Agents, Managers, Attorneys and Employment Regulations

From Media & Entertainment Law Wypadkis

Contents 1 Managers 2 Agent 2.1 California Law - Talent Agencies Act 2.1.1 Buchwald v. Superior Court 2.1.2 Wachs v. Curry 2.1.3 Waisbren v. Peppercorn Productions, Inc. 2.1.4 Park v. Deftones 2.1.5 Styne v. Stevens 2.2 NY Law 3 Attorneys 3.1 Day v. Rosenthal

Managers

Unlike talent agents, personal managers are not covered by the Talent Agencies Act. Personal managers primarily advise, counsel, direct, and coordinate the development of the artist's career. They advise in both business and personal matters, frequently lend money to young artists, and serve as spokespersons Deftones. They cannot seek to get commissions by procuring work without an agent’s licensed or they will be held to violate the Talent Agencies Act. Managers aren’t licensed because it is hard to quantify what they do.

Agent

The agent is a salesperson whose primary role is to find employment for his clients. An agent spends a great deal of time covering the town to learn what kinds of projects and talent potential buyers are seeking and then tries to fill those needs from his client list. Agents can “counsel or direct artists in the development of their professional careers, but managers cannot function as agents in agent licensing states. Guild Regulation- All talent agencies that represent SAG members must be franchised by the guild in accordance with the franchise agreement that was created in 1939. The franchise agreement was originally created to protect actors from abuses by unethical agents. In addition to governing an agency’s financial interests, the agreement lso caps an agent’s commission at 10 percent and regulates other aspects of the actor/agent relationship.

California Law - Talent Agencies Act

“No person shall engage in or carry on the occupation of a talent agency without first procuring a license therefore from the Labor Commissioner”

• talent agent – “person or corporation who engages in the occupation of procuring, offering, promising, or attempting to procure employment or engagements for an artist or artists, except that the activities of procuring, offering or promising to procure recording contracts for an artist or artists shall not of itself subject a person or corporation to regulation and licensing under this chapter

The Act’s purpose is to protect artists seeking employment. The Act limits their compensation to 10%. Talent agents must first procure a license from the Labor Commissioner. Any problems with unlicensed agents must first be brought to the Labor Commissioner to meet the exhaustion of administrative remedies Styne. A contract between an unlicensed agent and artist is void.

• talent have the ability to void the contract if teh mangers attemtp to collect compensation for securing employment
  • clients can turn on managers
• an unlicensed manager MAY procure a recording contract

(PROS: 1) Keep managers in their place 2) promotes checks and balances 3) keeps agent fees low because it limits to 10% 4) elevates agents to a profession Also the agent doesn’t collect until the deal is closed; CONS: 1) Disincentive to do useful things 2) creates work for agents which creates a situtation where teh talent now pays 30% (10% to agent and 20% to manager)

Buchwald v. Superior Court

(Cal. App 1967)

• Labor Commissioner has original jx to resolve disputes under the act
• attempts to procure employment subject you to the Act, whether or not you hold yourself out as manager or agent
• contract between unlicensed agent and artist is void and unenforceable

Wachs v. Curry

(Cal. App. 1993)

• carved out an incidental procurement exception to the licensing requirement

Waisbren v. Peppercorn Productions, Inc.

(Ct. App. 1995)

• incidental procurement exception incorrect dicta

Park v. Deftones

(Cal. App. 1999) Acting P.J. Nott

• FACTS: Park worked for the Deftones as their personal manager. The Deftones dropped Park after he got them a contract with Maverick Records.
  • the Deftones said he was acting as a talent agent without a license in Violation of the Talen Agencies Act
  • Park is appealing from summary judgment in the Deftone's favor (lower court found the contract void)
• ISSUE: Park claims that Maverick interfered with his contractual relationship with the Deftones and they now owe him commission.
• HOLDING:

1. Park argued that the Deftones petition was not raised within the statute of limitations - the Labor Commission said that it was timely because the Deftones filed the petition within a year of the filing of Park's filing his action.
   1. Park argued that he was not acting as an agent because he was trying to get them a recording contract, and under the act a manager can do this, but even indirect procurment is acting as an agent under the Act.
      1. Parks argued that he was not being compensated, but the contract actually said that he was being compensated for this work. The court says that any form of activity that procures employment for an artist, whether there is commission or not, falls under the Act and a license is required.

he was seeking compensation only for the recording contract and not the live gigs

• court points out that the contract provided he would get 20% on all work procured (not just recording contracts)
• the act should be liberally construed to promote its general object and apply even where work is being procured without a commission
• a legislative report indicates intent to reject un-charged procurement
• court said that the live gigs procured would increase the stream of money from the recording contract

Comments on this case:

• the law is very strict
• BUT the court was being hard on this guy
• normally the statute would be construed to find a legal purpose
  • so the commission would only apply to the recording contract

Styne v. Stevens

(Cal. 2001) J. Baxter

• FACTS: Styne represented Stevens in a deal to get Stevens cosmetic line on HSN. Stevens was never paid for any personal appearances on HSN, only for the cosmetic line.
  • footnotes of the case say this is still employment, though they have no obligation to pay benefits (this would be up to the Labor Commission to Decide)

Stevens failed to pay Styne under the oral contract and claimed that it was a procurement of employment and Styne was not licensed under the Talent Agencies Act.

• • requires that peole procuring employment have a license
  • if not the contract is illegal and void

Styne argued that the statute of limitations is up and she should have gone to the Labor Commission first

• talent Agencies Act
  • one year statute of limitations
  • all cases and controversies under the act must be brought before the Labor Commissioner, subject to de novo review in the superior court
• ISSUE: The trial court allowed the use of the Act as a Defesne, but the Court of Appeals found that the defense was barred by the statute of limitations.
• HOLDING: Ct. found the statute of limitations didn’t bar a defense matter BUT that she needed to go to the Labor Commission first

The statute of limitations does not bar the use of the Act as a defense as long as no affirmative releif is sought. If the Act is used as a defense, the court needs to issue a stay while an opinion of the Commission is sought.

• • There was no employment contract between Stevens and HSN and she would not be an employee by IRS standards either.

NY Law

managers are ok if there is an incidental procurement of employment

Attorneys

CA requires lawyers to have written fee agreements with their clients whenever the client’s total expense, including fees, will likely exceed $1,000. The lawyer must disclose whether they have malpractice insurance. Restrictions- There are rules restricting solicitations, advertising, and law service partnerships with non-lawyers. Whatever hat a lawyer is wearing, all applicable rules of professional conduct and enforcement procedures apply to licensed attorneys. 5-10% is a reasonable fee, but contingency fees can be as high as 50% possibly. Malpractice- The cause of action does not accrue until the A/C privilege is severed Day.

• legally nothing prevents a lawyer from acting as manager or agent but beware the rules of professional conduct

Day v. Rosenthal

(Cal. App. 1985) J. Goldin

• FACTS: Rosenthal (attorney who also acted as accountant, business manager, record keeper & investment advisor) appeals judgment against him in amount of $26 million for legal malpractice, fraud, breach of fiduciary duty, abuse of process; trial court determined that contract never existed, were invalid or unenforceable, and granted injunctive relief requiring Rosenthal to turn over trust funds & records
  • Rosenthal had a retainer agreement with Day and her husband for 10% of everything they had and litigation would be separate
    • not uncommon but usually 5%
  • Day relied on Melcher and Melcher relied on Rosenthal
  • they fired him and he sued for breach of retainer agreements
  • Rosenthal was found liable for legal malpractice, breach of fiduciary duty, fraud and abuse of process
  • he acquired money without their knowledge
  • he tried to change the administrator of their estate
  • he kept vital records, pertaining to the litigation, from them
  • Rosenthal appealed
• ISSUE: Whether appellees were required to prove appellant's negligence through expert testimony
• HOLDING: Ct. said Rosenthal had an obligation to disclose the implications of his agreement. Expert testimony not required to show that Rosenthal breached his duties
  • expert testimony wasn’t necessary to show his negligence – it is only needed when it will assist the trier of fact and will not be needed in all cases
    • the Rules of Professional conduct are all that is needed to show what he did wrong
    • Attorneys are required to perform any service for which he has been hired with such skill, prudence, and diligence as lawyers of ordinary skill and capacity commonly possess and exercise in the performance of the tasks which they undertake
      • Violation for attorney to assume position adverse to client without intelligent consent after disclosure
      • Rosenthal breached obligations as attorney beginning with retainer agreements
      • Granted percentage of income, not including litigation and services
      • Percentage included their property and income from corporations in which they owned substantial interest
      • Many advantages continued after he ceased to render services
      • Attorney has duty to protect clients
      • Failed to disclose conflicts, failed to provide competent legal services
      • Received profits from business dealings
      • Commingled, depleted, misapplied funds and failed to account