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Entertainment & Sports Industries

Entertainment Law: Some Practice Considerations for Beginners

Kirk T. Schroder

Despite the lack of a universally accepted definition of what entertainment lawyers do, a legal practice in this industry is distinct from other areas of law. No body of case law per se constitutes "entertainment law." An entertainment lawyer regularly counsels clients on issues involving a wide range of legal practice areas, including intellectual property, contracts, business, employment/labor, securities, international, taxation, immigration, and litigation. The legal practice areas on which the entertainment lawyer relies the most will depend on the nature of the client’s work within the entertainment industry.

In addition to case law, certain states have specific statutes pertaining to the entertainment industry. The great majority of entertainment contracts negotiated today are entered into and performed in New York and California. Because the entertainment industries are so firmly entrenched in those states, extensive regulation of the entertainment industry exists in those jurisdictions.

The choice of law of either state can create significantly different outcomes with respect to the interpretation and enforceability of the contract. A working knowledge of the entertainment-related regulations in those two states is essential for this practice area even if the attorney does not intend to practice in New York or California. Likewise, the attorney should actively identify and learn the entertainment-related statutes and regulations affecting clients in his or her state.

Many different trade guilds and unions operate throughout the entertainment industry. Their agreements cover basic fee arrangements and working conditions for essential creative and technical personnel. They control when the client is a "signatory" to a union/guild agreement of this type and/or when the production involves union members. Even if the state has right-to-work laws, these union rules still affect entertainment clients.

In traditional legal areas, knowledge of relevant cases, statutes, regulations, and collective bargaining agreements typically constitute sufficient competence for legal practitioners. However, this is not true for entertainment lawyers. An entertainment lawyer must also understand how the client does business within the industry.

The fact that entertainment is a document-intensive business further underscores the necessity for lawyers who represent entertainment clients to comprehend the business practices of the industry. This point cannot be overemphasized. In fact, entertainment lawyers have found that in today’s entertainment environment it is not enough for them to understand the business practices of only one particular field within the industry. A lawyer’s depth of knowledge of industry business practices almost always determines his or her degree of effectiveness.

One simple way to learn about the trends and developments within the entertainment industry is to read the industry trade publications faithfully. Also, many bar and legal education organizations sponsor seminars pertaining to the entertainment industry and provide great networking opportunities.

Sometimes lawyers beginning in the entertainment field improperly assess their market for available entertainment clients. The best way to understand the market for clients in the entertainment industry is to survey the local legal market for potential clients and compare that market to the overall level of entertainment industry activity in various geographic regions in the country.

Geography plays a role in the equation. The industry is primarily centered in New York, Los Angeles, and Nashville. If the entertainment attorney chooses to practice in one of these cities, he or she will face a different set of challenges to the practice of entertainment law than someone who wants to practice entertainment law in a market other than those three cities. However, general guidelines apply to both markets.

Any plan to develop an entertainment law practice initially should address how the entertainment lawyer gains the necessary competence. Remember that the entertainment industry thrives on relationships. Thus, the lawyer must take the time to meet people who work in the industry and learn about their business.

If the lawyer starts from scratch, typically he will have clients who can’t pay the bills but will still give him an opportunity to obtain valuable experience. For example, most actors and actresses struggle to make ends meet with part-time jobs. However, the types of issues they confront (such as talent releases, independent contractor tax issues, union affiliation) are at the core of some basic entertainment legal and business principles.

Investing time and energy in developing legal and business competence always pays off. Entertainment clients can and do shop and compare lawyers. Perceived competence will distinguish the attorney from others within the market who also hold themselves out as entertainment lawyers.

More opportunity exists for entertainment lawyers in the three primary markets. Thus, the competition for clients and legal positions in these markets is very high. Although it is more difficult, a lawyer can develop an entertainment law practice and represent entertainment clients in a secondary market. But proper planning becomes a critical necessity. Those who accept this challenge must, at a minimum, (1) assess the market at different geographic levels, and (2) be aware of how the industry continues to expand into secondary markets.

Advancements in technology will continue to increase the opportunities for entertainment lawyers practicing outside the primary markets. As the economy expands, more avenues for programming open, especially through nontraditional channels.

Lawyers who begin to represent clients in the entertainment industry should not assume that their present professional liability insurance will cover claims made against them for entertainment-related legal work. It is critically important to engage an insurance broker early on to learn what guidelines he or she uses to provide coverage in this area.

Lawyers who are new at representing entertainment clients find themselves drawn in by their clients to perform other services. These nonlegal activities include serving as an agent, a manager, or an investment advisor for clients, and they may prove hazardous for lawyers. The problems associated with nonlegal activities can be avoided. When dealing with entertainment clients, the lawyer must make it clear what can and cannot be done for the client. This is best accomplished through an engagement letter that states the scope of the lawyer’s activities for the client.

At the heart of the attorney– client relationship lie the fiduciary responsibilities the attorney owes to the client. Many contend that there is something special, unique, and extraordinary about the artist–fiduciary relationship in the entertainment industry. In any event, lawyers who begin to practice in the entertainment field must establish proper guidelines of conduct early in their careers.

All lawyers starting in the entertainment field are, at one time or another, faced with the dilemma of how to bill clients who cannot afford to pay their traditional fees. Unlike most traditional practice areas, lawyers in the entertainment industry can create varying fee arrangements with their clients. However, in some instances, certain nontraditional fee arrangements may present an entertainment lawyer with professional and ethical problems.

A growing practice by some entertainment lawyers is to take a percentage fee arrangement from their clients. Structuring fee arrangements, especially nontraditional arrangements, requires the careful attention of an entertainment lawyer. Lawyers starting out in the entertainment field should develop acceptable fee and billing practices from an ethical and practical perspective.

As the entertainment sector of the economy grows, the field of entertainment law will provide many new and exciting opportunities for lawyers who wish to practice in this area even if they are not practicing in New York, Los Angeles, or Nashville. The key to their successes will depend upon how well they respond to the important practical and ethical considerations presented above.

Kirk T. Schroder practices entertainment and art law with the firm of LeClair Ryan, P.C., in Richmond, Virginia.

This article is an abridged and edited version of one that originally appeared in The Entertainment & Sports Lawyer, Winter 1996 (13:4).

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