December 9

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Lessons From Pat Corcoran and Chance the Rapper’s Music Industry Breakup

Finance, Musicians

When the music community found out Chance the Rapper (real name Chancelor Bennett) and his longtime manager Pat Corcoran (aka "Pat the Manager") parted ways in early 2020, it kind of felt like finding out your friends who have been dating since the 4th grade are getting a divorce. When Corcoran sued Bennett for millions in unpaid wages and unreimbursed expenses, it was like finding out they're now airing each other's dirty laundry across the street. 

For those unaware, Corcoran and Bennett rose to the top of music world together as an independent tandem, forging savvy business deals and winning GRAMMYs without a dime from record labels. Many see them and what they built together as a blueprint for independent success in the music industry. 

And that still remains true. Their modern day falling out in no way delegitimizes the success they built as an independent business. But it does serve as a painful reminder that this is the music business and both artists and managers need to protect themselves.

The "Handshake Deal"

One of the big variables in the lawsuit is the fact that Corcoran and Bennett don't have a written contract. They just verbally agreed Corcoran would get paid 15% of Bennett's net earnings. Often known colloquially as a "handshake deal," these types of agreements leave a lot of gray area when it comes to what is and isn't legally enforceable in these situations. 

There's nothing inherently noble or romantic about a handshake deal (or "oral agreement"). It's not particularly punk rock to just roll with the punches without things in writing. 

All you're doing when you forego a proper signed agreement is creating the potential for headaches in the future. And you know what definitely isn't romantic or punk rock? Multiplying your attorney fees by 5 because your lawyer has to spend more time trying to cobble together proof that your oral agreement is legally enforceable.

The truth is, most entertainment lawyers can put together fairly standard management agreements very quickly. For a few hours of their time and a few hundred dollars, you as an artist or manager can protect yourself from this exact scenario. There are other, even cheaper boilerplate and DIY options if you absolutely have no money to spare at the very start. At the very least, read through some templates to get an understanding of how it works and then have the conversation.

Because being friends with somebody is no excuse to leave out the legal work. In fact, it should be all the more reason to agree early on to a contract. If an artist or a manager is squeamish about having a contract, that should serve as a big red flag. There's just not a really compelling reason to leave it all up to chance (pun only partly intended). 

Track The Money

Another big part of the disagreement stems from Corcoran claiming Bennett hasn't reimbursed him. Corcoran contends that he spent a significant amount of his own money to help Bennett's brand get off the ground. 

It's not entirely uncommon for managers to put some of their own money into an artist they believe in. In Chance the Rapper's case, his breakthrough 2013 mixtape Acid Rap didn't actually make money. The team put the mixtape out for free, largely due to the fact that they hadn't paid for or cleared any of the samples and beats Chance and company performed over. 

So, you find yourself in a situation where everybody is talking about you, artists are inviting you on tour, promotional opportunities are popping up left and right — and you don't have any money in the bank to make it happen. As they say, it takes money to make money. 

That's where somebody like a manager might step in, either with their own cash or with cash from somebody they know. But if you don't outline the terms of the money — like if it's an advance, a loan with interest, an investment etc. — and when it's expected to be paid back, you're potentially creating unspoken tension between the camps. The kind that could come back in a bad way.

As a manager or artist, you need to understand the terms of every dime you give or take from a third party. And you need to keep track of it. Even if it's just a spreadsheet.

Let's Not Get Personal

Part of the reason these disputes feel so personal is because, well, they are. Just take a look at the lawsuit Corcoran's team filed. It offers all kinds of additional, albeit unrelated details, like the lackluster response to Bennett's debut album, how the camps disagreed on strategy, how Corcoran believed Bennett wasn't focused, how Corcoran was replaced by Bennett's own dad and brother, and basically just a whole bunch of information that really doesn't pertain to the heart of the matter. 

It's not uncommon to use lawsuits as PR fodder or a de facto opportunity to release a statement to the press without actually releasing a statement. But it does underscore how the manager/artist relationship tends to blur lines that in many industries wouldn't really fly. 

At the end of the day, managers work with and for their artists. That relationship, as far as business principles are concerned, comes before friendship. It just does. It's tough when you're starting out and you go through a lot of first experiences together — like sleeping on air mattresses in closets and touring through Texas with no air conditioning

But there is, and always should be, an outlined hierarchy that acknowledges friendship is beneath professional and fiduciary responsibilities. As the boss, Bennett has the right to fire Corcoran. As an employee (and, as he claims, source of startup capital), Corcoran has the right to his wages. As far as the court is concerned, friendship doesn't have a role in this.

All the more reason to get the ink and paper handled in the early days. 

It Doesn't Have To Be This Way

For all the innovative things the Chance the Rapper brand managed in the past decade or so, Corcoran and Bennett's relationship as artist and manager was surprisingly old-school. The financial terms, the lack of legal definition, the ultimate demise. What a predictably cliche way for that particular relationship to end.

But it didn't have to be that way. Corcoran and Bennett could've structured their company in a way that more clearly defined roles, responsibilities, and contingencies for the partnership dissolving. 

Corcoran really was Chief Operating Officer (COO) to Bennett's Chief Executive Officer (CEO). When Corcoran put his own money into the company, he could've simply owned more units of the company. When Bennett ultimately fired him, he could've bought back those units. 

Bennett and Corcoran could've also agreed to a shift in payment structure to guaranteed salary along with Corcoran's minority stake in the company. As an artist, constantly giving percentages of your earnings to others takes its toll and tends to sow resentment between parties — justified or not. 

There are plenty of innovative ways to address all of the things that come with success in a copyright industry. And when you own everything, you have the ability to structure your company however you want. Ultimately, these messy business breakups are avoidable. 

So What Does It Mean For You?

Well, if you're still flying totally solo, it means you've still got a clean slate in a lot of ways. And it means you should be prepared to have paperwork for when you do bring more people into the fold. And you should think about whether or not you want to do it in the traditional way or adopt other structures.

If you've already got a team and have much of this in place, well done! It's always worth it to take a little time at the end of the year to read through some of your existing agreements as a refresher. 

If you're working with somebody but don't have anything official in place, we really encourage you to take the next step to getting it in writing. Even if money hasn't changed hands yet, it's a lot like getting a flu shot. It protects you and a lot of the people around you. And a little bit of hassle in the beginning can save a lot of headache in the end.






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