This article comes from Kelli Proia, the principal attorney at IP in Focus in Massachusetts, an intellectual property boutique. Kelli helps her clients maximize the return on investment in their most important business assets — their people and their intellectual property — while minimizing the risk of doing business in today’s marketplace. Throughout her many years of in-house practice, Kelli has helped her clients protect their intellectual property, buy and sell over $2 billion worth of companies and expand into new markets. I have asked Kelli if I could repost this article that I had first read over at Design Sponge because this was NOT this first time I had heard of something like this happening. I am excited to have “sit down and chat” with Kelli coming up soon! She has such good advice about knowing your worth!
Have you ever uttered the words ‘I know I should talk to a lawyer, but…’? If you have, you are not alone. Let’s face it. As a business owner, it’s easier to just sign the contract, put off filing that trademark registration, or not incorporate your business. Lawyers are expensive. They can make things difficult. But I am here to tell you that an ounce of prevention is truly worth a pound of cure.
Earlier this summer, I received a call from a good friend to tell me a literary agent agreed to represent him. He knew people who were being represented by the agent with some success. He thought it was good contract and didn’t have a problem signing it. In an overabundance of caution, he wanted me to take a look ‘just in case’.
The contract was sent as a .pdf file, so it was difficult to change. (Red flag #1) It was short, 1.5 pages. (Red flag #2). It only spelled out the rights and obligations of the agent. (Red flag #3) I made some changes, added a few provisions, and my friend sent the new draft to the agent. The agent’s response was quick and surprising.
The agent told my friend that he was disrespectful, that he lacked trust, and that everything that he had requested was implied and did not need to be in the written agreement. The agent then insulted my friend, telling him that the firm never really wanted to represent him. Lastly, they told him they wouldn’t work with him because he had a lawyer.
I have been an intellectual property lawyer for 13 years. Over the years, I have had the opportunity to review a lot of contracts. I’ve been yelled at, hung up on, and insulted for the terms I have asked for, but this was the first time someone rescinded an offer. I was shocked. What had I asked for that would cause such a strong reaction?
I simply defined terms that were ambiguous. I added a state of law to govern the contract. I asked that my friend have the right to audit the agent’s accounting books and preview publishing contracts before they were signed. I didn’t change the agent’s compensation or any of the agent’s rights. There was nothing out of the ordinary.
But what about all of those people who signed that contract? Did they see the issues? I’ve represented enough artists, authors, and illustrators to know why they signed it. They were blinded by the excitement that their dream has come true. So many of them have told me, ‘I want this so bad. I’m willing to do anything.’
Well, what are you willing to do or give up for that licensing deal? How much control are you willing to give away to be represented by an agent? If you find yourself in my friend’s position and saying ‘I know I should talk to a lawyer but…’, here’s what I would recommend you do.
1. Please do not get your legal advice from the other party. The advice is often wrong. I’m never sure whether they know it’s wrong or not, but it is usually self-serving. In my friend’s case, the agent told my friend that the right to sue and the right to audit were ‘implied’. Unfortunately, if there is a written agreement, nothing is implied. A court will always assume that all of the terms that were agreed upon have been spelled out in the document, and will only look to the document to determine who has what rights.
2. Try to be dispassionate about the outcome. When I protest a term in a contract, it’s rarely the opposing side that argues with me. 9 times out of 10, it’s my client who puts up the biggest fuss. I often hear my client argue ‘Don’t say that. They’ll walk away.’ To which I say, ‘It’s OK to walk away from a bad deal.’
3. Look at a contract as if it were a prenuptial agreement. You might be ‘in love’ with each other now, but consider what would happen if the relationship sours. Are you protected? What if my friend thought his agent was skimming some money from him? If he had signed the contract as is, he would have given away his right to sue and his right to audit the agent’s books even though the agent had total control of over all funds (both incoming and outgoing).
Another onerous term included in my friend’s contract was that the agent had the right to bind my friend to any publishing agreement the agent wanted without my friend’s consent. What if my friend hated the deal or couldn’t meet the obligations that the agent signed him up for? He would have to perform or face defaulting on the terms of the contract. It is so important to factor in the ‘what ifs’.
4. Lastly, please consider hiring a professional. A lawyer is dispassionate. I can look at the terms of an agreement objectively. I want to see my client’s succeed, but I also want to make sure they get the best result. I’ve seen what can go wrong, and I want to protect you from a bad outcome.
It shouldn’t cost you a lot of money to have an attorney review a contract. Call up a lawyer and tell her ‘I need to have a contract reviewed. It’s x# of pages. I can pay $XYZ. Would you be able to help me?’ I know there are a lot of lawyers who would help you.
If you truly can’t pay for legal services, consider calling Volunteer Lawyers for the Arts. It’s a wonderful organization that can pair you up with a legal professional who might be able to help you with your matter free of charge. Also, they offer education courses that could help you spot issues, and negotiate your own agreements.