Last month, Project Runway winner Christian Soriano was sued by Designer’s Management Agency (DMA) for unpaid commission. According to the complaint, DMA negotiated Soriano’s highly touted deal with Payless to design shoes for its company.
Payless has already put out several lines of the Soriano-designed shoes which Payless hoped would elevate its brand.
Now DMA is contending it brokered the deal for Soriano and is entitled to 20% commission. That percentage is on the top end of the normal range for an agent’s commission on a licensing deal. The deal gave Soriano an upfront fee of $35,000 with a 2.5% commission on sales (its not clear if the 2.5 was on the net or the gross). Soriano was also guaranteed commissions of $50,000 for the fall/spring lines and $30,000 for the summer line. That’s an OK deal, not a super deal in my opinion.
But in any event, DMA states that at some point Soriano contacted Payless to pay him directly and not go through DMA. DMA then sued for its commissions which it tabulates at $53,000. Soriano’s lawyers have issued a comment denying all the allegations.
I wonder whether $53,000 was worth it to DMA to expose that it did not enter into a written contract with its designer client. It is highly unusual for an agency to rely on an oral contract for commissions. The agreement need not be more than two pages long, but it should be in writing. I suspect that DMA wanted to capitalize on Soriano’s reality TV success and worried about the details later. Frankly, that’s no excuse. Agency’s should have these agreements pre-drafted requiring only minor changes to insert dates, commission percentages and names. I now that many of my fashion clients on both sides of such an agreement would attest to the speed with which these agreements can be knocked out when companies want to strike while the iron is hot. It was incumbent on DMA to insist on some form of writing acknowledging their entitlement to commissions. These agreements also normally include a right to an audit and an accounting to determine the monies generated by the deal. Sometimes, I have had clients who have been afraid to lose a deal because of my insistence that we get a written agreement. My advice is always the same: Get the paperwork done while there is still love in the room and everyone wants to make money. After time has passed, and the agency’s work has long been done, its not unusual for an artist or celebrity to have remorse about that 20% going out the window forever without any further effort. I could especially see that here, where the celebrity is actually performing work for the company and not just lending his name to the brand. “I could have gotten this by myself” “What have they done for me lately?” “All they did was a couple of calls and I have to give them 20% off the top of my take?” etc etc. A written agreement answers all of those questions with “True, but you agreed;end of story”
That being said, if DMA is accurate when it states that it used to receive the money from Payless and then give Soriano his 80% until Soriano told Payless to pay him directly, then they may be able to prove that an agreement was in place. Emails, texts, and the conduct of the parties may be enough to establish the claim. The whole idea of a written agreement is to avoid all of these issues of course. I wouldn’t want to be in their shoes.