April 2003

Management, Artists

The R&B group Dru Hill have been served with a $30 million lawsuit from former manager, Kevin A. Peck, who claims the group owes him millions of dollars in management fees. The lawsuit, filed in Baltimore Circuit Court on March 20 2003, alleges unjust enrichment and is served against all of the original band members. Peck believes that his management contract entitled him to a percentage of the group’s income from all three of its albums, as well as the members’ solo releases. Dru Hill attempted to settle with Peck, but were unable to reach an agreement with him. Dru Hill achieved multiple platinum albums, several music awards and generated millions of dollars in publishing royalties and record sales, including ‘The Thong Song’ released by band member Sisqo in late 1999.

Meanwhile, former Guns N’ Roses songwriter and guitarist, Izzy Stradlin, has also filed a lawsuit in the Los Angeles Superior Court. He alleges that he mistakenly paid his management firm Big FD $231,575 in post-term commissions after the ‘old’ Guns N’ Roses broke up and that Big FD had no right to receive this, since according to the agreement he entered, the remainder of his former band had ceased paying commissions and he was thus no longer obligated either. Stradlin is seeking the return of this amount, in addition to other damages.
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COMMENT: Most artist management agreements contain certain basic terms standard in the music industry. These agreements are entered into on the basis that the artists sign both as band members (jointly) and individually (severally). So, managers expect to receive commission from both the activity of the artist as a group AND from the activities of the individual members. Artist management agreements also often contain provisions for managers to receive income from projects they worked on during the term of the management agreement – even after the management agreement has ended. This is often referred to as “post-termination commission” or “sunset income”.

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