I posted an article awhile back called “Lawyers, Agents, and Managers” that highlighted the different roles of representatives in the entertainment industry. This article will serve to bolster the reader's understanding of those representatives and how they receive payment.
AGENTS AND MANAGERS
Agents and managers should always bill their clients on a contingency basis. The standard rate for agents is 10% of the client's earnings while agents booking commercial gigs can go up to 20%. Personal managers tend to bill their clients closer to 15% - 20%. Anytime an alleged “agent” or “manager” is asking their client to pay the agent or manager up front, that person is not a legitimate representative. The whole idea behind agents and managers is that they believe in their client so much that the representative is willing to pitch the client around town because they think the client actually has a chance of getting hired. Under no circumstance should a client be paying their agent or manager up front. However, it's normal for agents and managers to have their clients sign check authorization forms. Check authorization forms allow the hiring party to deliver payment on behalf of talent directly to the agent or manager, then leave it to the representative to deliver the larger cut of the check to the client. For example, actor earns $100,000 so the producer sends the $100,000 directly to the agency, the agency takes $10,000, then distributes the remaining $90,000 to their client. Agents and managers use check authorization forms, so the representative never has to worry about chasing their client for money. If talent signs a check authorization form with their representative, the representative should easily deliver the payment to their client inside 30 days from the date the check was received.
Generally speaking, there are two different breeds of lawyers, transactional attorneys and litigators. Transactional attorneys focus on negotiating deals and drafting the fine print to make those deals stick. Litigators spend their time pursuing or defending lawsuits on behalf of their clients. Lawyers are usually paid on an hourly basis, contingency fee, flat fee, or some mixture of those fees. Hourly rates for entertainment attorneys range anywhere from $200 - $1,000 dollars per hour. Attorneys on an hourly rate bill in increments of 1/10th of an hour rounding up to the nearest 1/10th. For example, if you talk to your attorney for 5 minutes the attorney will bill you for 1/10th of an hour (ex. $350/hr at .10 of the attorney's time equates to a $35 phone call). Contingency fees mean that the attorney is going to receive some percentage of the client's earnings. For example, if the attorney settles a lawsuit for their client at $100,000, the attorney could receive anywhere from 30%-50% of the settlement. Transactional attorneys in entertainment law typically receive 5% - 10% of the client's compensation unless the attorney is billing on an hourly fee. Flat fees are exactly what they sound like, the attorney sets a flat rate to provide a limited scope of services.
Any lawyer working on an hourly or flat rate, will require the client to submit an advanced fee retainer that sits in a trust account. The attorney bills hourly against the advanced fee until the advanced fee no longer has any funds in it. If the attorney finishes the work in a time frame where a balance still remains on the advanced fee retainer, the attorney will send their client back the unused portion of the fee. For example, if the attorney received an advanced fee retainer of $5,000 and bills at a $350/hour rate for 3 hours totaling a $1,050 fee . . . the attorney will return $3,950 to the client.
This article is not intended to be legal advice and should not be construed as such. If you have questions about your own fee agreement, talk with your representative or consult with outside counsel. Feel free to reach out to my office at (424) 202-4239, send an email to [email protected], or fill out a contact form on my website.