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It is so important in our opinion that athletes hire effective legal representation(“Rep”) for NIL. Unfortunately, Rep’s don’t work for free. Typically, the arrangement is contingent if NIL deals are also part of the service, but it can alternatively be hourly, or a hybrid. In this article we focus on the athletes understanding of the fee commitment, and its juxtaposition with contract termination.
“BAD ADVICE” –It is a common thought generally that people hate paying fees, particularly to a Rep (lawyers need love too!). Athletes are no different. The NIL dynamic basically involves a Rep putting in the work to market the athlete, source deals, review contracts, manage money, and conclude transactions. All the athlete may see, however, is the deduction of fees from a deal. The athlete may internalize, hop on google, or seek the advice of their “trusted” family and friend “advisors”, with the question, “can I somehow avoid these fees?” Then the advice comes in – “terminate the contract before you get paid!” This, however, may be bad advice and short-sighted.
CONTRACT “TERMINATION”- We talked in the previous Episode 6 about “Termination” and offered this standard contract clause, This Agreement will automatically renew for additional one(1) year terms unless earlier terminated pursuant to this Agreement’s express provisions or either Party gives the other Party written notice of non-renewal at least 30 days prior to the expiration of the then-current term ... Importantly, however, the contract will also likely state something like, “Notwithstanding a termination by Athlete, the Rep shall be entitled to all Fees due hereunder and shall have claim to any fees resulting from opportunities for deals originated and developed by Rep but concluded if by another representative of Athlete or no representative.
THE ATHLETE MUST UNDERSTAND THAT IF THE REP ORIGINATES A NIL DEAL, ETC., THEY REASONABLY EXPECT AND DESERVE TO BE PAID AND IT’S A CONTRACTUAL COMMITMENT.
Is the bad advice and decision to terminate short-sighted? Maybe! A good Rep was engaged in lead generation and sourcing deals, may have had several in the early pipeline stage, and was otherwise creating brand awareness for the Athlete in the market. Also, it is likely the Rep was providing other resources and education to the athlete. Athlete has just lost all this potential and momentum by terminating the contract mistakenly thinking fees are avoided. Hence, even though the contract may be terminated by the Athlete, it was bad advice from the peanut gallery if fee avoidance was the goal.
While fees earned by the Rep are due, we will not get into the dicey question of whether, or to what extent, the Rep should enforce the contract.
ABOUT THE AUTHORS:
NILegally Speaking™ is written by PowerNIL/Ken Feinberg, attorney, in collaboration with other expert attorneys focused on employment, labor, contract, and intellectual property law.
ken@powernil.com www.powernil.com