Outside my music business bubble, sometimes people ask me what a “music lawyer” does. People have crazy ideas sometimes. If they mean generally, it’s complicated...but I’m gonna try to ‘splain it a bit here. There are music lawyers who specialize in litigation, that’s not me (but I’m glad to know a few good ones). There are music lawyers who primarily work in the “music as an asset” space, which sometimes has little to do with musicians or artist development. I do a bit of that, but mostly - as I’ve recently explained - I prefer to work in the artist business, meaning the business that supports creative artists as they navigate the risks and opportunities the world of music and entertainment commerce.
On the artist side of the business, it will come as no surprise that lots of dealmaking goes on all the time. Music lawyers handle big deals and small deals: recording deals, publishing deals, management contracts, endorsements, licensing deals, merchandise, influencer marketing, on and on. Once an artist is ready to launch a commercial venture, there are always deals - even when the artist is fiercely “independent.” In my opinion, you need to consult a lawyer with music business expertise when you are considering signing a contract with respect to your music rights, or a contract with a term that is longer than say a single live gig. You should work with a lawyer to structure your company to manage risks and be efficient. You need a lawyer when you start making money with music - that’s the chum in the water that attracts the sharks.
What about before there are deals? Does an artist need a lawyer for anything before they bring a lawyer in to negotiate and review their deal? It’s debatable; however, I typically get involved before the dealmaking starts. An artist will get in touch when there’s a deal that requires a lawyer’s input. You see, when artists begin to build an audience, to get attention from the industry, they need a wider range of advice, counsel, and hands-on help than conventional legal services offer. They need a team. What do we mean by a “team,” and how does it come together? That’s the topic of this week’s rant.
Business Team vs. Creative Team
Typically when we talk about an artist’s team, we mean the business team. A successful artist may also have versions of a creative team, consisting of various collaborators, co-writers, producers, videographers, choreographers, creative directors, and other participants in the creative process. Then there’s the larger circle of arm’s length, contractual relationships, label partners, publishers, merchandise companies, brands, that are also engaged in an artist’s business and creative world. The business team tends not to get involved with the actual creative process,1 instead providing business support and services, risk management, strategy, and day-to-day work that keeps the money flowing. The core business team generally includes a personal manager, a business manager, a talent agent, and an attorney.
Personal Management
The old trope is that the personal manager is the “quarterback” of the team. A better analogy is the manager is the CEO of the business. Individual personal managers tend to have smaller rosters because managing a successful act is very work and time- and delegation-intensive. Typically a personal management “team” (the team within a team) consists of a higher-level manager who is primarily engaged in higher-level decision-making and direction, and one of more “day-to-day” managers who handle the constant minutiae of an artist’s business life, from overseeing the details of touring to content creation and social media, scheduling, routine contracting and invoicing, communication, fan engagement, etc. etc. The senior manager is the glue that connects all the team members with the artist, and the day-to-day manager is the engine that keeps the wheels on.
A manager might be a solo operation, or it might be a large, international company that provides resources ranging from marketing to promotion to brand partnerships. Managers do not, however, typically provide financial services or legal representation because management is a fiduciary i.e. trust relationship that requires oversight and accountability from licensed professionals working at arm’s length (such as business management and legal representation, discussed below).
Managers are typically paid a percentage of an artist’s gross earnings across most if not all revenue streams, at a percentage ranging from 10% to 20%, with a standard commission around 15%. A higher percentage might be due to a well-resourced management company providing some of the services that would typically be provided by a record label. Very successful artists may renegotiate management compensation to be based on net earnings; however, it’s uncommon for a manager to be paid a flat salary. The idea is that a manager’s compensation should increase if the artist’s income increases, giving management incentives to increase the size of the pie, benefitting artist and manager as the manager’s slice of the pie increases. Managers typically work under exclusive contract with a term of years, and, in many cases, commissions that continue with respect to certain revenue streams even after the management contract’s term ends.
Business Management
An artist with a lucrative career and overhead costs generally needs at least some help with their finances. With so many revenue streams and touring crossing state and international borders, tax filings are complicated. Artist careers are small businesses, sometimes with lots of employees and contractors, creating all sorts of complications and risks in managing all these relationships and compensation structures. Typically both artist and management prefer to delegate substantially all of the accounting, payroll, and other financial services to an individual or (more often) a company that handles everything short of personal banking, investing, and retirement planning. Business managers almost always charge 5% of an artist’s gross income, one of the most persistent “industry standard” structures in the business. In my experience, most artists and managers consider this a fair compensation structure for the peace of mind and efficiency that comes with having a highly competent team handling the many facets of business management.
Business managers often hold a CPA license - or at least have someone on their team who is a CPA. Larger companies are specialized, with tax accountants, royalty specialists, auditors, etc. Day-to-day business managers and support do not necessarily need to hold licenses; however, it’s important that someone in the organization holds a CPA. For example, CPA licenses carry certain requirements and duties that keep business managers accountable as fiduciaries to their clients.
Talent Agent
Most artists perform live and tour, with touring as the biggest revenue generator in most mature artist careers. Talent agents work closely with an artist’s management to plan, negotiate, book, and coordinate an artist’s live appearances and touring. Agents focus on live engagement, but talent agents sometimes provide a broader scope of representation, including services such as negotiating brand partnerships and product endorsements and tie-ins. It’s rare to find an agent working with successful acts who isn’t affiliated with a substantial talent agency.
There are several reasons for this. One reason is that certain states require talent agents to maintain a license. Certain states impose draconian penalties on personal managers who engage in the work of talent agents, including the opportunity for the artist to terminate a management contract (and in some cases reclaim all past commissions). Agents work within geographic territories; for example, it’s rare to find a U.S.-based agent booking international touring. As in the case of personal management, agents tend to work in teams, with day-to-day agents and support staff reporting to higher-level agents who engage primarily in big-picture strategy. Typical agent compensation is 10% of gross earnings with respect to the actual bookings, and agents are typically engaged on an “at-will” basis rather than for a term of years.
Legal
Here’s the hard part - describing what I do! I can say it’s much better and easier to be an artist’s lawyer within a team, because there’s less ambiguity or expectation around what I’m supposed to do. As I’ve explained, our primary function, at least early on, is identifying, negotiating, and documenting a range of business deals. The “identification” part of that is complex and involves intensive discussions with the entire team. For example, if an artist is offered a record deal, they’ll want the manager to bless the deal in terms of the business goals and personal relationships. They’ll want the business manager to bless the financial and accounting terms. They’ll want the agent to weigh in on how the deal will impact their long-term touring strategy. If all that checks out and the artist believes it’s the right opportunity, the attorney will take the lead in negotiating the terms, typically in constant communication with the team.
In my view, the lawyer’s role (assuming there’s no dispute that could end up in litigation), the lawyer’s role is primarily risk management. It’s my job in the context of planning, decision-making, team-building, and dealmaking, to identify the things that could frustrate the artist’s goals, and to seek ways to address those risks, whether or not that involves contracts. For a successful act, the lawyer often takes on a “general counsel” role that might involve delegating work to other lawyers, whether within or outside a lawyer’s law firm. There’s more of a range in how lawyers are paid than other team members, with structures ranging from hourly billing to flat fees or monthly retainers to commission structures similar to personal and business managers. It depends on the scope of a lawyer’s services and how much the manager relies on the lawyer in their own decision-making and risk management.
Putting It All Together
So how does it all come together? Is there an order? Do teams arrive fully formed? What are the considerations and risks? This is all case-by-case, but I can share some of my own experiences.
I love being part of the team-building from the beginning. There are small risks of a lawyer being first on a team or getting involved too early, but I consider these to be manageable risks if the artist is set up for success. One obvious risk is that an early-stage artist can’t afford legal fees. Although there are rules that attorneys need to follow involving conflicts of interests and client confidentiality, communication, etc., there is no rule that an attorney must be compensated for every second they spend advising a client from the first second. We control the billing clock, although there’s a risk that providing “free” services will cause a client to undervalue what we bring to the team. That’s a communication challenge - as long as we’re following the applicable rules of professional responsibility, it’s on us to communicate to the client that we’re cutting them a break because of short-term financial challenges. Another risk is that the artist will expect the lawyer, in lieu of a personal manager or agent, to take the work involved in these roles. This is also a communication challenge: we need to be clear about our boundaries and what is appropriate for us to take on for the artist. We work in teams because we need boundaries to define the work we’re responsible for.
One positive thing about getting involved early is the opportunity to advise an artist on their team-building, and having the opportunity to introduce the artist to individuals and companies I believe will serve the artist’s unique goals. Although it’s an opportunity to do a favor for someone I like working with and who may bring me business later, it’s critical that I don’t let these considerations compromise my duty to my client. It is objectively positive to introduce a potential team member I believe will be a good fit, but on balance it shouldn’t be self-serving. That’s what we call a conflict of interest, more on that later.
I’ve done quite a bit of team building since I’ve been back in law practice over the past couple years. in recent months. I’ve built teams from the ground, and I’ve been referred into fully formed teams minus a lawyer.
I’ll say that usually the most difficult seat to fill is the agent, because agents tend to be risk-averse about working with artists who have yet to develop a lucrative live business. Occasionally when an act has sudden success there’s a sort of bidding war between agents. This is different, however, from a record label bidding war because agents don’t engage in long-term contracts and they don’t pay the artist for rights in their work like labels and publishers. It’s more beauty contest than bidding war - the agents compete on personality, roster, and resources. If an act chooses an agent and has buyer’s remorse, they can more or less simply change their mind. Therefore I encourage artists to find a good personality fit with a roster that complements their style and get to work. Finding the right agent is usually a huge career break for a developing act.
Regarding personal management, it’s important that the artist feels the synergies between the members of the business team. However, it’s also key that artists are constantly aware that their lawyer doesn’t work for management. Usually step one in an artist/manager relationship involves negotiating terms, which means the lawyer is adverse to the manager. The lawyer must toe the line between zealous representation and managing the post-negotiation relationship with the manager. Once the ink is dry on the management agreement, the manager and lawyer must work closely together in their aligned interests with respect to the artist’s career. Too much scorched earth in the negotiation can set a negative tone for the working relationship. Regardless, the lawyer must always be prepared to step back into the adverse relationship in the event of any dispute.
The Artist Chooses Their Team
There are a couple of potential issues artists should keep in mind regardless of the process. First, it’s our job to help the artist select their business team, but it ultimately has to be the artist’s choice. Therefore, if we’re doing a good job, we will offer a range of potential referrals, and we’ll take the time to vet referrals that come from outside our circle with an open mind. Also, specifically with respect to attorneys, as we build our referral networks we need to keep in mind that our job in each representation is the best interests of our client. We may compromise our effectiveness and duty of loyalty if we place too much emphasis on seeking to build referral networks to encourage future client referrals. The focus must always remain on the client representation. We work closely with managers, record labels, publishers, and others, but these relationships should be aligned around the interests of the artist. If we do a good job for our clients, our teammates will notice and they’ll show up with the referrals. Our challenge is to do such a good and thorough job that we make everyone else’s job easier and, as income participants, more lucrative. We can accomplish that while remaining steadfastly loyal to our client.
The team-building process can take time, but it’s worth taking all the time necessary to get it right. It’s affirming when we trust one another and function well as a supportive team that’s aligned on goals and values. It’s deeply satisfying to share in an artist’s success. When a team achieves stability in a successful project, it makes the work so much easier and more efficient.
No Conflict, No Interest
One final word of caution for artists: it can be risky to take an attorney referral from a manager - especially if the attorney represents the manager. It is a clear conflict of interest - against the rules of professional responsibility - for a lawyer to represent both artist and manager in a management agreement. There are conflicts that can be waived by consent of a client, but the same lawyer representing both sides of a deal is different. For example, if a manager’s attorney advises an artist that a contract the attorney drafted on behalf of the manager or a “handshake” agreement is fair, that communication would create a conflict of interest - even if the attorney believes the contract is objectively fair. That’s an opinion a lawyer representing the artist may not share. The lawyer knows better - call them out.
Remember that attorneys and CPAs are licensed by their state, and they have specific rules that govern things like conflicts of interest and confidential communications. Literally anyone can declare themselves to be an artist manager, and there is no licensure requirement. A manager is a fiduciary; therefore, there are rules that protect the artist. But us licensed professionals are held to more of a strict standard. I’ve worked with many managers who have had good, consistent ethics and professionalism, but I’ve also worked with managers who were primarily self-interested or just incompetent. Keep those checks and balances in place, and work with your lawyer to make sure you have a recourse if your manager turns out to be problematic. Always keep in mind that, generally, the only team member that will make you sign for a term of years with post-term participation is the manager. The rest of us are at-will. That should be enough to realize where the biggest risks are hiding.
The caveat to this is that there are legal issues that arise in the creative process, so it is always advisable to share work with your lawyer before commercial release to issue spot. Are there samples that need to be cleared? Are there collaborations that need to be documented? Are there melodies that may or may not be ripped off? We want to get ahead of these issues and document along the way.
That footnote caught my eye: "Are there melodies that may or may not be ripped off?" Is there some kind of AI-fueled melody detector bounced against a vast catalog of previously released music that is becoming a standard pre-release filter these days, or is it just seasoned listeners there to say "hey, this sounds suspiciously like a ZZ Top deep cut from 1974" or something along those lines?