The Importance of Legal Representation in Esports Player Contract Formation

April 19, 2017

Author Note: I originally started this article intending to discuss choice of law and venue provisions in player contracts.  But, yet again, I feel that the framework is so important to understand that I wanted to get into detail as to why proper legal representation in the drafting of these contracts is (in my mind) a necessity.  This type of post will also give me something to link to when I need to provide context for a narrower topic area.  As such, I will save the choice of law discussion for my next post.  

 

Most people with an interest in esports business and law understand that there are many legal issues that plague the current competitive scene.  One issue that comes up more often than most are issues with contracts that the players sign with their respective team or organization. Due to the wild-wild west nature of the industry, and the relative inexperience of many of the major participants in the business side of things, there is a high frequency of shoddy, and frankly sometimes unenforceable, contracts between the parties.  This is especially true where it is a new organization, usually run by a young individual or individuals, who have never attempted to run a business before in the past.  They are sometimes known figures in the esports community, either a formal professional player or personality, that has decided that his next move in the esports business is to set up shop and run a team of his own.  Little does this poor individual know that he is in way over his head, and his knowledge of how to play the game will not directly translate into business acumen.

 

An unfortunate side effect of the internet age is that bad advice spreads rapidly, and there are example "templates" out on the internet to copy for every conceivable topic; from college admission essays, to resumes, to, as is most important here, legal documentation.  This is not to say that the rise of the template age of legal documents is a purely negative occurrence--there are some basic documents that a template may be sufficient (although I feel it's my duty as an attorney to say, when in doubt, consult a professional).  However, complex legal contracts between a team and player do not fall into this category of do-it-yourself sufficiency.  The simple fact of the matter is that these type of performance contracts (an agreement to do an action, rather than a contract to buy/sell something) require tailoring to the individual situation.

 

Now you might say: "but I'm sure attorneys have templates they work from when they draft these contracts, why should I have to pay when some freedom of information loving citizen posts a contract online for me to 'borrow.'"  And yes, it is true that any attorney worth his/her salt will have a large collection of templates to choose from when they begin the process of drafting a contract of any sort.  This library of contracts is one of the reasons hiring a lawyer with experience in the specialty you are seeking advice in is ideal--they will have the necessary knowledge and resources to efficiently help you with your problem.  However, even when one attorney adopts the template of another attorney, it usually requires some changes or explanation from the first (drafting) attorney to explain why, legally speaking, the document was drafted the way it was.  Sometimes a paragraph only applies to a single state, or country, and sometimes a paragraph will have to be changed every time the type of compensation changes (flat fee, salary, equity, etc). Without the proper guidelines to operate from, even a trained attorney will need some time to get up to speed with someone else's templates.

 

Now imagine that instead of one attorney requesting the template from another attorney that he trusts, that instead that newer attorney goes online and finds a template to work with.  How is he to know if that template is legally sound? He doesn't.  Instead, to do his due diligence he will have to apply the law he already knows to the document to make sure it is legally sound, and look up any provisions he is unfamiliar with.  If he's really doing his job, he will also compare multiple templates to one another, and read treatises on the subject to make sure that there aren't any missing provisions. This process is time-consuming, and can only be accomplished due to his basic understanding of the law.

 

Now take this reasoning a step further.  What do you think happens when a non-lawyer, someone completely ignorant in the law, goes online, finds a player contract to use as a template, and just plugs-and-plays? There's not even the guarantee that an attorney drafted that template. You might as well be playing the lottery.  This is what is happening at a staggering rate in the esports industry: smart, young, inexperienced businessmen and women are attempting to figure these contracts out on the fly, and the chaos that ensues is a predictable byproduct this haphazard approach.  

So what sort of things can happen as a result of a poorly constructed contract between an esports organization and a player that is playing for that organization? 

 

  • The contract can be found to be unenforceable, which means that neither party can force the other party to comply with its terms.
     

  • The player can become stuck in a low (or nonpaying) contracts for extended periods of time, unable to move on with his career due to unduly burdensome terms.
     

  • A dispute can arise that can not be settled in a cost effective manner due to ambiguity in the contract (I'll discuss this in my article about choice of law provisions).
     

  • There is unnecessary friction between the parties to the contract due to a failure to lay out guiding principals.  This can apply to a large range of topics including what to do when a player is sick or injured, or how a team can compel a lazy/uncooperative player to do his job.  Contract provisions can lay out the framework for resolving these issues to the benefit of both parties.
     

  • Non-payment of salaries/tournament winnings to the player, or streaming revenue to the organization (when applicable).  

 

These are just a few of the potential issues that can arise when a contract does not conform to the practical necessities of a given situation.  Only a contract drafter with experience in the matter can help minimize the risks to both the organization and the players.  With time and growth in the industry, the costs of such undertakings will drop rapidly.  But for now, think twice before grabbing the first offical looking document off of Google and handing signing on the dotted line. 

 

 

 

 

 

 

 

 

 

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