Management Agreements
Why have a manager?
Most performing artists are not trained in business or finance and understandably want to focus on the creative aspects of their careers, such as composing new songs, recording them and performing live at concerts. A manager experienced in the music industry, who understands how to negotiate deals and to ensure the artist actually makes any money, is therefore often appointed to look after the business side of an artist’s career.
Why bother with a written agreement?
Some managers prefer to work without a formal written agreement with the artist. Whilst this isn’t an issue when things are going well, often when a problem arises it can be expensive and stressful to resolve without a proper written management agreement setting out precisely what terms were originally agreed between the artist and the manager.
Why bother with lawyers?
Often you will see the following disclaimer notice in music industry agreements:-
“THIS IS AN IMPORTANT LEGAL DOCUMENT AFFECTING YOUR CAREER AS AN ENTERTAINER AND PERFORMER ON A POTENTIALLY LONG TERM BASIS. YOU MUST THEREFORE TAKE ADVICE FROM AN INDEPENDENT LAWYER SPECIALISING IN MUSIC INDUSTRY AGREEMENTS BEFORE DECIDING WHETHER TO SIGN IT”
This doesn’t necessarily mean you ‘must’ take independent legal advice, however as always it is better to be safe than sorry. We strongly recommend that any artist approached by a manager offering to work for them should seek independent legal advice from a lawyer specialising in music industry agreements before agreeing to appoint them.
Similarly, when a manager is thinking about managing a new artist or band, they should seek legal advice before deciding what sort of deal to offer. There is no such thing as a standard template management agreement, and terms can vary significantly. For example if the manager works alone the agreement may need to allow him to work with other artists, whereas if the manager works for a management company with offices all over the world, it might be important to the artist to include a ‘keyman’ term in the management agreement to ensure the personal services of a particular manager are guaranteed.
Who pays for the lawyers?
If the artist cannot afford a lawyer it is quite usual for the manager to agree to pay the artist’s lawyers costs of explaining and, if necessary, negotiating reasonable terms to the management agreement itself. This does not necessarily mean that an artist who’s manager did not pay for such independent legal advice has an automatic right to set aside a signed management agreement should a dispute arise between them in the future – however when a manager has covered the artist’s legal costs, this can be used as evidence by a manager to refute any claims of undue influence over the artist who might otherwise have the right to set the contract aside on the grounds he or she did not know what they were signing.
How do managers charge for their services?
Managers typically work on a commission basis for new and emerging artists, whereas for more established famous artists the manager may be on a fixed retainer. For the former, as a rough guide the usual commission rate is 20% of income the artist receives from deals procured by that manager. If income arises from an agreement not negotiated by the manager then that should not be commissionable.
How long does a management agreement last for?
It is important to agree how long the manager will work for the artist. This is also known as the ‘Term’ and often will only last for a fixed initial period, with an option in favour of the manager to extend provided that important conditions are met. For example, such conditions often relate to the manager securing a major record deal for the artist or ensuring the artist’s income reaches a certain level.
An artist will usually also want to ensure they can terminate the agreement if things don’t work out after this initial period. Obvious examples include misconduct where the manager is not doing his job properly or gets into financial difficulties himself. This is quite usual – why would anyone want to continue with a business manager who can’t do business or look after their own finances?
What will the manager do?
Usual obligations of managers include:-
• securing offers from record labels and publishing companies to enter into new agreements for the financial exploitation of recordings and compositions;
• arranging suitable live and promotional appearances on television and so on;
• obtaining the prior approval from the artist before incurring any significant item of expense or agreeing to any contractual obligations;
• and generally dealing with all business matters relating to the artist’s activities and liaising with their accountants and lawyers in that respect
Artist’s obligations
An artist will also usually agree to the manager’s appointment being on an ‘exclusive’ basis, so that no-one else can do their job. Most managers will also require the artist to direct any new business opportunities to that manager to deal with. Some artists might be more than capable of negotiating the finer commercial terms of a deal – if that is the case then such artists should think twice about agreeing to appoint any manager, although if things really take off and the artist is working very hard on tour or promoting a new album, their record label, lawyers and other promoters may prefer to deal directly with the artist’s manager (who should be obliged to consult with the artist where necessary) because it may be quicker and more convenient for all involved.
Contact us
Chris Phillips and Mike Shepherd who head up the Media and Entertainment department here at Bolt Burdon are experienced lawyers used to negotiating and advising on all types of music industry agreements.
To find out more about music licensing agreements, and how we can represent you, please contact us for a free initial consultation on 0207 288 4700.