Rock Band Case

You are a first year inexperienced attorney representing a rock

group. Recently the group has told you that it wants to get out of its present recording

contract in order to take advantage of a much better offer. The group's contract is a

"new kid" agreement common in the recording industry. The group complains, and you

agree, that the terms of the contract heavily favor the recording company. For example,

although the contract calls for the group to make eight albums, the company can drop

the group at any time. In contrast, however, under the contract, your client (the rock

group) cannot terminate the agreement at will (i.e. whenever it wants to), but instead,

must stay with the recording company and make all eight albums. However, these

could take up to twelve years to produce.

The rock group entered into the contract, before you represented them, at a time when

the members were all just out of high school. In your opinion, had you been there to

represent them, you probably could not have secured a much better deal. The above

kinds of contractual terms are standard throughout the recording industry. In this regard,

record companies say they have to rely upon "new kid" type contracts to balance the

financial risks of signing and producing many new artists, most of whom meet their

needs.

A lawsuit, requesting a court to release the group from its contract could go on for

years. You know about another legal strategy, however, that could generate the same

result much sooner -- declaring bankruptcy. Under federal bankruptcy law, the courts

may free debtors from contracts the court views as burdensome. You realize, although

you have not yet shared this with the rock group, that it might eliminate the contract if

the group members all rapidly accumulated large debts that might convince a judge they

are financially bankrupt.

What are the ethical, legal and possible options the band has?