Hello and welcome to our second Advice column of the week. This feature is a bit extra special because it also serves as our first collaborative piece with Daniel Alvarez, attorney at law and music business aficionado. We will be working with Daniel a lot in the months ahead, and we think the perspective he has on the business today is one that can aide both artists and industry professionals. If you have any questions about the content of the blog, or if you would like more information regarding the distributional services offered by Haulix, please email firstname.lastname@example.org and share your thoughts. You can also find us on Twitter and Facebook.
As an entertainment attorney, it is amazing what I see from the sidelines of the music business. I feel like it is hard to shock me anymore due to all the craziness that has come across my desk. We have all heard horror stories about record labels label that treats a band wrong. Yet what surprises me, is how frequently I consult with a band about a bad manager experience but I hardly hear about that in public. Entertainers think it is a quasi-parasitic relationship where they accept that they are getting used for profit, but they are getting the career benefit of label support. The sharp difference for when a manager does something wrong, is that they are supposed to be on your team, so the entertainer almost never sees it coming. The hit hurts most when it comes from someone you trust.
There is a fundamental lack of understanding of the roles and duties required of a manager – even by practicing managers today. I would argue that very few are well versed in the legal relationship that is formed between them and their entertainers, not by contract, but virtue of fiduciary duty laws throughout the country. If the phrase fiduciary duty is new to you and you are managing or being managed someone right now, start Googling for more details but please read on. I want to be clear. There are lots of good managers who know what they are doing and operate ethically and legally. Its just that there are enough bad apples out there, that folks need to fully understand what is required of them or risk getting hurt.
What does a manager do? This is a fundamental question that is so very often answered incorrectly. A manager is akin to a CEO (Chief Executive Officer) or COO (Chief Operating Officer) of a corporation. An artist hires a manager to run their business for them much like Coca Cola hires executives to run their business. Thanks to their position, a manager often has unrestricted access to a band’s money and can legally make binding decisions for them. Due to the nature of extreme trust required, the law says that positions like this have higher duties and responsibilities placed on them. For example, they can do no harm, they cannot personally benefit from the relationship other than agreed compensation, they cannot put their interests above the band and they always have the duty of loyalty.
As an example, I recently consulted with a very successful band whose manager was attempting to start a side business with them while remaining their manager. The manager and the band were going to get equal shares in a separate company they were forming. What is the big deal? Well, how is the manager looking out for his band’s best interests when his interest now competes with theirs as a partner? Who was now looking out for the band? Who would the manager have been loyal to in this situation? The conflicts are plenty and unfortunately so are situations like this one.
In another example, I worked with a band that was leaving a management company. The manager made a compensation claim and without permission changed the band’s Tunecore password and took the money he thought he was owed from the band’s account. Eventually he returned the account minus the money, but it is hard to imagine a court anywhere that would not have called that illegal. It is conversion (theft) at a minimum and without a doubt it is a violation of almost every legal duty he had to the band. His management company was exposed to major liability. All it would have taken is an enterprising attorney to go after them.
For an artist, it is a VERY large leap of faith that the stranger they are hiring is a good and trust worthy person who is also qualified to do the job. So what does an artist do to make sure a manager is competent or worthy of their trust these days? It seems not much. Usually they tell me, “the manager works for this big agency so we thought they must be good.” It is hard to imagine Coca Cola’s board of directors using such logic to hire such an important person without making sure they were trustworthy or qualified.
If you are at the point of hiring someone, there is not one all-inclusive list that could tell you what makes a great manager. Often it is a combo of the experience, their education (formal or on-the-job) and a lot of times, it is just the plain art of being a great manager. Many times, entertainers just feel lucky that a manager is even interested in them so they feel this is a take it or leave it predicament. That attitude is dangerous. Bad deals are bad deals no matter who proposes them. Taking the time to understand whom you are working with and what makes them qualified to do the job are key. Determining if they are trustworthy may be the difference between a career with longevity or one riddled with problems.
What to look for in a manager:
Resume: Request a written resume to look over. Hiring someone who wants complete access to your life and at least 15% of everything you earn should be professional enough to have one. Look for valid work experience. Business education is a major plus.
Maturity: It is VERY important to note that age does not determine maturity. I know and work with quite a few twenty-ish year old folks who are more mature than people in their forties. As an artist you want to be sure your manager is mature enough to check emotion and concentrate on business. Your manager is often your first point of contact for the rest of the world and you. You do not want childishness or foolishness for the face of your business.
Background Check: I recommend this all the time and no one does it. I cannot fathom working with someone who has access to all of the deepest recesses of my business without making sure they have a clean record. People do not do it because they think the manager will get offended. I say if they get offended maybe you should reconsider. This is a high position of trust. You need to be sure it is well placed. This is why Attorneys and Accountants are moving into the managing game so strongly like they did in sports. The Governmental agency’s that regulate them often have very strict background checks before they are given a license. They have to maintain that clean record. Any wrong doing on their parts and they risk losing that license. If you won’t do a background check, make your manager sign and swear in a document that he has never been accused, arrested or convicted of a crime dealing with fraud, dishonestly or truthfulness.
Roster: Check out who they manage and maybe more importantly check out who they have managed. Ask for the manager’s alumni contact info so you can contact them and get a first hand account of his or hers performance. Anyone who won’t give you a full list and contact info is hiding something. There are always relationships that go sour so you won’t find one manager that is loved by everyone, but you will see patterns. Be fair in this assessment. One bad review is not enough to run, a couple though should raise an eyebrow.
Education/Experience: Education comes in many forms. So it is not reasonable to judge someone by how the obtained his or hers. What is important is what they know now. If someone is formally educated, that is a great start. Notice I said start. Look for business courses. Those are great building blocks. If someone doesn’t have a formal education, then the chronology and depth of their music business experience is vital. For example, tour manager is great stepping-stone position because they deal with the day-to-day business at the street level. A good tour manager is well versed in contracts, personal interactions, merchandising as well as the “it factor” of getting things done.
Now I will offer a caveat here, there are tons of people who “manage” that are just starting out with no experience. This is a double-edged sword. If they are smart, motivated and have the ability to recognize that they don’t know everything, then you are on the right footing. If they do not posses all of the aforementioned traits, you may want to pass until they ripen a bit. They may do more harm then good.
Personality: This one is really subjective. On one hand you want someone who is friendly and can counsel you through the ups and downs of a career. On the other, you want someone who is tough enough to represent your interest to third parties. It is really hard to find someone who can do both well. This one is on you and what you feel matches best with you or your band. Just remember, this person is the business face of your brand, make sure he/she is a good reflection of your values and persona.
Manager Do’s and Don’ts:
Be a window – be transparent: Being transparent and telling your entertainer everything you are doing is the key to avoiding legal problems when it comes to your duty. If they know everything that is going on, the likely hood of someone finding you did something wrong is reduced significantly. You work for them. You owe them the duties of good faith and loyalty.
Conflict of Interest: Do not put yourself in a position where you use your band for personal gain. If there is something you want to do that could possibly be a conflict disclose that to your entertainer in writing so they are on notice. They should have a say in the matter and you should come t a written agreement.
Confidentiality: You have the duty to keep the artist’s private dealings private. Seems logical, but too often I hear managers over talking about their band’s private dealings. It is an easy way to get sued.
Avoid Improper Compensation: It is too easy to cross the line here. You may have access to the bank account or the royalty checks come to your office and you can deposit them, etc. If the entertainer can afford it, higher a business manager. This is the best way to get your hands out of he money jar. You should only be getting paid what was agreed to. Your best friend is a contract. It will tell everyone how you are compensated and it is all out in the open.
Avoid Competition: It is really tempting to make money off your relationship with your entertainer. As they rise in notoriety the potential to make money off them or with them rises also. It is best to stick to your commission. If you get them better deals with more money, its stands that you are making more money. If you just have to do the deal, recuse yourself from the band for that deal, disclose the information and do not take any commission from the band’s portion of the earnings for this deal. Always put the above in writing.
STUDY: Learn everything you can about business law. Concentrate on agency law and fiduciary duty. Please remember ignorance of the law is never a defense in a lawsuit. You can’t just say I didn’t know. If you hold yourself out as a manager, you will be held to a manager standard. It is a high bar and one you do not want to take lightly.
This article is for educational purposes only and not legal advice.
Daniel A. Alvarez, Sr. is an attorney, music manager and business law professor based out of Tampa, Florida. Known to his friends and clients as Danny, he is the managing member of The Alvarez Legal Group, P.L. and President of The Vindicated Group, LLC. Danny has earned a Bachelors Degree in Journalism from The University of Florida, a Masters degree in Education from Troy State University, a Juris Doctor degree from Stetson College of Law and LL.M. (Masters in Law) in Estate Planning from the University of Miami School of Law. Danny focuses his legal practice on Entertainment, Business and Personal Injury Law and has clients as varied as actress/singer Brooke Hogan and bands such as Go Radio, Broadway and War Generation. Danny is also the full time manager for the up and coming band, Stages and Stereos.