When talking to up and coming bands about having someone manage their business and accounts, the reaction to letting go of their financial oversight ranges from “we don’t have any money”, to “how can we trust them?”. The reality is that as an artist you are exposed to the risk of fraud and abuse by your manager.
This can be seen in the recent “shady dealings” of the management group that takes care of both, “The Hives” and “The Cardigans”. While a few little discrepancies here and there can be expected in rock and roll, an unsigned, unauthorised loan of $775,000 isn’t something that a band can just write off, and still keep faith in their representation.
In this case the monies were transferred back and forth between the bands, over a period of years, and “The Hives” unknowingly amassed the $775,000 debt to “The Cardigans”.
“The Hives” are contesting this, saying they never agreed to the loan and that the claim of debt is false.
Now this shouldn’t put you off getting representation, but this is where having checks and balances, and your finger on the pulse is important.
A good manager can take care of transactions, negotiations, and general nonsense, so you can focus on writing hits and buying cool jackets. However you need to be aware of the bottom line, and create an environment of accountability.
The importance of being across your own affairs cannot be stressed enough. Quarterly reviews, and a top level understanding of the way the bands finances work will leave you empowered, and you won’t end up holding the bill down the line. Both parties’ rights and obligations are defined in the Management Agreement, so get advice when this is being drafted. It is important to understand the scope of their role in your own terms, and if they start acting outside of it ensure you question this and are comfortable with these answers.
Beyond this, checks and balances can come from a separation of management, legal and accounting. It is important to get independent legal advice, or have legal counsel separate from your manager and an independent accountant. It’s important that they have a working relationship, but having things passing through three sets of eyes can ensure that shady dealings ring alarm bells immediately.
At the end of the day a good management/legal/accounting team can make your life easier, but don’t let complacency leave you exposed to being taken advantage of. Or you might end up owing “The Cardigans” money as well.
Sam is a guest blogger who comments on Law, Entertainment, Tech and Fashion. His scribbles can be found here.