , , , , , , , , ,

Always an important concern is price.  How much does the attorney charge?

Price

Attorneys have different billing rates based, which are mostly based on their experience and number of years in practice.  Some attorneys only bill hourly and/or take retainers, while some will also charge a flat fee or take a percentage of income.  Take serious consideration of what the attorney quotes you and whether you can afford it.  An attorney will not be happy if you think you can afford their rate and then rack up a large bill you cannot pay.

There is one point I need to address because I feel a lot of people do not understand it.  Lawyer’s rates are based on time expended on a matter, experience, years of schooling and learning a skill.  It is different than walking into a store and getting a product.  Many people seem to feel that they should not have to pay for legal services because they do not walk out of the office with a tangible product in hand.  When you pay an attorney, you are paying for that person’s time and skill.  You are paying them to provide a service to you that you should not provide for yourself.  Even attorneys hire other attorneys when they have legal problems.  Just as you spent your time and used your talent to craft a song or write a screenplay and expect to be paid for it, the attorney will do work for you and expect to be paid for it.

Next time, I’ll address attorney location concerns.

© 2010 Erin M. Jacobson, Esq. All Rights Reserved. If you like this article and want to share it, you may provide a link to www.erinmjacobsonesq.com or a direct link to the post for others to read it. You may not reprint this article without written permission from Erin M. Jacobson, Esq.

This site is not intended or offered as legal advice. These materials have been prepared for educational and information purposes only. They are not legal advice or legal opinions on any specific matters. If they are considered advertisements, they are general in nature and not directed towards any particular person or entity. Transmission of the information is not intended to create, and receipt does not constitute, a lawyer-client relationship between this site, Erin M. Jacobson, Esq., and you or any other user. The content is not guaranteed to be correct, complete, or up-to-date. The law may vary based on the facts of particular circumstances or the law in your state. You should not act, or fail to act, upon this information without seeking professional counsel. No person should act or fail to act on any legal matter based on the contents of this site. Unless expressly stated otherwise, no document herein should be assumed to be produced by an attorney licensed in your state. For more information, please click on the “Disclaimer” section in the top menu of this site.

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How to Choose the Right Attorney for YOU – Part 5

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Categories: Business, Music Industry, Tags: , , , , , , , , , ,

Consequences

Something that goes along with your attorney’s style is the consequences of your attorney’s style.  Some attorneys have bad reputations and people do not want to  deal with them.  Other attorneys have killed or almost killed deals for clients because they are difficult to work with or have a large ego.  Ask other people you know in the industry if they know anything about the attorney, or even ask the attorney for references.  If they are well respected, it will show.

Next time, I’ll talk about fees.

© 2010 Erin M. Jacobson, Esq. All Rights Reserved. If you like this article and want to share it, you may provide a link to www.erinmjacobsonesq.com or a direct link to the post for others to read it. You may not reprint this article without written permission from Erin M. Jacobson, Esq.

This site is not intended or offered as legal advice. These materials have been prepared for educational and information purposes only. They are not legal advice or legal opinions on any specific matters. If they are considered advertisements, they are general in nature and not directed towards any particular person or entity. Transmission of the information is not intended to create, and receipt does not constitute, a lawyer-client relationship between this site, Erin M. Jacobson, Esq., and you or any other user. The content is not guaranteed to be correct, complete, or up-to-date. The law may vary based on the facts of particular circumstances or the law in your state. You should not act, or fail to act, upon this information without seeking professional counsel. No person should act or fail to act on any legal matter based on the contents of this site. Unless expressly stated otherwise, no document herein should be assumed to be produced by an attorney licensed in your state. For more information, please click on the “Disclaimer” section in the top menu of this site.

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How to Choose the Right Attorney for YOU – Part 4

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Categories: Business, Music Industry, Tags: , , , , , , , , , ,

Another very important consideration in choosing an attorney is that attorney’s style.

Style

When you envision your attorney, what do you see?  There are some attorneys that scream at everyone to get the job done.  There are attorneys that would like to party with the band on the tour bus.  Some attorneys are not that extreme, but are still friends with their clients.  Other attorneys do not like to socialize with their clients and prefer to quietly sit in their offices.  Some attorneys are in the middle of all of those types.  Your attorney is part of your team and is a representation of your image in some cases.  Think of how you want to do business and there will be the type of attorney for you.

Next time, I’ll talk about the consequences of some of these attorney practice styles.

© 2010 Erin M. Jacobson, Esq. All Rights Reserved. If you like this article and want to share it, you may provide a link to www.erinmjacobsonesq.com or a direct link to the post for others to read it. You may not reprint this article without written permission from Erin M. Jacobson, Esq.

This site is not intended or offered as legal advice. These materials have been prepared for educational and information purposes only. They are not legal advice or legal opinions on any specific matters. If they are considered advertisements, they are general in nature and not directed towards any particular person or entity. Transmission of the information is not intended to create, and receipt does not constitute, a lawyer-client relationship between this site, Erin M. Jacobson, Esq., and you or any other user. The content is not guaranteed to be correct, complete, or up-to-date. The law may vary based on the facts of particular circumstances or the law in your state. You should not act, or fail to act, upon this information without seeking professional counsel. No person should act or fail to act on any legal matter based on the contents of this site. Unless expressly stated otherwise, no document herein should be assumed to be produced by an attorney licensed in your state. For more information, please click on the “Disclaimer” section in the top menu of this site.
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