How ADR Can be Implemented as a Useful Tool with Contract Disputes Between Agents and their Clientele

By Leora Perlstein

The entertainment, sports, and arts industry is a fast-paced and profitable field that draws in a wide range of stakeholders, such as producers, artists, labels, and agents.[1]  Contracts play a vital role in safeguarding the interests of all parties in the entertainment industry; they clarify the terms of agreement, protect intellectual property rights, and offer a framework for resolving disputes.[2]  Although the idea behind contracts sounds positive and secure for a client, there are darker portrayals of the arts and entertainment industries— or, for example, a record company— which may try to stifle a young artist’s creativity through deception in a record contract, subjecting them to a life they did not want.[3]  In this context, many young artists, often desperate to secure a record deal, will agree to almost anything, feeling reluctant to walk away from negotiations until they have signed a deal that ensures their dreams of becoming famous come true.[4]  That kind of eagerness, without the right kind of support from an agent, can lead to unfavorable terms that compromise the artist’s creative control and financial well-being.[5]  In 1963, The Beatles’ founded their company and were looking for a publisher to help with debuting their album.[6]  The band ended up selling their rights to their music to ATV Music.[7]  The Beatles were new to the artistic world, but years later Paul McCartney filed a lawsuit to claim the rights of his music back.[8]  Their story reflects the classic tale of the powerless artist who comes into a big industry with high dreams and too much trust and allows a company to capitalize on the artist’s lack of knowledge, exploiting them for big money.[9]

Because these individuals feel a certain trust and debt to the agent who discovered them, they tend to overlook the fact that the agent’s financial interests rarely align perfectly with what the client envisions.[10]  Imagine a screenwriter hires an agent to represent their interests in securing a film deal to their script, and after several meetings the agent negotiates a deal with a studio and the client is ecstatic.  However, unbeknownst to the client, the contract gives the studio significant creative control, including the right to make substantial changes to the script.  Is there a way for the writer to deal with the agent’s legal contract dealing without going through the process of litigation?  According to an article in The Hollywood Reporter, creative writers in the entertainment industry have spoken out against their agents, stating that one cannot trust that an agent has your best interest at heart, because the agents are more interested in protecting the package of the deal they created rather than protecting their own clients’ interests.[11]

The use of alternate dispute resolution processes in arts and entertainment contractual disputes between a client and their agent is not something that should be overlooked.  Rather, implementing a process such as mediation— in which an unaffiliated third party helps facilitate discussions and assist disputants in working towards a resolution— is a more cost-effective and ideal process for individuals who will still be working together in the future.[12]  This approach has the potential to address parties’ underlying concerns of wanting to come to a resolve in an expeditious manner while ensuring the dispute remains confidential.[13]  Additionally, through mediation, individuals can overcome the hurdles of their dispute while ensuring that their prior collaborations with certain individuals and companies remain intact.[14]  Applying mediation to the above scenario with the screenwriter, a mediator could help facilitate an open dialogue between the screenwriter and the agent to assess whether the agent’s negotiations were truly inadequate or whether the demands of the studio were part of standard industry practices.  Because mediation is not a binding decision, mediators would work to suggest potential remedies, such as renegotiating certain terms in the contract to protect the screenwriter’s creative input in the future or working to find a compromise with the studio on specific changes within the existing contract.  Mediation has many advantages including, party control over those involved in solving their dispute, the length of time it takes to solve the dispute, the cost saved here as opposed to litigation, and a constructive discussion that works to lead individuals to a solution that satisfies both parties and prevents the screenwriter from severing the relationship entirely with the agent.[15]

Through the use of ADR processes in the arts and entertainment industry between agents and their clients, celebrities can keep the details pertaining to their disputes confidential, while ensuring that they feel as though they have received “their day in court.”[16]  By selecting neutral third-parties with specialized experience relevant to the specific area of arts and entertainment— whether it be sports, music, television, or design— the parties can streamline the process and avoid the need to educate judges and jurors who may lack familiarity with the industry and legal nuances.[17]

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[1] Barry Chase, The Importance of Contracts in the Entertainment Industry, Chase Lawyers, https://entertainmentlawyermiami.com/the-importance-of-contracts-in-the-entertainment-industry/ [https://perma.cc/2Z5A-SAAD] (last visited Nov. 1, 2024).

[2] Id.

[3] Pay for Play: How the Music Industry Works, Where the Money Goes, and Why, Univ. of Oregon, https://opentext.uoregon.edu/payforplay/chapter/chapter-18-the-record-contract/ [https://perma.cc/47WT-8XE3] (last visited Nov. 1, 2024).

[4] Id.

[5] Id.

[6] Parkes P. Winder, Tension in the Industry: An Analysis of the Conflict Between Recording Artists and Record Labels Over the Rights to Music Ownership (May 13, 2020) (Plan II Honors Program, The Univ. of Texas at Austin).

[7] Id.

[8] Id.

[9] Id.

[10] Pon Staff, How Serious is Your Agent’s Conflict of Interest?, Harv. Program of Negotiation (Apr. 14, 2022), https://www.pon.harvard.edu/daily/dispute-resolution/how-serious-is-your-agents-conflict-of-interest-nb/ [https://perma.cc/PY22-YJDZ].

[11] Rebecca Sun & Jonathan Handel, As Talent Agencies Push to Own Content, Some Creators Cry Foul, Hollywood Rep. (Sept. 12, 2022), https://www.hollywoodreporter.com/movies/movie-features/talent-agencies-push-production-rankles-wga-some-clients-1142009/ [https://perma.cc/2PBW-MM4M].

[12] Mediation Defined: What is Mediation?, Jams ADR, https://www.jamsadr.com/mediation-defined/ [https://perma.cc/XBP2-3756] (last visited Nov. 1, 2024).

[13] Theodore K. Cheng, Using Alternative Dispute Resolution to Address Entertainment Disputes, NYSBA Ent. Arts & Sports L.J. 1 (Spring 2015).

[14] Jason Aylesworth, The Benefits of Mediation and Arbitration for Dispute Resolution in Entertainment Law, Sendroff & Baruch, LLP, https://sendroffbaruch.com/the-benefits-of-mediation-and-arbitration-for-dispute-resolution-in-entertainment-law/ [https://perma.cc/Y28X-82EA] (last visited Nov. 1, 2024).

[15] Id.

[16] Id.

[17] Jeffrey Grubman, Taking advantage of ADR in the entertainment industry, JAMS ADR Insights (June 12, 2013), https://www.jamsadr.com/blog/2013/taking-advantage-of-adr-in-the-entertainment-industry [https://perma.cc/4PFL-B7F6].