How to work with your lawyer

11 04 2012

Whether you retain a lawyer to draft contracts or to represent you in court, the outcome of your case will depend largely on how well you work with your lawyer.

A lawyer is not a magician or a mind reader.  Your lawyer needs to know all of the information available to you in order to best represent your interests.  For instance, if you were in a car accident and you noticed that the other driver was on the phone, keeping this information from your lawyer could substantially harm your case.

A good lawyer will listen to you and ask you questions.  A good client will tell their lawyer everything about their case.

So, a good place to start is to write down everything you can remember about what led up to the lawsuit.  Or, in the case of a contract, all of the terms that you would like.  Then sit down with your lawyer and go through the list.  The more you provide ahead of time, the better.  For each fact, try to answer the question “how do I know this”?

Boilerplate, Part Three, Forum Selection Clause

23 01 2012

Another clause you almost always find in a contract is a Forum Selection Clause.  This clause specifies the place where disputes will be resolved.  It will say that disputes under the agreement will be resolved in the courts of a certain jurisdiction, and that, by signing the contract, you grant jurisdiction over any resulting dispute. The clause may even require you and the other party to consent to service of process in a specific manner.

THE RISK: By signing an agreement with such a clause, you are agreeing to the forum provided. If the jurisdiction selected in the contract is not your state of residence, you risk the time and expense required to fight a lawsuit in a distant state (or even country!). This can cause you great inconvenience. If a distant jurisdiction is listed in the forum selection clause, it is important to specify what law will apply to the contract. This is usually included in a Governing Law Clause (discussed in the previous installment).

THE REWARD: You can structure this clause in a way that is convenient for you, ensuring that a dispute will be resolved in your state of residence. If you are entering into a contract with an individual or entity located outside the United States, this clause can place the contract firmly under United States jurisdiction, and allow you to resolve disputes in the US. You can also use this clause to state the method of service in case of a dispute, which is valuable when your potential adversary is not local.

Boilerplate, Part One: Entire Agreement Clause

9 01 2012

If you’ve ever negotiated a contract, you’ve probably heard something like this: “Don’t worry about it – it’s all boilerplate.” Variations on this theme include, “These terms are standard in the industry,” and “This is just legalese, you don’t have to read it.” The implication is that the terms on the paper in front of you are formalities, and don’t have any affect on your agreement.

Of course, this isn’t the case. Every word in a contract is important, because those words govern your relationship with the other party. But there are certain clauses that appear in almost all contracts, and are often referred to as boilerplate. Understanding these clauses is important. Boilerplate clauses can be included, left out, and varied to meet your individual needs, just like any other contract terms. This is the first in a series of blog posts, where we will explain, one at a time, several of these clauses so you have a better understanding of them the next time you find yourself staring at a long, boring contract.

First up: The Entire Agreement Clause:

The entire agreement clause is a good place to start, because you will almost always find this clause in a contract. It usually goes something like this:

“This Agreement constitutes the entire and final agreement between the Parties and supersedes any and all prior oral or written agreements or discussions. This Agreement may not be modified in any respect except in a writing which states the modification and is signed by both Parties hereto.”

The entire agreement clause is included in the contract so that neither party can say, after signing the contract, that it agreed to terms which are different from those in the contract. This is good for you, as a party to a contract, because it makes your obligations certain. Before you sign a contract that includes a clause like this, you must make absolutely sure that everything you agreed to is in that document, because anything that you agreed to in negotiations or in another document evaporates the moment you put your signature on that piece of paper. Of course, ensuring that your entire agreement is included in your contract is something you should always do before signing.

There are situations, however, where the standard “entire agreement” clause is not appropriate. For example, some contracts depend on other, outside documents which contain certain terms of the agreement. In that case, those documents should be incorporated into the contract, and to be safe, they should be specifically excluded from the entire agreement clause so that they remain in effect after you sign the contract. In other cases, the parties are involved in multiple, unrelated contractual relationships. In that situation, the entire agreement clause should reflect the fact that it is the entire agreement with respect to the subject matter in the contract, and that it does not affect other agreements between the parties.

Another thing to look out for is the second part of the entire agreement clause, which usually states that your contract can only be modified in a writing signed by both parties. This term is not essential to the entire agreement clause, but often appears there. If this sentence is not included in the entire agreement clause, check for it in the rest of the contract and consider including it if it isn’t already there; it protects you from uncertainty if one party wants to change the terms of the agreement. If it is included, make sure that you and the other party intend to abide by it. Do you want to require a signed writing to change the terms? That’s the safest option, but some arrangements require for more flexibility. You can use whatever procedure you want to, but if you plan to allow less formal contract modifications (for example, by email), you should include that in this clause.

Next Installment: Governing Law

Work For Hire: Good or Evil?

20 09 2011

When negotiating an entertainment related contract, anything can happen (I’d love to spend this blog post telling you all the crazy stories that came to mind when I wrote that line, but that wouldn’t be very informative and might get me sued for defamation).  One thing that almost always happens, however, is an argument regarding copyright ownership, and that argument usually centers around the inclusion of a Work for Hire clause.

The words Work for Hire seem to be almost universally hated. Artists see it as a disadvantage no matter what the situation, and they can hardly be blamed. A Work for Hire clause or agreement requires one party to give up rights to intellectual property, and no one likes to give things up. And the numerous articles and blog posts imploring artists not the sign Work for Hire agreements would give anyone the impression that there is never a good reason to do so. Clients on the business end of the entertainment industry also express discomfort with the Work for Hire. Knowing it is likely to cause a problem, they often ask me to “say it some other way” or “make it friendlier.”

Unfortunately, a Work for Hire clause can’t be stated another way, or made much friendlier, because it only works if it jumps off the page, yelling “I’m a Work for Hire and you’re giving up your rights.” That’s a good thing, because it prevents people from being tricked into signing away their rights. The main problem with the Work for Hire clause, in my opinion, is misunderstanding.

The reason the Work for Hire clause is often necessary is that, without a Work for Hire clause, collaborators on a project become equal owners, with equal rights to sell and otherwise encumber the whole project, and equal rights to collect money from the project. This happens whenever two or more authors prepare something with the intention that their contributions be merged into inseparable or interdependent parts of a whole.

This arrangement is fine if you are truly collaborating with a partner or several partners, and you intend to share equally in the final project. Many collaborations, however, are not set up that way. Often, one or more parties gets paid up front for their work on a project, while the person or entity that hired them takes a risk on its eventual success. An unequal division of rights, in that situation, may be more fair than a 50/50 split. The same goes for situations where one party will be solely responsible for selling a project. Without the Work for Hire, there is no guarantee of exclusivity.

The lesson to take away from this (very abbreviated) explanation of the Work for Hire clause, is that whether to include it (or whether to sign it) turns on your intentions with regard to the final product. If you intend to be an equal owner, no Work for Hire is necessary. But, if you intend to have anything other than a 50/50 division of rights, the Work for Hire is the only way to make your arrangement enforceable. That can be to the benefit of both parties. The point, as in all contract negotiations, is to understand and accept the contract terms before you sign the contract.

The Great Contract Fairy in the Sky

13 09 2011

We write a lot of contracts.  We review a lot of contracts.  There is a common misperception about contracts that should be cleared up.

Often, the misperception appears when a client asks us for “X” type of contract.  Maybe it’s a “Service Agreement,” or a “Writer’s Agreement,” or something else.  We then ask for details.  Invariably, we are asked to produce “just a simple, standard form.” 

The impression most people seem to have is that lawyers have a connection to the Great Contract Fairy in the Sky and just pick up the phone and say “can you send down a Writer’s Agreement?  Thanks.”  Sometimes a person will just do a search for the type of contract, and send us what they found to review.

But there is almost never a standard agreement.  While there is a lot of “boilerplate” that can be copied from past agreements, even that is not standard!  For instance, do you want faxed signatures to be treated as originals?  Do you want the contract to be binding as of the last signature date or some specified date? What do you want your remedies to be in case of breach?

It is not a matter of knowing which form to use or having access to the right one.  It’s a matter of putting on paper the expectations and obligations of each side.  You can certainly use something that you find online, or draft yourself.  But you will then be bound to that.

Contract Pitfalls–the “merger” or “integration” clause

28 07 2011

Contracts often have “boilerplate.”  People assume that boilerplate clauses are standard, necessary, and risk-free (this seems especially true in the entertainment industry where everything is claimed to be “standard”).  But there are huge pitfalls to signing a contract without carefully thinking through the effects of each clause.  One of the most common “boilerplate” clauses is the merger clause (a.k.a. an integration clause).  Like all “boilerplate,” this clause can be worded several different ways (which already says something about how “standard” any language is).  To spot this clause, look for a heading titled “entire agreement,” or “merger,” or “integration,” or something to that effect.  The language itself will state, in substance, that “this Agreement is the entire and final Agreement between the parties on this matter…”

The effect of this clause is to make the current contract the final, binding agreement between the parties.  This is very important in case there were oral communications, emails, etc. that might otherwise be considered part of the contract (but keep in mind that just because a merger clause is in a contract, that doesn’t mean evidence of discussions or emails can’t come in to help interpret the contract).  In short, it keeps things simpler and cleaner in case of a dispute.

But, sometimes the unintended consequence of this clause is to supersede another contract, which should not be superseded, and can lead to confusion.  For instance, if you contract to buy 100 widgets a month, and then want to buy another 200 a month (so the total would be 300), and the contract for another 200 a month has a merger clause, are you supposed to buy a total of 200 or 300 a month?  If the new contract contains a merger clause, then there is a strong argument that you are only buying 200 a month, not 300.  This can be a huge problem is you need 300 a month and you have now contracted yourself into a shortage!  Once this problem is recognized, you have many options on how to proceed, depending on the specific circumstances.  In this example, for instance, the new contract could just be an addendum to the older one, or you could have it be an amendment for the full 300.  Either way, to avoid confusion it should reference the old contract and clearly explain how to treat the old contract.