The relationship with an agent is often an artist?s most significant professional relationship, with an agent fulfilling many important roles. Sean Egan looks at the legal aspects of the relationship.
The law provides a valuable mechanism for protecting the interests of both agents and their clients, and comes into play at various points in the relationship between the parties:
1. Making an agreement
It is important that any agreement with an agent is set down formally. Historically, agents have operated without formal agreements, but they should not do so now. Though oral agreements are binding, it is in both the artist?s and agent?s interest to have a written agreement that deals with all the important issues that may arise during their relationship. Without this, both sides are vulnerable to misunderstandings and acrimony.
2. An agent?s legal standing
An agent acting within his/her ostensible authority (i.e. acting in a manner you would expect) can bind the client. Producers are entitled to assume that an agent is entitled to bind an artist. This is an additional reason for artists using only reputable and professional agents. It is better for all that the artist signs the agreement and therefore checks the details before being bound.
3. An agent?s duties
By virtue of there being an agency agreement there are a number of legal duties imposed upon the agent. The agent is responsible to the artist for any loss if he/she did not use the proper skill and diligence and has a duty to keep accounts and to show the artist, on demand, all documents and transactions relating to the artist. In legal terms the agent has a fiduciary duty towards the artist, which means that because of the high degree of reliance on the agent, the artist can expect a higher degree of care than under a mere contract. The artist can also sue the agent for any profits the agent makes due to the use of confidential information. Agents have a first duty to the artist so that where there is a conflict of interest, they are obliged to give full disclosure and seek the artist?s approval to their proposed course of action.
4. The agent?s authority
The agreement needs to specify in what areas of activity the agent will represent a client. Often agreements cover all activities within the entertainment industry so that this would cover writing or directing as well as acting, and it is crucial to be clear as to whether the agent acts on an exclusive or a non-exclusive basis and for which territories. Agents will usually only act on an exclusive basis for good practical reasons, but where an actor may also have a US agent, the two agents will need to work closely together to ensure that there are no overlaps or double bookings.
5. Term and termination
Agent and client need to be clear about how long the agent agreement will continue. From the artist?s point of view this is particularly important where the agreement is exclusive, since being stuck with an agent where the relationship is not working can be disastrous. I would recommend for both agents and artists that there is always the ability to give notice to terminate of anything between one month and three months, though I regularly see agreements with minimum exclusive terms of two years or more.
6. Payment of commission
Agents are paid commission of at least 10% of earnings, with higher rates usually applying for voice-overs, advertising and personal appearances. The agreement should specify what expenses the agency is prepared to bear as part of the commission and what expenses it will expect the artist to bear. Commission will usually be paid on all the artist?s income, whether the deals are negotiated by the agent or not. This should not be an issue as there should be an obligation on the artist to pass any enquiries for work through to the agent; if the artist starts negotiating deals on his own this will undermine the relationship. VAT will be charged on commission so if the agent is not VAT registered this is an irrecoverable cost. The provision that gives rise to most disputes is the extent to which commission is charged for jobs undertaken after the agency agreement has ended ? usually when the artist has moved to another agent. The drafting of the agreement will be crucial if an issue arises. Some agent agreements expect commission from all jobs arising from introductions. It is standard that commission will be charged on future options, which is particularly important in relation to jobs on TV soaps.
7. Legal regulations
In April 2004, the Conduct of Employment Agencies and Employment Businesses Regulations came into force. These were principally a response to several cases where rogue agents had dipped into client monies to support an extravagant lifestyle, subsequently going bankrupt and causing substantial losses to clients. It also prohibited up-front fees where agents required advance payments before acting. The regulations were criticised by trade bodies as being unlikely to prevent the worst behaviour, whilst adding an extra layer of paperwork and cost. There was a widespread call for agencies to be licensed on the basis that continuing the regime of self-regulation will not root out the rogues. The regulations require written terms of business to be in place before negotiations commence and that client accounts are set up into which client monies are kept separate from agency monies and passed through to the client within 10 days of receipt unless agreed otherwise. There are also considerable obligations to keep records and issue regular statements. Reputable agencies will have such arrangements in place but others may well be ignoring the regulations taking their chances with the DTI inspectors.
Sean Egan is Head of the Theatre and Arts department at Bates, Wells & Braithwaite Solicitors.
w: http://www.bateswells.co.uk