The purpose of this column is to provide career guidance from the perspective of an entertainment lawyer. The information presented here is not intended to be legal advice nor an overview of how to write, negotiate or interpret contracts. Rather, each article addresses issues like business relationships, considerations when seeking legal advice, and in general, a "backstage" informal dialogue about the realities confronted in pursuing a career in today's music business.
In this month's column, we take a look at partnership agreements. Keep in mind that a partnership is not corporations, although in forming a corporation, a "shareholder agreement" would be the equivalent of a partnership agreement as the road map for setting up your corporation. Since a little bit of knowledge can be dangerous, visit an attorney when you want to go over your "choice of business entity" options.
While most bands would rather not take the time or make the expense to put together a written partnership agreement, it remains true that sooner or later the partnership agreement can be a valuable document to have, or a more expensive one not to have.
Much of this may mean little to the band in its current situation - trying to get ahead, not making much money, not releasing professional quality musical product. However, the status of the group's business relationship will mean everything later, and provisions, known as "leaving member " clauses in your partnership agreements, and separately in your exclusive recording agreement, can and often do affect the very essence of your career, especially members who may seek to go solo from a group recording contract. These are situations which are truly more than minor distractions which can throw a career off center at the very time you want to move ahead. We won't go into the complexities of this now, but remember that these are areas which lawyers deal with and should not be overlooked. Sooner or later, someone leaves a group and someone joins, or everyone leaves. "What happens then?" is a question which has to be asked if you are going to continue in the business of music.
If you are investing a lot of time, equipment or money into your group, this would be a good time for you to consider having a written partnership agreement among the group members. I will give you some of the areas which can be clarified by a partnership agreement:
* Who put what investment of money or property into the group?
* What is the division of "equity" in the band? Are you all equal partners or are some of you entitled to payback for loans or extra services off the top for your larger contribution before you split equally?
* Who controls the name of the group if one or more than one member leaves, or one band becomes two, etc.?
* If a member leaves, is that member entitled to any sort of "buy out", or do they remain responsible for band liabilities incurred when they were in the band?
* Are there special provisions regarding songs which are written for the group, or special services such as arranging, and musical direction.
* How do you anticipate the withdrawal of old members and addition of new members to a group situation?
Consider a situation where a group enters a recording agreement and is unrecouped on their first record, or first two records. One member wants to leave and go solo, but remains tied to the original record company under the contractual concept of "joint and several" obligation. Simply put, it means that everyone in the group is signed to the record company for the term of the contract, even if one or more members want to leave the original group. The solo record may become a hit, but the solo member under the "leaving member" clause, will remain responsible for the recoupment of two previously unrecouped group recordings out of the success of the upcoming solo project. You can imagine how discouraging this can be to the solo artist who finally found out how to cut hit records. Time to refer to the "leaving member clause" and hope your lawyer prepared for these eventualities or can now negotiate out of this situation. If the star member or writer of the group wants to leave, as in our story, how likely is it the record company will say..."okay, you [group] owe us $425,000 in unrecouped royalties. We'll let you [solo artist] out of this so you can be a success at another label as a solo act or with another act." Interesting discussion, and now you know why it often takes so long between records while music sadly takes second place to working out negotiations.
I do not want to overload you with "paper" in this age of virtual everything, but I can tell you that with groups ranging from the Beatles to Guns n Roses and scores of other less celebrated controversies you heard of or never heard of, partnership agreements, and "leaving member" situations are among the biggest stories in the business of music.
It need not be difficult to prepare for your next step, so start thinking seriously about your career. The longer you wait, the longer things take, and unfortunately, the more complications, the higher the legal bills. Do what you can to keep your complications to a minimum, so you have the most time to devote to the music.
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and comments for future articles to:
Robert Rosenblatt
301 West 53rd Street
New York 10019
Telephone (212) 262-2112
or email to legal@soloperformer.com.
© Copyright 1997 Robert Rosenblatt
