The artist-manager relationship has been described as the most intimate of all business relationships. Some artists have had the same manager for early their entire career (Neil Young and Elliot Roberts for example). Other artists change managers often. A manager will often be blamed for a slump in an artist's career, which can cause the manager to be terminated. (For the most astute explication of the relationship between artist and manager, I recommend this video from Mark Volman and Howard Kaylan of The Turtles: http://tinyurl.com/9w89vbf).
Some managers prefer to work without a written contract, aware of the fact that once an artist decides that he or she no longer wishes to work with the manager, the relationship is over no matter what the contract says. Despite this truism, it is generally a good idea to have a contract in place – almost like a prenuptial agreement in a high-risk marriage.
There are really only three major points that have to be considered in a management contract: the term, manager's compensation and the manager's post-term compensation (indeed the manager who operates without a written contract risks losing any post-term or sunset clause income).
While, as stated above, the main reason artists seem to grow disenchanted with managers has to do with frustration over their career levels, there are at least six main areas where the parties often find themselves in dispute (note that these are somewhat inter-related).
A. Breach of Fiduciary Duty – It would seem that the most common complaint regarding management agreements from an artist's point of view is that the manager has breached his or her fiduciary duty to the artist. A fiduciary is a person to whom property or power is entrusted for the benefit of another and thus has a higher duty to that person. A manager can be accused of breaching his fiduciary duty to an artist for any number of reasons including not using sufficient efforts to promote an artist’s career, self dealing, sloppy accounting or having a conflict of interest with the artist. More often than not, this tends to happen with inexperienced managers who attempt to function as all things to an artist: as artist, investor, manager, publisher, agent and/or production company.
B. Failure to Render Services – Another major complaint that artists often have against managers is that the manager has not done enough to further the artist's career; i.e., has not used "reasonable efforts" or "best efforts" to further the artist's career. As any litigator will observe, this can be extremely difficult to prove. The solution is to build performance clauses into the management agreement so that the manager's efforts can be tracked by some external reference.
C. Compensation – Disputes often arise over the amount of commission and reimbursable expenses due a manager. On a more basic level, disputes often arise when the artist refuses or has an inability to pay. On a practical note, any manager seeking reimbursement for expenses should maintain scrupulous records.
D. Accounting – This item is almost a subsection of compensation. Disputes often arise in those agreements wherein the manager is obligated to account to the artist or the artist is obligated to account to the manager. A simple way around this, if budgets allow, is to hire a third party business manager to handle these transactions.
E. Expense Reimbursement – (Again this is essentially a subsection of compensation) Managers will often try to claim as expenses items for which they have no backup documentation. Also managers from time to time ignore the conditions of their agreement which might require them to seek approval for single expenditures over a specified dollar amount, travel expenses and certain other expenses. Again, accurate record keeping is a must to avoid these types of disputes.
F. Injunctive Relief – This provision may not be enforceable in all jurisdictions. From an artist's standpoint it may be devastating. In any contract where an artist is required to accept an injunctive relief provision he or she should have the ability to oppose such relief if the facts warrant such opposition. Early in my practice I was forced to accept an injunctive relief provision in a management contract only to be rewarded with a telephone call the day after Christmas when an alleged aggrieved manager had gone into federal court in another state to seek an injunction against the artist, my client from getting on a plane and flying off on an important promotional trip. Although the manager's claim for injunctive relief was completely meritless, I was powerless to convince the federal district court judge on the other end of the telephone of any reason why she should deny the injunctive relief requested.
G. Management Entity – When the management company is functioning as a corporation or a partnership or similar entity it is important to specify what will happen to the artist in the event of a breakup of the management company; i.e. who gets custody.
The reality is that no matter how well a management agreement is drafted the contract is secondary to the relationship between manager and artist. If the relationship is not working it's going to end and the job of the parties and their attorneys at that point is to understand what both parties' obligations and expectations are under the contract and to try to work out a fair settlement; one that rewards the manager for the work they did but also allows the artist to move forward with certainty about their obligations to the manager and the ability to enter into new relationships. Again this is very much like ending a marriage and the quicker the parties can work out the terms of the dissolution agreement the better it is for both sides.