Artist management agreements series; (part 7) Accounting transparency

Accounting transparency

This is probably the biggest and most contentious issue in the relationship between artist and manager. Yet it is the simplest. There needs to be a clause in the contract requiring the manager to account accurately and transparently to the artist, particularly when the manager handles the bank account. The artist also needs to be given the right to send his own accountants in to check the manager’s books on a regular basis, at reasonable intervals. Clauses like these are, of course, vital, but it is their implementation that really counts. The artist simply has to be vigilant in enforcing this right, and will undoubtedly lose if he does not.

Expenses

Always a bone of great contention, it is vital that the contract achieves absolute clarity on all questions regarding expense management. Some of the questions the contract needs to answer are:

1. Will the manager be entitled to re-charge the artist for his expenses personally incurred in working for the artist, and if so, to what limit and by what procedure?

2. An artist might feel that if the manager is earning a commission on the high end, say, 20%, his commission should therefore be inclusive of expenses, or expenses should be deducted before calculating the commission. But if expenses are rechargeable to the artist, then the agreement must clearly define those expenses. Thought should also be given to how those expenses can be recovered (if at all) by the manager following any ‘divorce’. Can the manager demand repayment? If so, is the artist obliged to repay the expenses only out of his future earnings as a professional musician, or is he immediately obliged, if those earnings are insufficient, to repay the manager out of, say, his savings and/or other personal (non-musical related) assets? These are important questions, because if you are in debt to your manager, he essentially owns your career.

The key person provision and The Non-assignment provision

Where there is a good personal and professional relationship between the artist and the manager, as there should be, it is always a good idea to put a Key Person clause in the contract. This is, of course, only applicable where the artist is signing a management agreement with a management company instead as opposed to an individual manager.

Thus, the contract should specify which individuals will personally play an active role in the artist’s account. Whether signing to an individual or a company, the manager should not be allowed to cede or assign his responsibilities and/or rights in the contract to another party without the artist’s consent. (‘Assignment’ means that the manager can hand over his responsibilities under the agreement to another company or person, and ‘cession’ means that he can transfer his rights). Look for these clauses in the contract and delete them if necessary.