DO YOU HAVE A BAND AGREEMENT? Pt 2
So here's part 2 of the Internal Agreement blog. I'm basically just scratching the surface on many of these points to bring some awareness to you about what needs to be addressed and why. If you're going to act on this then I'd recommend digging deeper into it with an attorney or maybe you can ask me specific questions and I'll be glad to share everything I know. I should make a disclaimer though: I am not a lawyer by any stretch, so this is, in no way, proper legal advice. Seek out an entertainment lawyer. Lol
DIVIDING THE CONTROL FOR DECISION MAKING
Control is a different matter from songwriting splits and the way the partnership is divided up percentage-wise. The amount of control a member has over decisions can directly correlate to his or her percentage of the partnership but it doesn’t have to. Many times there’s a ‘key member’ or two within a band and it’s common for them to get two votes while a non-key member gets one vote. This can help to avoid a deadlock where there are an equal number of votes on either side of the fence. If you do split things equally among a band that has an even number of members where a deadlock is possible, make sure to assign the job of breaking the tie to a third party like a manager or an attorney. Whatever you do, don’t make it the gf/bf of one of the band members because things will get ugly. Lol
OTHER DETAILS TO CONSIDER
How many votes does it take to fire a band member? A majority vote or a unanimous vote?
How many votes does it take to hire someone like a manager, agent, or attorney?
What if someone wants to quit the band? Generally if someone’s unhappy in the band, it doesn’t make any sense to force them to stay through a contract. If you’re in the middle of a tour, however, you can’t walk away from the promoter and if you’re signed to a label you can’t leave the record company.
Things can get pretty crazy here so pay attention! If you’re signed to a label and there’s a ‘key-man’ clause in the contract and he or she wants to leave, the label has the right to just drop the band all together and carry on with the ‘key man’ as a solo artist. There will also be a clause in the contract that will state that the label gets first crack at the departing member’s solo career. So they would have to refuse the solo artist before he or she had the right to shop anywhere else. This is where things can get sticky. They may also decide that royalties earned by this solo venture will be used to replenish the band’s deficit (if the account is unrecouped). This can also work the other way; if the key man’s solo career is a bust and the remaining members of the band have kept things rolling along successfully, the label has the right to dip into the band’s earnings to replenish the solo artist’s account. Please, don’t shoot the messenger!
What if a member dies or becomes disabled? In this case, there’s usually a ‘buy-out’ and you’re treated as though you quit the band or were fired.
What happens after you’re fired or you quit? You will keep your percentage of the work that you were involved in when you were in the band (record/songwriting royalties, royalties for DVDs or television shows, etc). For future activities that you are not involved in, you get nothing.
If the band has accumulated a lot of equipment that it owns collectively then you’ll get bought out of your share of these hard assets. ‘Hard’ assets are any physical things that you can touch and feel as opposed to ‘intangibles’ (the band name, record deals, etc). Generally they’ll calculate the book value of all the hard assets and buy you out based on your percentage of the total.
Your percentage of the total book value of hard assets is paid out to you over a period of two years. This protects the remaining members from having to come up with a huge chunk of cash immediately. If you were owed $25,000 (25% of $100,000 worth of equipment) you would receive $6,250 six months after your departure from the band, another $6,250 in twelve months and so on until the entire $25,000 is paid.
When you are ready to sit down with an attorney to go over the details of a band agreement, you should understand that if the whole band is dealing with only one lawyer, there’s a built-in conflict of interest. It means that the lawyer is representing two or more clients that are on opposite sides of the fence. So it’s unethical for the lawyer to take sides under these circumstances. He should bring this to your attention so you can determine if you’d rather choose to have every member seek independent counsel or just go ahead with one lawyer for all. Quite often bands will use one lawyer to just act as a secretary to draft up what the band has agreed upon among themselves. In this case the lawyer will get you to sign a Conflict Waiver which states that you are aware of the conflict of interest and are willing to go ahead anyway.