Talk to Melissa Haydens kids and parents

October 19, 2008

INTRODUCTION
Hello everybody, thanks for being here. It says a lot about you that youre takin
g the time to listen to what I have to say here today. You care deeply about yo
ur kids, and youve got questions about this crazy business. Youre right to be con
cerned, but with a good team of advisors, a successful career in entertainment i
s definitely possible.
Let me start though, with a few names of child actors you might remember
McCaulay Kulkin
Drew Barrymore
Gary Coleman, Todd Bridges, Dana Plato
Danny Bonaduce
Jackie Coogan
Most of you will remember these names, and that they were in the media in contex
ts in which you wouldnt want your childs name discussed.
They are just a few of the many child actors whove had significant problems in th
eir lives after stardom. Theyre a cautionary tale.
For every child actor, theres a teenage or young-adult FORMER child actor... so t
he job of parenting for these young performers is not only navigating the showbi
z of today, but also setting them up for life after showbiz. Sure, some of thes
e youngsters will cross-over into playing roles as adults, but many will not. So
, its important to make sure that these kids are well adjusted, and can deal with
the rejection that comes with putting yourself out there at auditions, having a
series cancelled, or a movie flop.
But Im not here to talk about psychology. I just wanted to get that off of my
chest. Its relevant to what well be discussing, though... because most of the leg
al landscape for kids in showbiz is designed around protecting them.
So, the title of my talk is Child Actors and the Law: What every parent should k
now.
Im going to talk for a bit, then Ill be glad to take your questions... but if I se
em to be glossing over something, or Im not being clear, please DO stop me for cl
arification.
Im going to talk to you about:
Building a team of representatives
The Coogan Law (I mentioned Jackie Coogan a minute ago)
Contracts, and the special situation when dealing with minors.
Unions and Guilds and the Working Rules for kids
Loan Out Corporations
Questions and Answers
So... Lets jump in.
Building A Team of Representatives.
Parent - lots of parents want to handle their childs career, and after all, who b
etter to know whats best for your kid, right? I submit that this is NOT a good i
dea. You are, to put it bluntly, too close to your child to be an effective ma
nager, agent or attorney. Even if you have the training for one of these positi
ons, you and your child will be better off if you step back and focus on being a
parent. You wouldnt perform surgery on yourself, even if you were a surgeon, r
ight? Discipline, Supervision, and love are the most important things you can
give your child. My view is that a child actor is first and foremost a child, a
nd should be allowed to have a childhood. Sometimes as a parent, thats going to
mean deciding NOT to go on that audition, or to turn down a role. And your chil
ds other representatives (whose incomes depend on percentages of your childs earni
ngs) will NOT be happy about it.
Youve got to be that advocate. Be the CEO of the business. Supervise all the ot
hers.. think big-picture, and let them do their jobs, within the parameters you
set up for them.
Now, with all that said, until your budding performers star begins to rise, you m
ay have no choice to act as manager for his or her career. Finding an agent to
represent your child should be a big part of your focus. Sure... keep an eye on
the audition notices, and go to any open calls... but having an agent is really
important.
Agent
What does the Agent do?

If you think of an actors career as any other kind of business, you have to look
at the Agent as the SALES department. The Actor is the manufacturer/service pro
vider...right? So the Agents job is to GET THE ACTING JOB... To SELL the actor t
o the casting director, the director, the producer whos doing the hiring.
The Agent will review all of the casting opportunities in town and figure out wh
ich ones are good prospects for his or her clients. Then, the agent sends over
the photo and resume, follows up with a phone call and with luck, arranges an ap
pointment for the audition, interview or screen test.
OK... so an agent is somebody who procures employment for the artist. In Californ
ia, New York and some other states, agents and agencies have to be licensed. So
thats your first inquiry.... find out if its a licensed agent/agency.
Agencies ranges in size... from one-person boutique operations to large mega-com
panies like Creative Artists, ICM and William Morris Agency.
Smaller agencies often specialize in segments of the industry, or only child per
formers, for example. The larger agencies are full-spectrum and full-service, b
ut youll hopefully have a primary agent to handle your business. Its not at all u
nusual for an actor to have different agents for Movies, for TV, for Commercial
s, Modeling, etc. Just be sure that if youre signing with someone whos a commer
cial agent... you retain the freedom to sign with someone else for film/tv, etc.

Agents contracts
How does the Agent get paid? the simple answer is, he gets a commission of bet
ween 10% and 20%... depending on the work, etc . Most of the performers unions
(which well talk about later) impose a cap of 10%.... But 10% of what? Often ti
mes, its 10% of ALL MONIES earned by the artist, regardless of whether the agent
had anything to do with the job. At the very least, then, its important if youre
signing for only a segment of the industry, that the commission only apply to e
arnings in that segment.
Some other things to ask for in the agents contract are some way OUT of the contr
act if things arent going well. Typical agency contracts last 3 years or more,
and often have automatic renewals, so you want to ensure that theres a minimum e
arnings benchmark in place, so that if the agents not performing for you... you c
an terminate.
Another important provision is a key person clause... so if YOUR agent quits or
is fired, you can go with him or her, or leave the agency... and not be stuck wi
th someone you dont know...
Finding an agent. LEGWORK.
Send photos and resumes to all the likely suspects... do some research to identi
fy those suspects... follow up after a couple of weeks. everybody is busy, so
dont make a pest of yourself... give them some time to get to your packet. With
luck, youll get some meetings. From there... its a job interview... YOUre hiring
them... make sure its a good fit. Get a sense of how often to expect to communic
ate with the agent, etc. Ask about their other clients, success stories, etc.
Ask around about the agents you meet. Referrals from other actors, casting di
rectors, producers, etc... are a great way to meet and select an agent.
Finally, you want an agent whos connected, energetic and who really believes in y
our childs career.
Manager (Personal Manager)
Some folks who call themselves personal managers are really just unlicensed agents
, running around doing the same kinds of work that agents do, but without the li
cense, the bond, the insurance, and, in many cases without the connections or cr
edibility to really make things happen for your career. Be cautious about worki
ng with a manager instead of an agent.
In my view, a manager is somebody you bring aboard to work WITH your agent. the
manager should be someone with experience and skills in the entertainment indus
try, and who will advise and counsel on nearly all aspects of your professional
life. The personal manager is someone who will often serve as the primary
contact for the other members of the team... coordinating activities, of the ag
ent, lawyer, accountant, PR firm, etc.
If it sounds like someone you probably dont really need at the beginning, youve go
tten my point. UNLESS, you just cant find an agent... Then, if you can find a ma
nager, and he/shes experienced and connected... it might be a good choice. But,
a manager who has too many clients, or too little experience is worse than havin
g no representation at all... so be careful about personal managers.
Most management agreemnts give the manager broad power to act on the artists beha
lf. POWER OF ATTORNEY allows the manager to handle day-to-day matters without
constantly getting the artists permission. This can be a good or a bad thing. M
y advice is to insist on signing all contracts at the start, and get a sense of
the situation before you completely entryst things to a manager. It should be l
imited, though, to day-to-day business, and not larger creative decisions about
which jobs to take, etc.
Managers generally commission the clients earnings at 15%-20%. (of all earnings
)
Signing with a manager is a 3-5 year initial commitment, with automatic renewals
, (manager can terminate, but artist usually cant). Again, you want those earnin
gs benchmarks and key-person clauses. Another big issue with managers is what
happens with money earned AFTER the contract expires or is terminated, from jobs
that were booked BEFORE the contract expired. Then, what about the extension
of that contract that occurs AFTER the managers out of the picture.
Also... since the manager will be receiving money from employers, you want him/h
er to account to you frequently, with some meaningful detail about earnings and
expenses, and the commissions received. The manager should also be required to
keep you informed of all job offers, activities, etc.
This is a relationship founded on trust... so choose a manager carefully...
Lawyer...
As with agents and managers, you want an ENTERTAINMENT lawyer whos experienced,
knows this business, and with whom you get along well. Your cousin who just got
a law degree is NOT equipped for this. You need someone whos focused on enterta
inment law, and really knows the ins and outs of this business, and the legal la
ndscape that applies to your situation.
Some lawyers are litigators, and some are transactional specialists... Now ove
r the course of a career, you may need both of these, but I think the transactio
nal side will be more important early-on. At the outset, youre going to be see
ing contracts like nothing youve ever seen before. Dont sign anything without get
ting some good advice. That goes for the agents contract, the managers contract a
nd of course, the employment contract. As you get into the biz a bit, youll star
t to know the ropes a bit, and youll be able to recognize the basic contracts, an
d youll only need your lawyer once in a while.... but until then... dont take chan
ces with your childs career.
Now, as a lawyer, Ive never seen a contract that was perfect on the first look.
I always have some comment or change that can improve the contract in some way..
. and I have the knowhow and experience to negotiate effectively for my clients.

Lawyers work on Retainers, hourly rates or percentages, depending on the situati
on. A 5%-10% fee structure is not unusual for representing an actor... but you
may be required to pay a minimum fee as an advance. More recently some of us a
re using a method called value billing, where we negotiate a flat fee of flat fee
with a percentage for each deal, and stick to it... Id recommend this approach, s
ince it gives some certainty to what youre doing.
Choosing a lawyer is best done by referral... talk to your friends, talk to your
family lawyer, your estate planning lawyer, or your business attorney, get a fe
w names, ask for free consultations, and meet one or two... then choose. The g
ood news is you can fire your lawyer at any time... so its not a long-term marria
ge.... unless its working... then, the loyalty should work both ways.
Business Manager
A business manager is a financial advisor, and someone who will handle the munda
ne money issues like paying bills, investing, etc. Save this until youve got a c
areer thats taking off. Business managers take 5% of earnings...
OK, so thats Agent 10%, Manager 20% Lawyer 10% Business Manager 10% - as much a
s 50% of earnings going to representatives.... Wow. But its worth it, if youre wo
rking alot, and theyre increasing value in everything..
THE COOGAN LAW
OK... so you all remember at the beginning of this talk, I mentioned a child act
or named Jackie Coogan? Jackie was a child actor in the silent movie era. He w
as one of the highest paid actors around, and his mother was his manager. He ea
rned millions of dollars (this is 1920s money).. and when he reached his teenage
years, he;d sort of out-grown his boyish cuteness, and the work dried up... Goo
d thing hed made all that money.. but guess what.... Mom had spent it. This you
ng man had nothing to show for giving up his childhood, going to work, becoming
famous, and trusting his mom. This story was in the headlines, and eventually
the State of California passed a law named after Jackie that requires a portion
of the money earned by a child actor to be put in a special trust account calle
d a Coogan Trust until the child reaches 18.
The law was pretty good, but we still had a situation arise with Gary Coleman..
. after all those years of Diffrent Strokes on TV, Gary (with some health problem
s related to his dwarfism) got ahold of his bank accounts, managed by his parent
s and saw so little there, he said What you talkin bout Mom!??. He ended up suing h
is own parents over mismanagement of his $8.3 Million Trust... and won a judgmen
t against them.
In 2004 the Coogan Law was revised in a big way.
Now... a childs earnings belong to the Child... not the parents. (as was previou
sly the case).
15% MINIMUM must be set aside in the Coogan Account.
Parent is subject to a FIDUCIARY DUTY with respect to ALL of the money
Producers/employers must pay into this fund in a timely fashion,
Court can approve the contract, eliminating the childs right to disaffirm the con
tract.
When your child gets that first job... youll have to set up the Coogan Trust Acco
unt. It has to be held in an account in a Bank in California... if you visit a
branch and ask about a Coogan Account, they should know what to do.
CONTRACT BASICS
How do you make a contract?
Someone makes an offer... someone else accepts. What else to you need?
Offer and Acceptance = AGREEMENT, Meeting of the Minds, Mutual Assent
Consideration - promise for a promise... compensation, services, etc.
Lawful Purpose
Capacity?
Writing? - Oral contract valid? (Goldwyn Quote)... and Basinger case. Agent c
an bind the client???
MINORS AND CONTRACTS
Under basic contract law, you need several things to form a contract. Youve got
to have an agreement of the parties, valid consideration of some kind, and CAPAC
ITY to contract. Minors are generally held NOT to have the capacity to make con
tracts... so when a child actor gets hired to be in a commercial, tv series, mov
ie, etc. That contract is essentially NOT binding on the child... He or she can
disaffirm the deal at anytime.
Well, obviously, this isnt very satisfactory for producers, so theres a court-proc
edure where the judge looks at the contract, and decides that its fair... and con
firms or ratifies the agreement. From that point on... the gavel comes down, t
he child can no longer disaffirm the deal.
The procedure is done entirely by mail. The employer submits an application, a
copy of the contract, and a parent or guardians affidavit (called a DECLARATION),
to the court The judge will look at your declaration to make sure youre behind
the deal, and that youve set up that Coogan Trust account. ..., and decides whe
ther or not to order it confirmed.
So.. this is actually good news... youre assured that the money is going into th
at trust, youve got a judge looking at the fairness/reasonableness of the deal, e
tc.
Unions and Guilds
Screen Actors Guild - This is the primary union of actors in film, television, a
nd generally anything with a screen. The Union serves a couple of roles. First
off, they establish important working rules, safety regulations and minimum pa
y schedules for employment on projects produced by signatory companies.
Once a member of the union, it is a violation of the rules for an actor to work
on a non-union production. Since lots of commercials and smaller, independent f
ilms are non-union, joining the union is a decision you want to consider careful
ly. Of course if youre hired for a TV series, or a major film, youll join. Youll
be eligible under the Taft-Hartley Act, and provided you pay the dues, you cant
be prevented from joining (IF youre hired for a speaking role in a series or unio
n feature. Membership fees are about 3 days work wages..
AFTRA - Radio spots, TV hosting, etc.
AEA - living stage
AFVA, AGMA, etc.
State law also establishes some of the work rules you should know.
--parent/guardian must be within sight and sound of their child (under 16) . If
over 16, must negotiate the parent/guardian right to be present on set, travel
with kid, etc.
--State licensed studio teacher/welfare worker required on set 24/7 (if youve go
t bargaining power... ask for approval of the teacher, or right to select the te
acher)
--work hours limited by age
--overtime illegal
--3 hours per day required of schooling on set on school days
If an employer is violating these rules, you should go to the Union (if a uni
on project) and the California Department of Labor
Loan Out Corporations
Many performers find it advantageous to have a privately owned corporation to len
d the services of the artist to various employers. So, instead of being an EMPL
OYEE of the producer, the actor is an employee of his own company, and the two
companies have a contract for the services of the actor to be provided on loan.
The advantages of having a loan-out company are things like the ability to s
et up a pension plan, deduct medical expenses, have other business-related expen
ses paid with pre-tax money, etc.
Disadvantages - the loan-out company is responsible for the payroll tax withhold
ing, social security, workers compensation and other things that go along with be
ing an employer. Also, the cost is a factor.
Cost to set up a corporation is between $1500 and $2,500.
annual legal fees of a few hundred dollars
Youll have accounting fees of anywhere from $1000 or so.
If your accountant is also acting as the business manager fees could be a percen
tage of the companys grosses.
Annual minimum taxes to the State start at $800. (steps at 1/4 Million, etc)
Los Angeles Business License (smaller companies may be exempt... for now)
So, at what point does it make sense to set up a loan-out company? A general ru
le of thumb is about $150,000, but you should start talking to your financial ad
visers sooner, alot will depend on a good old cost/benefit analysis, and you ne
ed to look at the whole picture to really make this decision.