Talent Management Contracts and Strategic Due Diligence

DISCLAIMER: The following information is general, is not legal advice, is not a substitute for legal advice, and should not be acted on without obtaining advice from a lawyer. 

You can read an endless amount of books and articles concerning what percentages and legal language to look out for in a management contract. However, most artists I work with in my capacity as an entertainment lawyer have their eyes so glued on the contract, they forget to ask their potential manager the most fundamental questions of all — questions which can have answers that make ANY contract not worth the paper it is printed on.

Contrary to popular belief, step #1 when you are handed a management agreement is NOT to get a lawyer and start negotiating terms. Don’t get me wrong, getting offered a contract is not a bad thing. It’s genius, it means that someone values your work. But take a deep breath, cats. The act of getting paperwork in-paw is not a time to celebrate. It is a time to look more closely at the proposed arrangement. And to keep in mind that after a little strategic due diligence, you may not want to sign with this manager. Read that last sentence 2x.

First, before anything even remotely contract related happens — you must have a long heart-to-heart professional discussion with your (possibly) new manager to see if it is even a good idea to negotiate a contract with them. This meeting must be in-person, unless that it impossible due to distance or other factors, and get rid of as many distractions as possible. Beer is not on the menu for this meeting.

In the meeting, you (and every member of your band or group, if the “artist” in question here has multiple members) must get the opportunity to ask the manager questions, until literally you run out of questions. TIP – Do not talk about percentages or other contract terms. The mission is simply to find out if the manager is right for you.

In your meeting, focus on these issues:

  1. CREATIVE – What is the Manager’s Creative Vision?  Maybe this management will have nothing to do with your creative direction. But more typically, they do. So, you want to find out, now — does their vision involve refinement or a continuation of your current creative direction?  What happens after pen hits the paper? Does management have a drastic change in mind? Does your horror script become a musical? Does your rock band suddenly wear chicken costumes? Ridiculous hypotheticals, yes, but kooky things happen in the entertainment industry ever day — and creative chaos is NOT something you want to learn about after you sign a management contract.
  2. BUSINESS – Does the Manager have a sound Business Plan? The manager must have a business plan to make you money and expand your fan base.  And musicians – if the entire plan is “get signed,” sell your gear and buy lottery tickets —  it will be easier, you won’t have to lug your heavy drums up the steps. And even if you get miraculously signed to a label with no fans behind you, your negotiations with the label will not be from a position of strength, and you will probably get a terrible deal. You will likely not recoup your advance, if you get one. BUT – once you have a revenue stream and fan base, THEN, it will make business sense to sign the band, and the terms will more than likely be good.
  3. CONTACTS – Does this Manager have substantial personal contacts and experience in the relevant industry? Consider this — A manager who has passion to help your career in awesome, necessary, in fact — but think about this — at the end of the day, almost everyone who is seriously trying to succeed in music, film or TV has passion in their heart, or they would have already quit. They would have found one of the millions of easier, less time-consuming and less-stressful way to make a living. So, if your very hyped and passionate manager does not already “live in the world” that you want to get into, so to speak, maybe they he/she isn’t the right manager for you. Please understand, that doesn’t make them a bad or unworthy person/company, at all — but the evaluation at this stage is about making your career, not friends. Management must be able to pragmatically help you, right now.
  4. TIME? What exactly is the manager’s availability and time commitment. Does he or she represent other talent or have other personal commitments that conflict with your career? Will they take your calls? Find out what is going to happen time-wise, right now.
  5. The Yes-Men Rule (avoid).  Don’t waste your time with a yes-man (or woman). You need a manager to give honest and an objective perspective so you can improve your career and make money. Period. Yes-people make you feel good, they are fun people to hang out with, good friends — but they usually add nothing to your career as a manager, unless you are so established already as an artist that it doesn’t matter who is at the helm, you will succeed regardless.
  6. Personal References.  Ask for 3-4 personal references, and follow up. Too bad if you don’t feel like doing this – you must. Pick up the phone. A management contract is not a small commitment, it is your career. If the manager won’t provide references, run away

Assuming you have done all of the background work, then — and only then — it is time for Step #2, to review the specific terms of the contract.

And now, it is time to get a lawyer. Rock-n-Roll!

Lee Rudnicki, Esq.

p.s.  Check out my new article, A simple guide to financing an independent film with private equity.

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