REHKATSCH LAWYERS · MUSIC LAW
Attorney Specializing in Management Contracts in the Music Industry
Do you want to sign a management contract, get out of a contract, or ensure that your management contracts hold up in court? We review, negotiate, and draft management contracts for artists, bands, producers, DJs, and management companies nationwide.
20 %
standard management fee
Section 627 of the German Civil Code
the right to terminate a contract, which is at the heart of almost every dispute
both sides
We represent artists and management companies
Known for:
Management Contract: Trust Put in Writing
A manager builds your career, negotiates your deals, and speaks on your behalf with record labels, publishers, promoters, and brands. In return, they receive a share of your earnings—usually 20 percent. That’s fair as long as performance and commitment are in sync. It becomes problematic if the contract ties you down for years, strips you of decision-making power on every matter, or allows the manager to continue earning a share of your earnings after the separation without any further work on their part.
Legally, a management contract is a service contract with the nature of agency. The manager is obligated to provide effort, not success. Because the collaboration is based on a special relationship of trust, the law grants you a special right to terminate the contract. This is precisely what many contracts attempt to circumvent. Whether they succeed often hinges on a single question: Is the clause pre-formulated or was it truly negotiated?
We’re familiar with these contracts from both sides. We review them for artists, renegotiate them, and enforce claims. And we draft them for management teams that want to protect the work they’ve built up. We’ve litigated many of these disputes in court, and there are currently ongoing cases as well.
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A management contract is a contract based on trust. If that trust is lost, the contract may be terminated immediately, provided that § 627 of the German Civil Code (BGB) has not been validly excluded.
We represent both sides: artists and management
Those who know only one side are worse at negotiating. Before becoming a lawyer, Patrick Rehkatsch worked in the music business himself: from 1995 to 2000 for Universal Music, and concurrently for Sony, Edel Records, Kontor Records, and Berlin Music. He knows what a management team delivers—and what it costs when they don’t.
FOR ARTISTS, BANDS, PRODUCERS, AND DJs
Before you sign, and if you want to leave
– Reviewing the contract before signing
– Renegotiation of commission, term, options, and trailing commission
– Termination and separation from the manager, including settlement
– Defending against claims following termination
FOR MANAGEMENT COMPANIES AND AGENCIES
So Your Contract Holds Up When Things Get Serious
– Management contracts that stand up to scrutiny
– Protection for your business development efforts and investments
– Enforcement of commissions and trailing commissions
– Representation in the event of termination by the artist or poaching
Management, Booking, Label: Who does what, and who makes money from what?
Many conflicts arise because one person holds multiple roles. When that happens, multiple commissions are involved at the same time, and no one pays attention anymore to whether a deal is ultimately worthwhile for you. Therefore, make sure to clearly separate these roles in the contract.
1
Management
Career planning, strategy, networking, negotiations. Compensation is based on a commission on your earnings. Terminable under Section 627 of the German Civil Code (BGB) if the exclusion clause is invalid.
2
Booking
Arranging performances, negotiating with event organizers, often taking a commission from the fee. According to case law, booking is also considered a service of a higher nature. A separate page on booking contracts will follow.
3
Label or publisher
If the management is also part of your label or music publishing company, it stands to profit twice. This isn't illegal, but it is a conflict of interest that the contract should disclose and limit.
§ 627 BGB:
The Right to Terminate, Which Is Often the Subject of Dispute
§ 627(1) BGB · Termination without notice in cases involving a position of trust
§
In the case of a service relationship that is not an employment relationship within the meaning of § 622, termination is permissible even without the requirement specified in § 626 if the person obligated to perform the service, without being in a permanent service relationship with a fixed salary, is required to perform duties of a higher nature that are customarily entrusted on the basis of special trust.
IN PLAIN LANGUAGE
A management team works for you on the basis of trust. If that trust is gone, you may generally terminate the contract at any time, without notice and without cause. According to case law, this also applies to booking contracts. Many management contracts exclude this right. In a pre-drafted contract, such an exclusion may be invalid. If negotiated, it may be valid. Whether your contract falls into one category or the other determines everything else.
Can you fire your manager?
THE CRUCIAL QUESTION
Does your management contract state that termination under Section 627 of the German Civil Code (BGB) is excluded?
YES, the exclusion is included
It then depends on how the clause was included in the contract. If management used a form that it also provides to other artists, the exclusion is generally invalid. Even a printed standard contract containing terms like “manager” and “artist” can support this.
If, on the other hand, the clause was actually negotiated, it may be valid. In that case, you’re left with the option of ordinary termination at the end of the term or termination for cause. And it’s worth checking whether the contract as a whole is even valid.
NO, there's nothing about that in there
In principle, you can terminate the contract at any time. Be careful, though: A termination may also be implied by the contract, for example, if only certain valid reasons for termination are listed.
And terminating the contract is only half the battle. Other clauses specify what commissions, trailing commissions, and final settlements are still due afterward. Make sure to clarify this before you terminate the contract.
Clause Check: What's in Your Management Contract
The percentage is only half the story. Whether a management contract is fair depends on how its various clauses interact. That’s why courts always look at the big picture. These are the eight points we examine first in every contract.
Provision
fair
10 to 25 percent; most management teams take 20 percent.
negotiate
Around 30 percent, especially when combined with a long-term commitment.
Hands off
50 percent or more. Courts have deemed this to be usurious.
Basis for Calculation
fair
Clearly defined revenue; GEMA and GVL only if management handles it: reporting works, reviewing statements.
negotiate
Commission based on sales, without deducting production and travel expenses.
Hands off
"All revenue," including the VAT portion or revenue that management has no involvement with.
Term and Options
fair
One to three years, with clearly defined notice periods.
negotiate
Extension options that only management is allowed to exercise.
Hands off
A five-year fixed-term contract with automatic renewal and no option to terminate.
Termination
fair
The right to terminate under Section 627 of the German Civil Code (BGB) remains in effect or has been fairly negotiated.
negotiate
Probationary period, notice periods, limited exclusion during an initial phase.
Hands off
Termination is permitted only after “settlement of the artist’s account” or in exchange for severance pay.
Subsequent Commission
fair
This offer is for a limited time only and applies only to deals that were initiated during the promotion period.
negotiate
A flat-rate share of all revenue after the contract ends.
Hands off
Full commission for years, regardless of whether management contributed anything.
Cash Flow and Billing
fair
Fees are deposited into your account, and your management sends you an invoice.
negotiate
Debt collection handled by management, but with fixed billing deadlines and the right to review.
Hands off
Debt collection with no obligation to provide an account and no access to the documents.
Power of Attorney and Decisions
fair
Authority to negotiate; agreement may only be concluded with your consent.
negotiate
Power of attorney to enter into contracts up to a specified amount.
Hands off
Irrevocable general power of attorney and obligation to accept every deal.
Legal Advice
fair
Management takes care of the business; you have your own lawyer for contracts.
negotiate
Management brings in “its” lawyer to handle your contracts.
Hands off
Under the terms of the contract, the manager is obligated to provide legal advice. This could render the entire contract null and void.
The traffic light system is no substitute for an audit. A clause that seems harmless on its own can tip the scales when combined with others. Conversely, a strict commitment can be justified if management has made a significant investment.
20% of what? A sample calculation
Two contracts, both at 20 percent. Yet one could cost you twice as much as the other. The key factor is what the commission is based on.
10.000 €
Fee for a performance
4.000 €
Costs for the band, equipment, and travel
2.000 €
20% commission on sales
33 %
That much of your profit goes to management
If, on the other hand, management calculates the result after expenses, the figure is 1,200 euros instead of 2,000 euros. Both are acceptable. But you should know what you’re signing: Don’t just look at the percentage; read the definition below it.
Breaking Up with Your Manager: Here's How to Do It
Most terminations are settled out of court if the initial notice is valid. It gets expensive when artists terminate their contracts before they know what other payments will be due afterward.
01
Back up documents
Contracts, addenda, invoices, emails, chat histories. Most importantly: all supplementary agreements regarding merchandise, concerts, and accounts. These are often tied to the management contract.
02
File the contract
Standard form or negotiated? That determines whether the prohibition on termination holds up and whether the contract withstands a review of its content.
03
How to Give Proper Notice
At the end of the term, without notice for good cause, or at any time pursuant to Section 627 of the German Civil Code (BGB). A termination based on an incorrect justification may still be valid, but don't count on it.
04
Settle the money
Outstanding invoices, commissions for services already rendered, follow-up commissions for deals initiated. The exact wording is what matters here.
05
End the public perception
Revoke powers of attorney, notify partners, regain access to accounts, the website, and the domain, and remove the management email from the bio. If management continues to pose as your management, you can take action against it.
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Never quit until you know what it will cost you in the time after you quit.
When Courts Overturn Management Contracts
The Supreme Court has not definitively resolved this issue. However, the lower courts have established clear guidelines. A contract is almost never deemed contrary to public policy because of a single clause, but rather because of the overall picture, which includes the degree of commitment, the extent of control by a third party, and the compensation.
●
2008
●
2009
●
2017
●
2021
Cologne Regional Court
Decision of October 31, 2008 – 8 O 256/06
A 30 percent commission, an obligation to accept almost every deal, approval of all contracts by the manager, a five-year term: unconscionable and void.
Higher Regional Court of Cologne
Decision of June 19, 2009 – 24 U 194/08
The manager was also obligated to provide legal advice. For that reason alone, the entire contract was void. Furthermore, without an explicit clause, there is no commission on revenue earned after the contract ends.
Hamburg Higher Regional Court
Urt. v. 30.11.2017 – 5 U 136/13
A 20 percent management fee and a 20 percent booking fee are not contrary to public policy. However, the pre-formulated exclusion clause in Section 627 of the German Civil Code (BGB) was invalid, while the singer’s termination was valid.
Potsdam Regional Court
Decision dated June 2, 2021 – 2 O 101/20
A 50 percent commission, 60 percent of the performance fees, 90 percent of merchandise sales, contractual penalties, and a three-year trailing commission for a minor singer: a one-sided contract—along with all ancillary agreements—is null and void.
The bottom line is this: The more the contract restricts you and the more it limits your freedom to make decisions, the more closely the courts will scrutinize the compensation—and vice versa.
When Courts Overturn Management Contracts
The Supreme Court has not definitively resolved this issue. However, the lower courts have established clear guidelines. A contract is almost never deemed contrary to public policy because of a single clause, but rather because of the overall picture, which includes the degree of commitment, the extent of control by a third party, and the compensation.
2008
Cologne Regional Court
Decision of October 31, 2008 – 8 O 256/06
A 30 percent commission, an obligation to accept almost every deal, approval of all contracts by the manager, a five-year term: contrary to public policy and void.
2009
Higher Regional Court of Cologne
Decision of June 19, 2009 – 24 U 194/08
The manager was also obligated to provide legal advice. For that reason alone, the entire contract was void. Furthermore, without an explicit clause, there is no commission on revenue earned after the contract ends.
2017
Hamburg Higher Regional Court
Urt. v. 30.11.2017 – 5 U 136/13
A 20 percent management fee and a 20 percent booking fee are not contrary to public policy. However, the pre-formulated exclusion clause in Section 627 of the German Civil Code (BGB) was invalid, while the singer’s termination was valid.
2021
Potsdam Regional Court
Decision dated June 2, 2021 – 2 O 101/20
A 50 percent commission, 60 percent of the performance fees, 90 percent of merchandise sales, contractual penalties, and a three-year trailing commission for a minor singer: a one-sided contract—along with all ancillary agreements—is null and void.
The bottom line is this: The more the contract restricts you and the more it limits your freedom to make decisions, the more closely the courts will scrutinize the compensation—and vice versa.
Patrick Rehkatsch Explains: A Management Contract in Five Minutes
Video coming soon…
Can I just fire my manager?
Video coming soon…
20% of what? Here's how to read the commission clause
For Managers: How to Make Sure Your Contract Holds Up When Things Get Serious
You invest time, money, and connections in an artist who isn't making any money yet. When success comes, the next management team comes knocking. Whether your contract protects you then depends on how it's drafted—not on what the court decides.
Form Traps
Anyone who presents the same contract to multiple artists is using standard terms and conditions. Many of the clauses that management firms rely on then don't hold up.
This is not legal advice
If the contract states that you also provide legal advice to the artist, you risk the entire contract being deemed null and void—and thus losing your commission.
Explicitly state the trailing commission
Without a clear rule, you'll come away empty-handed when the contract ends—even for deals you initiated yourself.
Protection Against Poaching
The right to terminate an employment contract under Section 627 of the German Civil Code (BGB) is a gateway for competitors. There are ways to protect the business you’ve built. We’ll discuss those during our consultation.
Have your management contract reviewed before you sign it
During a no-obligation initial consultation, we’ll determine whether we can take on your case and what the consultation will cost. The initial consultation starts at 250 € plus VAT.
From Our Practice
We handle cases involving management contracts for artists and management firms, including current ones. As soon as the proceedings allow, we will report here—in an anonymized form—what the cases were about and how they turned out.
COMING SOON
Management is wrongly demanding a commission
What management demanded after the separation, and why there was no basis for it.
A case report will follow, anonymized.
COMING SOON
Is the sunset clause valid?
How long and to what extent management may continue to receive a share of the profits after the contract ends.
A case report will follow, anonymized.
COMING SOON
Can the management contract be terminated without notice?
When trust is lost and the collaboration may end immediately.
A case report will follow, anonymized.
Management and agencies for influencers, athletes, actors, and models as well
The legal questions are the same everywhere: How long is the contract valid, how much does it cost, and how do you get out of it? The details vary depending on the industry.
Influencers and Creators
Agency contracts with access to your accounts, commissions on collaborations, and exclusivity.
Models
Modeling agency contracts, contract terms, and costs for photo shoots and comp cards.
Your Team for Management Contracts
Patrick Rehkatsch
Attorney Specializing in Copyright and Media Law – Founder
Attorney
Specializing in
Copyright and Media Law
Juliette Sarvan de Castro
Attorney Specializing in Copyright and Media Law
Frequently Asked Questions
The standard range is 10 to 25 percent; most management firms take 20 percent. The key factor, however, is what the commission is based on: revenue, profit after expenses, or whether it includes GEMA and GVL royalties. Courts have confirmed that 20 percent is in line with market standards, while 50 percent and higher have been deemed usurious.
Generally speaking, yes. Under Section 627 of the German Civil Code (BGB), you may terminate a contract for services of a higher nature that are based on a special relationship of trust at any time without cause. Many management contracts exclude this right. In a pre-drafted contract, such an exclusion is generally invalid; however, if negotiated, it may be enforceable.
A share of your revenue for the management after the contract ends. This must be expressly agreed upon. It is considered fair if it is limited in time and applies only to deals that the management initiated during the term of the contract.
Yes, if that's been agreed upon. Collecting payment through management isn't prohibited per se. However, you then bear the risk that management might not pay or might become insolvent. Insist on fixed payment deadlines and the right to review the documents.
Not by law—a verbal agreement is also valid. However, without written terms, any separation will lead to a dispute over commissions, the term of the agreement, and trailing commissions. A clear contract protects both parties.
No. Only attorneys and a few other professions are permitted to provide legal services. If a manager is contractually obligated to provide legal advice, this could render the entire contract invalid. Even the attorney chosen by your management does not automatically represent your interests.
Not automatically, but it is a conflict of interest. Management then stands to profit twice and, in case of doubt, is negotiating with itself. The contract should disclose this and align the commissions accordingly.
Then your parents had to give their consent. Without that consent, the contract is provisionally invalid. Courts also take young artists’ lack of experience into account when determining whether a contract is contrary to public policy. Have the contract reviewed before you continue to be bound by it after your 18th birthday.
★︎★︎★︎★︎★︎
Clients rate us 5 stars on Google
Over 5,000 cases
Since 2003, serving artists, labels, management companies, and businesses
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