Entertainment boutiques brace for the next act

Entertainment law field not crowded but full of "pretenders" ... Technology, not competition, the real game changer ... Paul Karp surveys the specialist firms with glamour-puss clients  

AT the top end of town the entrance of international firms might make competition for work the fiercest in years, but boutique entertainment and arts firms claim their ability to specialise and represent the small client has this advantage: that they are shielded from the competition and the market is, in fact, no more crowded than usual. 

Competition and overcrowding overstated

Brett Oaten, the principal of Brett Oaten Solicitors, said that big corporations tended to opt for big city law firms or new multinationals, but "the work of the boutiques hasn't changed much".

"The identity of the boutique firms may have changed over time, but a similar number tend to do the bulk of the work."

Then, there are the pretenders. "A greater number of firms purport to do entertainment work, but it's not sustained," Oaten claimed.

One of the new faces in the market is Kay & Hughes, a new boutique that opened its doors in February 2013.

Ben Kay: word of mouthPartner Ben Kay cited insurance, building-up revenue and gaining access to the industry as the key components for a new firm to have in place.

"There are lots of difficulties in setting up - but it should be hard to start your own firm." 

Kay agreed that a lot of general practices claim to work in entertainment and arts but don't have a significant practice in the field.

"There is a particular desirability to this field, the glamour, so generalists express that they are happy to practice in it but in reality they don't."

He added that firms with bona fide arts practices could be found in industry specific publications and giving pro bono advice to artists.

"We have particularly good access to the industry as a specialist firm. And word of mouth and recommendations are the main source of work." 

The oldest Sydney specialist firm in the field is Simpsons, founded in 1986 by Shane Simpson.

Adam Simpson: arts and entertainment law requires a high level of empathy Managing Director and partner Adam Simpson told Justinian the field had become more mature in expectations and offerings now there were a few specialist firms, but warned "it's still a small market and there are some with perhaps less experience than they advertise".

Simpson believes globalisation has "made little, if any, difference" although the market has become more crowded since the 1980s.

He thinks it's a tough area to break into because, "it's more cost sensitive and it's an industry that perhaps requires a higher level of empathy".

"It's certainly a field that favours boutique practices with lower overheads and a more nimble and flexible approach."

But size also has its advantages. Simpson said:

"It can be particularly challenging for a boutique practice if larger firms run matters as loss leaders, as they are better able to absorb losses and take the risk that the ongoing relationship will be financially fruitful." 

Technology the real game changer

The driver of change in the industry has been technology, affecting both clients' legal needs and the way legal practices are run.

Brett Oaten said the internet and new media have allowed clients, "to create content and interact with audiences without being prevented by gatekeepers".

As a result, "the established models have crumbled and the career path for content creators is less clear. It is significantly more difficult to make money". 

The challenge facing his clients is a scarcity of investment in creative projects by third parties and the effect on his legal work is that, "commercial deals have become more complex but tend to provide less money [to clients]".

Oaten said accounting and timekeeping were now done in the cloud, so his lawyers could work from home, out of Sydney and travel - all without any effect on the service to the client.

Ben Kay said his firm also works in the cloud and claims that he and partner Kate Hughes have the advantage of being "substantially younger [than other practitioners] ... which is a strength in creative industries".

He hastens to add that this doesn't mean that other firms are "out of touch".

In search of new billing models

Kate Hughes: fixed fee billing works better for creative clientsBen Kay cited fixed fee billing as the comparative advantage of his new firm. "Billable time doesn't work very well for creatives," said Kay.

"Actors, musicians, theatres and galleries all operate on set budgets, they need more certainty because they don't have a huge amount of money and need to treat legal advice as a predictable cost, another line item."

He believes other firms "haven't jumped" at the prospect of fixed fee models because of the risk.

Transaction costs were reasonably predictable and "if someone has to bear the risk, it's unreasonable to place the risk on the client".

"With the level of expertise we have it should be the lawyers who know what something will cost and the ideal amount of time to spend on it." 

Billing filters through to the way advice is given, according to Kay.

"We are more consultative as a result, advice is not constrained by time so we can give clients more access and exposure to us to solve issues pre-emptively".

Others still prefer hourly rates.

Adam Simpson said they also offer fixed fee but, "clients generally prefer an hourly rate approach accompanied by good communication about cost progress and variables".

New faces, but not an overcrowded field; new ways to give advice, but still a preference for billable hours.

Even in creative industries it seems the more things change the more they stay the same.