by Michelle Butler and Danny O’Neil
Danny and Michelle are skilled entertainment attorneys that frequently represent and collaborate with top-tier artists, world-renowned brands, and cutting-edge technology companies across music, fashion, art and other creative industries. Please feel free to get in contact to start the conversation at email@example.com or firstname.lastname@example.org, and follow them: @oneillesquire and @michellelynnbutler
As a creative, you spend your whole life devoting yourself to your passion, then (hooray) people finally want to pay you to do what you love! But wait, all of a sudden you are supposed to understand how to effectively run your own business while you deal with brands and artists with full scale legal teams, how did that happen? They didn’t teach contract negotiation in art school?! Not to worry, an overwhelming majority of creatives have never worked with an entertainment lawyer before, and this process can be daunting. Lawyers can be expensive (if not managed properly) and the issues we deal with are complicated. Don’t be overwhelmed!
If you’re reading this, you might be an emerging or established creative that provides different levels of creative services to brands, other artists, or companies. You may currently work with a lawyer, never even have met one, or be somewhere in between. Either way, in this article, we will try to demystify some of the common misconceptions about working with a lawyer, and provide you with a brief guide to understanding (i) what your business lawyer can and should do for you, (ii) how to effectively hire one to help you negotiate your rights and (iii) some of the main types of contracts and legal issues your lawyers can help you navigate as a freelance creative.
What is a lawyer for creatives?
First things first – there are two types of lawyers: litigators and transactional attorneys (or “business lawyers”). Quick summary: litigators go to court, transactional attorneys draft and negotiate contracts for business transactions. For our purposes here, we will be discussing how to work with a transactional attorney in the creative and entertainment industries.
What do lawyers for creatives actually do?
A good lawyer should help break down complicated agreements into plain English so that you understand the key terms of your arrangement and their implications, and communicate your legal and economic rights to your potential business and creative partners. Put simply, we draft contracts and negotiate on your behalf, mainly in order to protect your intellectual property rights and creative and economic interests.
What do lawyers for creatives NOT do?
Understanding what lawyers do NOT do is equally important in understanding the typical role of a lawyer. Your lawyer should collaborate with you, but should not make the decisions that determine the business or creative terms of your projects. We work with you to understand your goals and vision and can give you guidance on what terms are standard in certain arrangements, but our primary role is translating your business and creative discussions into enforceable terms.
HINT Lawyers CANNOT represent both sides of a project or collaboration, meaning, they can’t negotiate on your behalf and on behalf of your collaborator/employer. We want to be sure that we can prioritize your interests 100% of the time, particularly where they might conflict with those of your collaborators. We would encourage your partners on the other side of a project to engage their own counsel to be in their corner as well.
From a practical perspective, lawyers generally do not provide other professional services beyond legal counseling. We do not do your taxes, help you draft invoices, serve as your manager or business agent or provide other types of business and financial counseling. We leave those services up to other experts who are better suited to help you with those tasks. Your lawyer can, however, make introductions to these professionals and should have a wide network for you to tap into!
How do you engage a lawyer and begin the process?
Once you understand the benefits lawyers can provide and the roles we serve, the next step is learning how and when to engage a lawyer.
Step 1. Identifying the Right Lawyer
Don’t go to your neighbor’s cousin’s best friend’s former roommate for advice, just because they happened to pass the bar. A true entertainment/creative lawyer should have direct experience doing the specific type of work you need. The best way to find an entertainment lawyer is to get a referral from someone in the industry who you trust. Also, make sure it is someone who fits your personality and cultural values, this is a big part of how the working relationship will develop.
Step 2. Billing/Timing Expectations
Law firms have the following price hierarchy, Partner > Associate > Paralegal. Lawyers typically bill at an hourly rate, so you should ask your lawyer what their rate is, and what the rates of their colleagues are that might be assisting them. If you are working with a partner, ask them what their rates are and the rates of any associates and paralegals they will involve. You should be able to have a candid conversation with your lawyer about the projected fees on a project, and don’t be afraid to ask for what works for you! Typical fee structures can be hourly, flat fee, or some other arrangement. Good lawyers should be flexible in their fee structures, especially if you are an emerging creative. The same goes for timing, talk with your lawyer about realistic deadlines and hold them accountable for hitting those deadlines.
HINT We work for you, not the other way around!
Step 3. Engagement Letters
Once you have discussed your needs with your lawyer, they will typically (and should) send you an engagement letter, which is a document that makes the lawyer/client relationship formal and outlines what you have agreed with respect to fee structure. This is a necessary step, and at this point there should be a level of trust established between you and your lawyer, but always read this document carefully for anything that is different than what you discussed.
HINT You do not have to sign an NDA (see below) with your lawyer, EVER! We are bound by what is called “attorney/client” privilege. So, most anything you say to us, we cannot disclose to anyone outside of our law firm (unless otherwise required by law). This is true even BEFORE you sign the engagement letter!
What are a few types of contracts or legal terms your lawyers can help you negotiate as a freelance creative?
Independent Contractor Agreements and Related Terms: In exchange for not receiving benefits that employees typically receive, a freelancer will often work under an Independent Contractor (IC) Agreement. ICs should have greater control over the way in which they conduct their business. If you are engaged as an IC, a lawyer can help you ensure that your IC agreement makes this clear so that you have maximum creative control.
Also, under an employment relationship, copyrights in artworks and creations developed during the scope of the relationship are automatically owned by the employer. This is not the case under an IC agreement, unless the contract expressly says so. If you are engaged as a creative IC, you may wish to avoid any terms that lead to an assignment of your rights. On the other hand, if you are engaging a contributor through this type of agreement, you may expect to receive the rights to the creations that you are paying for. A lawyer can help you understand these decisions and use the correct language in the agreement.
Licenses vs Work for Hire/Buyout Agreements – What is the difference between the two?
When you ‘license’ something to someone, you are giving them a right to use what you own (in this case, it would be the intellectual property (IP) that you create). The terms of licenses can get very complicated, but essentially you will give someone the right to use your work for whatever purpose the agreement describes, either for a fixed amount of time or forever.
HINT In this case, you would be the “Licensor” and the person receiving the license will be the “Licensee,” and this is the way the parties (i.e. who is signing the agreement) will be referred to in the agreement.
Licensing your IP under an ‘exclusive license in perpetuity’ could mean that you are granting full rights to your work FOREVER, and this could prevent you from using it without the Licensee’s permission. You should speak with your lawyer about trying to get the license to either be exclusive only for a certain amount of time, or making it a non-exclusive license between the Licensee and Licensor.
Work for Hire (WFH) (also known as a ‘Buyout’ Agreement)
A WFH is, as it sounds, a document where someone ‘hires’ you to perform or create ‘work’ for them. What this means in practice is that they will be the exclusive owner of all the intellectual property in the work that you create under the agreement. These agreements typically do not allow the creator to use the work later for, even self promotion, BUT this is a negotiable point, and one you and your lawyer can discuss.
Important points to negotiate in each
Scope of license: exclusivity terms, duration, what is licensed, for what purpose, what specific rights are you comfortable granting
Backend Royalty: which means if the work is commercially “exploited” you would receive a portion of the money the Licensee earns.
HINT This could be a flat royalty rate or a more traditional percentage-based royalties
IP protections: acknowledgment that you retain IP ownership, license to your IP rights can’t be granted or sublicensed to others
Scope of IP assignment—should be narrowly tailored to what you are creating for the other party (rather than any IP you develop at any time for any purpose)
License back or retention of rights for certain purposes—e.g., to use your creations in a portfolio, on your personal or professional websites, etc.
Scopes of Work (SOWs)
This is a document prepared by the creatives that outlines the parties’ responsibilities and key economic and business terms for each specific deliverable. Ideally, your lawyer will facilitate the necessary discussions with your partner and will attach the final SOW to the contract, which becomes part of the legally binding document.
HINT Lawyers typically do not draft SOWs or guide the conversations on the business terms, and you should keep a personalized, stylish SOW handy for each deal you do.
Non-Disclosure Agreements (‘NDA’)
“NDA, NDA, NDA,” I am sure you have heard this a million times.
HINT NDA is not a verb, you cannot “NDA” something. NDA stands for “Non-Disclosure Agreement.” These agreements impose confidentiality restrictions to prevent a collaborator from disclosing details about the project or other sensitive information to third parties.
Here are the main (basic) things you need to understand about an NDA:
- Is it mutual or one way? Meaning, does the NDA only bind one person to keep things confidential, or are both people signing
HINT It will say it in the first couple lines of the agreement!
- How long does the NDA last (i.e. what is the “Term”)? NDAs can bind you to confidentiality for a certain amount of time, but watch out for words like “perpetuity,” or, “indefinitely” —these are fancy words for, yep, you guessed it—FOREVER. Don’t sign something that binds you to keep silent forever, that means if, in 10 years, you make an Instagram post about a project you worked on, you are in breach of the contract!
HINT There is a question here about enforceability of an NDA with a long term, something you should definitely discuss with your lawyer.
- You should work with your lawyer to make sure the NDA you’re signing isn’t overly restrictive. For example, it shouldn’t prevent you from disclosing information that you already knew before entering into the project or that is public knowledge everyone has.
- Liquidated Damages – this just sounds ominous, and it certainly can be! What this means is if you are in breach of the NDA with liquidated damages, there will be an upfront dollar amount in the contract that, if you willingly sign, you will owe as damages to the individual or company for violating the agreement. If you are dealing with a major brand or high profile artist, this can be in the thousands, or even hundreds of thousands of dollars
HINT Watch out for words like “unforeseeable” or “damages that are ‘difficult to calculate.”
Should I have my own LLC or corporation (C-Corp)?
Short answer is, probably yes.
Whether your client / collaborator / employer is a company (like a brand) or an individual, you should consider using your LLC or Corporation (“C-Corp”) to conduct your business.
HINT If you are an artist performing services for money, you are a BUSINESS, so treat yourself like one!
LLC means “limited liability company” which means, generally speaking, any lawsuit against the business or costs incurred in connection with the business you conduct under your LLC is limited to the company, and you do not take on the liability yourself. Operating through your business entity can allow you to save money on taxes by expensing certain items, and will ultimately save you money down the road.
What if you don’t have an LLC?
File for one! It is very easy, pretty inexpensive and takes 3-5 business days (or shorter with expedited service). Ask your entertainment lawyer if they have the capacity / expertise to help out with this, or if they can refer you to someone who can.
HINT Your visa status can affect your ability to contract through a separate corporate entity, make sure you bring this up with your lawyer early in the process!
After forming your LLC/corporation, you will need to also open up a business bank account. In order to do this, you will need (i) your certificate of formation from the state in which you filed your LLC (which your lawyer typically stores for you, but will send you a copy of) and (ii) a federal employer identification number (EIN).
HINT Ask your lawyer to put you in contact with their paralegal to get this done, they are (hopefully) very knowledgeable about this stuff and will be less costly!
This article is meant to help you understand at a very high level how to practically bring a lawyer into your creative and business dealings. There are countless issues you will come across as a freelance creative that we can help you navigate from a legal perspective. For example, we can help you with as broad of a range of tasks as (i) understanding the difference between various types of intellectual property protection (such as copyrights and trademarks) and how to best protect your rights and creations, (ii) forming your LLC or corporation and helping navigate tax issues for your corporate entities, and (iii) addressing visa issues if you are not a U.S. citizen but are doing business here. There are many, many other issues we would love to talk to you about!