|
|
Entertainment
Lawyer Q&A By Mick Spence
Band Agreements
Any group of people working, playing or even talking together is bound
to see things differently from time to time. This is the result of our varied
experiences, intellects and agendas. Sometimes the different perspective can be
massaged into a shared vision. Sometimes the opinions or actions of the
disputing players cannot be consolidated, and the parties can only agree to
disagree. Because there is this potential for conflict, there needs to be a
mechanism for conflict resolution, or at least a fair formula to apply if the
conflict can't be resolved, and the parties go their separate ways.
The answer is a Band Control Agreement. Marriages have their equivalent
in a prenuptial agreement. When the husband and wife cannot work out their
conflicts, the prenuptial agreement expedites the process of separation, and
division of marital assets. In the business world, this same document is
usually called a partnership agreement, a buy sell agreement, or a shareholder
control agreement. Again, the purpose of such an agreement between all the
business partners or shareholders is to fairly and efficiently manage the
departure of one of the business partners, without significant conflict or
costs.
Many bands I work with come to me without such an agreement in place.
In fact, the reason some come to be is because they don't have one in place, and
a conflict amongst the band is beginning to cause problems between them.
Unfortunately, once a conflict has begun that looks like it can't be resolved,
that is the worst time—and usually an impossible time—to get everyone to sign
off on such an agreement. The options then are either that the departing
person(s) just walk away without conflict or compensation (yeah, right) or a
lawsuit is brought by one or more parties, and everyone suffers the cost and
time associated with that. Neither option is fun, and most of the involved are
hurt in various ways. The easiest way to resolve such a situation is to have
the plan for the ultimate departure and/or addition of band members reduced to
writing, and agreed to by all, before any conflicts arise.
So what topics should the agreement cover? It can cover whatever you
want or need. Important topics I like to include are: 1) decision procedures
or voting rights of the band members; 2) method(s) for terminating or adding a
member of the band;
3) division of income earned while together; 4) division of hard assets when
someone departs; 5) right to ongoing income (or not) for the departing member;
6) ownership, control and use of the band's name; and, 7) song ownership,
control and use.
Decision making procedures or voting rights are important to clarify,
because they might help the group avoid many conflicts from the beginning. If
the band is fairly equal in the contributions of all members, usually the best
policy is one vote for each member. Decisions then can be determined
democratically by a majority of the votes on an issue. Different arrangements
can be drafted for bands with a leader or leaders, giving them more influence in
the process. Sometimes the leader will get more than one vote. Sometimes the
leader will be the decision maker on some or all of the issues, without a vote.
Furthermore, the types of decisions to be determined might have different
methods of being resolved. For instance, adding or terminating a member of the
band might be a decision that only the leader can make, or it may be only
accomplished only by a unanimous vote of the remaining members. Changing the
Band Agreement is another area that special consideration makes sense. Should
that be unanimous, a majority or one vote by the leader can trump all? The band
members should evaluate each of these decisions. Finally, an arbitration clause
that forces disputes to be resolved by arbitration, or at least submitted to
arbitration before a lawsuit can begin are helpful in resolving disputes before
they spin out of control.
Division of income is also obviously important to address. The
agreement should cover both the division while all are together in the group, as
well as how to treat departing member(s) regarding income. Again, if it is a
band where all members are contributing relatively equal amounts of time,
energy, creativity, money and writing, an equal division of profits earned might
be the easiest and fairest way to divide the pie. If one or two members are
carrying a lot of the weight of the band, that might be acknowledged in the
agreement, carving our more of particular income for their efforts. The most
significant matter to be addressed and understood is the division of publishing
income, as opposed to performances, record sales and merchandising. Sometimes
all the writing is done by one member, sometimes all contribute. Some bands
treat publishing income completely separate from band income. Some bands
characterize all the writing as that of the band, and all income is divided
equally. There are as many variations to these issues as there are songs in the
world. What is right in one case might not fit as well in others. Again,
because of the potential for misunderstandings and unmet expectations, it is
important for these procedures to be reduced to writing and agreed upon before
any conflict arises. Obviously the case of a departing member, or dissolution
of the entire band complicates this matter significantly. Ownership, control
and income entitlement to ongoing record sales, performances and other income
streams are much disputed and hotly contested areas when bands break up. The
best defense to long, drawn out and expensive disputes is to have an agreement
in place before the conflict arises.
Finally, an understanding about who gets entitlement to and use of the
band's name in a departure of one or more band members should be addressed.
Like song ownership, this is sometimes a hotly contested matter. The name is
what the public associates with the product (the sound and the songs).
Therefore, such an asset is at times much more valuable than all of the hard
assets, like sound equipment, that the band owns. If the band breaks up
completely, it might be fair that no one member can use the name again. An
exception to this rule might be if someone bills themselves as "formerly with . . . ."
If one person thought of the name, the agreement might allow that
person to use it, or use it if he or she is performing with at least one of the
original members of the band. Again, the amount of contingencies and variations
to this element of the agreement can be as varied as the band desires.
Overall, the best advice I can give is to have one of these agreements
in place very early in a group's formation and career. It is cliché, but
accurate in this case, that an ounce of prevention is worth a pound of cure.
 |
© 2002 Mick Spence, Esq.
As originally published in City's Tone February 2002 edition. |
10 South Fifth Street, Suite 700 | Minneapolis, MN 55402
Phone: 612.375.1555 | Fax: 612.375.1511 | E-mail: info@spencelawfirm.com
© Copyright 1999-2007
The Spence Law Firm.
All Rights Reserved
|
|
|
|
