This Article Originally Published April 1998
by Donald Passman
Most lawyers in the music business don't charge just on an hourly basis. For the ones that do, the rates are usually from $125 per hour for new lawyers, up to $450 or more for biggies. Some of us charge a percentage (usually 5%), while others do something known as "value billing," often with an hourly rate or retainer against it. (A retainer is a set monthly fee that is either credited against the ultimate fee, or it's a flat fee covering all services. "Value Billing" means that, when the deal is finished, the lawyer asks for a fee based on the size of the deal and his or her contribution to it. If the lawyer had very little to do with shaping the deal, but rather just did the contract, I think the fee should be close to an hourly rate (though I'll get heat for telling you this because it's usually more). On the other hand, if the lawyer came up with a clever concept or strategy that made you substantial sums of money, or the lawyer shaped or created the deal from scratch, he or she will ask for a much larger fee. If your lawyer "value bills," you should get some idea up front what it's going to be, so that there aren't any rude surprises. At minimum, get a ballpark range.
Here are some questions to ask your potential lawyer:
1. Do you have expertise in the music business?
2. What do you charge? In addition to fees, do you charge for costs? (Everyone charges for long-distance phone calls, messengers, etc., but some charge for every page of photocopying, faxing, etc, while others are much looser.)
3. Ask if the lawyer has a written fee arrangement. In California, lawyers are required to have their fee arrangement in writing in order to enforce them (a major incentive to get them in writing). Ask for a copy of the fee arrangement so you can review it. Also, the lawyer can't insist on your signing it in his or her office--the California Bar considers that too intimidating. So take it home.
It's unethical in California for lawyers to have an agreement with you that can't be terminated at any time. If it's a percentage arrangement, be careful about what happens to the percentage after the term.
You should ask if they object to your having the fee arrangement reviewed by an independent advisor, preferably a lawyer, but at least a personal manager or business manager. No legitimate lawyer will object to this, and in fact, they should encourage it. If it's at all possible, you should have your fee arrangement with your lawyer reviewed independently--especially if it involves a percentage. And, if it isn't possible to do this, make sure the lawyer explains it to you in detail and that you understand it.
4. Ask for references of artists at your level, and check them out. Does this lawyer return phone calls? Do they get deals done in a reasonable period of time? "Reasonable" in the music business is not going to be anywhere near the speed you would like. It's not uncommon for a record deal to take four or five months to negotiate, especially if you're a new artist and can't force the record company to turn out a draft quickly. Four to five months is a realistic time frame, but if it goes beyond that, someone isn't doing their job. I've always been amused by a story I heard from a new client when I was a young lawyer. He had been represented by another lawyer, and he said, "I know my record deal is good. It took over a year to negotiate."
5. Do you have or foresee any conflicts of interest?
Conflicts of Interest
A lawyer has a conflict of interest when his or her clients get into a situation where their interests are adverse. This is easy to see, for example, when two clients of the same lawyer want to sue each other. However, it's also a conflict of interest when two clients of the same lawyer make a deal with each other.
Lawyers are ethically required to disclose their conflicts of interest to you. Your choice is either to hire another lawyer, or you may "waive" (meaning you choose to ignore) the conflict, and continue to use the same lawyer.
Because the entertainment industry is a relatively small business, those of us who practice in this field are continually bumping into ourselves when our clients make deals with each other. Most of the time these situations are harmless and can be handled simply, in one of several ways:
1. Each of the clients gets another lawyer (rare unless it's a pretty serious conflict).
2. One of the clients gets another lawyer (much more common).
3. The clients work out the agreement amongst themselves (or else the manager, agent, or business manager negotiates for them), and the lawyer merely draws up the paperwork, not representing anyone's interest.
When you are interviewing attorneys, you should ask if they have or foresee any conflicts of interest. Most ethical lawyers will bring it up before you do, but you should ask anyway.