Sunday, November 3, 2013

Trouble for California Entertainment Attorneys

Most entertainment attorneys are vaguely aware of California Labor Code 1700,  The Talent Agencies  Act.  We remember the broad outlines:  the law  originally had something to do with the movie business, it was once used against the Jefferson Airplane’s manager in the 1960s.  We all routine admonish our manager clients that they cannot “procure employment” for a client, even if this statute does not reach outside of California.

            Incredibly the law was recently employed by Labor Commissioner of California to punish a California attorney who did nothing more than negotiate  a contract on behalf of a client.  The case, Solis v. Blancarte, first reported on JD Supra, involves an attorney who negotiated an employment agreement for a sports reporter and charged a fee equal to 5 percent of the compensation earned by the client.  According to the opinion, the relationship between attorney and client lasted for several years.

            While the practice of charging a percentage of earnings is not prevalent among Nashville  attorneys, it is by no means unusual in California.  I am aware of many law firms which operate this way.  What is striking about this opinion is that it punished the attorney for doing the job he was hired to do.  The opinion quotes from the labor code which defines “Talent Agency” as  a person…who engages in the occupation of procuring, offering, promising or attempting to procure employment engagements for an artist or artists”.  Crucially, the statute also states that “the activity of procuring, offering or promising to procure recording contracts for an artist or artists shall not of itself subject a person to regulation and licensing under this chapter.”

            So while soliciting and negotiating record deals is exempted from this statute, everything else that an attorney might negotiate for an artist client is not.  Interestingly, even though there was no evidence that the attorney was attempting to solicit a reporting job for his client (i.e. the job was offered to the client and the attorney’s job was to negotiate the contract) the Labor Code Commissioner saw fit to stretch the definition of “procure” to include those activities which “bring about” the deal, i.e. the act of negotiating the contract. This is what lawyers do: they negotiate.

            I am not in California,  have very few California clients and have rarely represented an artist on a contingent fee but this ruling is still shocking.  Imagine a governmental agency arbitrarily deciding that an otherwise legal and legitimate professional activity was suddenly illegal and that your earned legal fees had to be forfeited.  This seems so far removed from the original purposes of this statute.  I hope that Attorney Blancarte challenges this ruling and I am sure that we have not heard the end of this California saga.

1 comment:

Rcksgl said...

Hi Trip,
Your last paragraph is dead on -- the enforcement has nothing to do with the legislature's intention. But the Labor Commission also finds 360 deals to be a violation of the TAA, so there really is no recording exception anymore, since virtually all deals are 360's. And the Labor Commissioner will accept petitions of controversy about a Tennessee artist's representative, be they an agent, manager or lawyer, if the artist can show that significant portions of the work will/have taken place in CA. So the enforcement should trouble all artist representatives everywhere.

Check out:
It's all the submissions and related articles relevant to the National Conference of Personal Managers suit currently in the Ninth Circuit alleging that the TAA is unconstitutionally vague on its face and as enforced by the CA Labor Commissioner.

In there is the defenses to use should someone be entwined into a controversy -- whether using how the Act and its enforcement interferes with interstate commerce, violates the Commercial Free Speech Provision, the Fifth Amendment, Eighth Amendment, Thirteenth Amendment (the Act voids the right to get paid for one's labors though there's no claims of fraud, non-performance or criminality involved) and the equal protection and due process clauses of the 14th Amendment.
Best, Rick Siegel