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.
