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Monday, October 22, 2012

It Pays To Have A Lawyer

Abbey Road To Ziggy Stardust cover image from Bobby Owsinski's Music 3.0 blog
Continuing on with the theme from yesterday about how important having a music attorney look over your agreements is, here's an excerpt from the Ken Scott memoir Abbey Road To Ziggy Stardust that illustrates the point.

Ken relates a story of how the group Kansas lost millions of dollars from signing something without having it looked over, then compounded the mistake.
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"Another topic of conversation that came up during my time with Kansas is something that maybe should be talked about as a warning to new acts reading this book. Musicians signing record deals these days have a lot more knowledge about the business than they used to, but this story is still worth bringing up - just in case. Kerry (Livgren, the main songwriter of Kansas) and I were talking one day and he was telling me about when they signed their recording contract. It came up in the conversation that they had signed away their publishing, then he told me the story about how it actually happened. 

It seems that the band was playing at a small club in Georgia somewhere and the contract from Kirshner Records was delivered there for them to sign. As all bands who are signing their first record deal do, they wanted to immediately get their John Hancocks on there, lest it disappear and they be relegated to playing clubs forever. Every place that had a “Sign Here” clip, they signed. Finally they came to a bit at the back of the agreement that they hadn’t seen before that had all these clips on it, and they thought, “Oh, I guess we have to sign these as well,” and they all signed it and immediately sent everything back the next day. It turns out that the little bit at the end that they hadn’t seen before was all about their publishing.

I said to Kerry, “Did you go over it with an attorney?” 

“Of course not. We were in a club,” came his reply. 

“In which case, the contract is illegal,” I told him. 

“What do you mean?” he asked. 

“You’ll find in modern day contracts that there’s a clause that states that if you haven’t gone through it with an attorney, the contract means nothing.” 

“Yeah, come on. You’ve got to be joking.” 

“I’m deadly serious.”

“Well, you’re wrong. If that had been the case we would’ve been told about that ages ago,” he adamantly replied. 

“I can only tell you what I know,” I told him, not willing to argue. 

“I’m sorry, but you’re wrong.”

“Fine, but do me one favor. Next time you see your attorney, ask him about it,” I exclaimed. The subject was then dropped and we went back to work.

It turns out that a couple of days later the band had a big band meeting with their attorney on some other business. When they finally got to the studio, Kerry immediately came up to me and said, “I owe you an apology. I asked our attorney, and he said that you were absolutely correct. We could have gotten all of our publishing back.”

“Could” was the operative word here. It turns out that when the band became successful, they renegotiated their record deal using their attorney. Because they didn’t know about the law, they didn’t tell the lawyer about it, so he never acted on it. Since the attorney was now involved, they couldn’t go back on something from the previous contract. The wound up losing millions of dollars as a result.

This is one of the things that happens when people get into the business and have absolutely no idea what it’s all about. There are all of these legal loopholes that not many people know about, and they end up losing a lot of money because of it. On the other hand, there are those people that make money from those same loopholes as well."

As you can see, it should be mandatory for a musician to run any agreement by an attorney before signing. It could save you millions. You can read more excerpts from Abbey Road To Ziggy Stardust and my other books at bobbyowsinski.com.

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2 comments:

Nichole said...

Bobby,thanks for including this in your blog although it saddens me to hear about Kansas and the many bands who have had that same situation. Despite the modern day clause and information overload, etc.. do most musicians' attorneys "today" proactively ask their clients thoroughly about all previous contracts.. like how it looked etc.. (even if their client is unaware of what they truly signed) when they are intially Retained and especially during Contract Renegotiation?

Bobby Owsinski said...

Yes, Nichole. Kansas was special in that they were on the road and got the contract with an attached addendum that they never saw before, but signed anyway. They could've gotten out of it but never mentioned it to their attorney until it was too late.

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