Be The Artist, Not the Lawyer: How Not to Get Taken in Legal Transactions

by Linda Bruton Law, PLLC

“Industry rule number Four Thousand Eighty, record company people are shady!”
-Q Tip
Q Tip (of the legendary Tribe Called Quest) knows through his direct experience just how bad it can get.  The stories of musicians and other creative people being taken advantage of by scrupulous and unscrupulous business people are many and varied.  I’ve gotten permission from a couple of my grateful clients to use their experience as examples. The names have been changed to protect the innocent!

It usually begins with the thought, “I don’t need to have my own lawyer.”

You’ve been talking to someone who is professional.  It is clear this person respects you and, more importantly they admire your creative work. The two of you have worked out a deal that is straight forward, uncomplicated and fair.  You don’t need to spend the money on a lawyer.  A lawyer will only complicate an uncomplicated situation.  Right?

WRONG!  The following examples reveal just a very few of the reasons why.

Example 1.  “We understand the deal. So we don’t need to put anything in writing.”

My client, “Rosalind,” thought she had a deal to split royalties 50/50 with another musician on a recording project. Because the other musician was her friend and she trusted him, she thought getting a lawyer to memorialize the 50/50 deal in writing was unnecessary.

Trust is essential.  If you don’t think you can trust someone, you ought not to be doing business with them in the first place. However, your business relationship may begin with trust, but it must not end there. The value of trust can evaporate if, as folk often do, people “forget,” the details get fuzzy about who said what, for how long and how much.

There is also something in the law called the Statute of Frauds. In Michigan, as in most other states, any contract that, by its terms, cannot be performed within 1 year from the date of the agreement is void and unenforceable if it is not in writing.  A contract to pay royalties potentially goes for as long as the life of the copyright, which is life plus 70 years (much longer than a year).

In Rosalind’s case, the other musician just stopped paying. Without a written agreement, there was no way to make the other musician pay by taking him to court.  First, the Statute of Frauds would bar the case and even if we did manage to slip past that gate, there was no way to prove the details of the agreement to split the royalties. The other musician claimed no agreement to split royalties was ever made. With nothing in writing to present in court, my client was left with no ability to enforce the simple, straight forward deal she thought she had made.

In addition, what is simultaneously frustrating and revealing about this particular circumstance is that the other musician had a written agreement with a major record label. That major label agreement spelled out every detail, including the amount of royalties that musician would be paid.

There was also a license agreement between the record label and one of its affiliates that provided for the licensing of a sample of the song which Rosalind thought she’d get half the royalties for. Despite the fact that the two record labels were legally related, they had their separate lawyers work out a very comprehensive written license agreement for the sampled song. Trust had to be important between these two companies.  One was the affiliate of the other, but they took the time and spent the money to have their respective lawyers draft, and execute a license agreement for the sample.

Individual musicians should be no less cautious and responsible between and among one another, or when dealing with big corporations.

Example 2.  “Their lawyer will draft the contract. So I don’t need my own.”

My client, “Felicia,” thought she a deal where she would be paid a certain amount of the revenue generated from the sale of media ads to be aired during her syndicated television program.  The company representative assured her that in addition to increasing the number of stations that would carry her program and thus the amount of revenue from placing the ads, she would get to keep the bulk of the ad revenue and the company would keep only a small portion.  She and the company had a mutually satisfying deal. She only contacted me when she got a contract from the company’s lawyer and it occurred to her that if they had their lawyer, she ought to have her own.  Smart!

When I looked at the contract the company had sent Felicia, it simply did not reflect in any of its provisions of the deal she thought she’d worked out.  In fact, the contract didn’t provide anywhere to pay Felicia a single dime.  The contract clearly stated that the company would get 35% of the “revenue,” but nowhere in the contract was there any mention of or promise to pay Felicia anything.  That provision was simply missing.

There was lots of writing about “gross revenue,”  “adjusted gross revenue,” but only in a way that left so much discretion with the company that they could pay Felicia whatever they wanted and there was no way to tell if she would really be getting the 65% of ad revenue the company’s representative agreed to pay her.

The contract, as presented, looked legitimate; it was full of definitions and descriptions of who had the right to do what, but it did not provide anywhere for the deal that Felicia thought she had worked out with the representative of the company.

Under the circumstances, the company could pay whatever they wanted to pay. There would be no way for anyone to question the amounts of payments to either party.  The company could take what it wanted and send any amount to my client and no one would know any better.

Both of these clients are smart, talented and quite successful, but neither is a lawyer.  Lawyers are trained and through experience develop special skill to read legalese. We are trained and with time develop the special ability to not only understand the terms of complicated documents, but also to determine what may be missing.  Lawyers possess understanding of the statutory and case law applicable to the particular transaction involved that helps us to see clear legal problems when to the layperson all is well.

Think of it like this: Would you attempt to interpret or negotiate a document written in Arabic with a person whose native tongue is Arabic, or would you find your own translator?

Please don’t try to do it on your own. Protect yourself by letting someone act as your lawyer.