If you take a look at the history of bands you’ll see one common issue that continues to happen…and that’s legal battles.
From the Go-Go’s to Marilyn Manson and lesser known indie bands, ex-band members sue their band (or former band) for a variety of reasons. This is why you should treat your band like a business. Assume that there will be disagreements or disputes between your band mates at some point, so you’re prepared to deal with them if they actually happen. A band partnership agreement is a professional way to resolve potential disputes or disagreements before they get out of hand and affect everyone involved in your band.
So what does this have to do with you?
I’ll tell you…If you you are serious about being a part of band, you should strongly consider putting a partnership agreement in place because it can offer protection from a variety of expensive legal battles and downright ugly situations that can develop.
For example, in 1990, Guns ‘N’ Roses had an issue with their drummer Steven Adler as his live performance was considered impaired. Adler contended that it was due to an opiate-blocking drug, but Slash appeared to believe that Adler just couldn’t get the job done anymore. Either way, Guns ‘N’ Roses wanted Adler out but they didn’t have any recourse for kicking him out of the band at the time. This resulted in some heated accusations, and a large settlement for $2.5 million plus a 15% royalty on everything he recorded prior to leaving the band (to avoid a long drawn out legal dispute). I imagine this was no fun for any party involved.
The bottom line is this situation may have been avoided if Guns ‘N’ Roses had a partnership agreement that described under what circumstance(s) a band member can be expelled, and how income would be distributed to expelled band members.
Regardless of your band structure, your band partnership agreement should address these important points:
How profits and losses are shared?
It is common for band members to share equally in net profits and losses. Sometimes this can vary depending on band structure (especially if one member contributes more than others) but this should be addressed to save headaches and potential lawsuits in the future.
What occurs when a band member leaves the partnership?
A member who leaves can receive an interest on activities that he or she participated in while a band member, but they should not receive an interest in any future activities of the band.
Initiate a voting process to insure band members make decisions fairly.
You should list and agree upon the type of issues that band members can vote on and whether the issues will be decided unanimously or by a majority vote.
How assets and debts are address if the band disbands?
It should be crystal clear how band property, income, debts, and future income are distributed.
Keep in mind there may be a business structure, other than a partnership, that could be better suited to your band’s needs. You should consider consulting an attorney to see what your options are to make sure your interests are covered.