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This article is for informational purposes only, and not for providing legal advice. Use of this information does not create an attorney-client relationship. Readers should contact an attorney to obtain advice with respect to any particular issue.

Music teaching is a craft that you have spent decades honing: first, to command demonstrable mastery of your chosen instrument, in itself a lifelong process, and second, to develop and use compelling pedagogical methods for transmitting that knowledge, skill, and artistry to your students. As a music teacher, you are already wearing two very large hats. But as an independent studio teacher, you also wear a third equally-large hat—that of a business owner. To protect your passion for music and teaching, you have to protect your business too, and one of the best legal protections available to independent music teachers is the Studio Policy.

Why You Need a Studio PolicyAn effective Studio Policy communicates the mutual expectations between you and your students, which will help ensure a professional, well-managed studio business. A thoughtful, well-written Studio Policy can prevent problems during the course of the relationship. If a dispute or disagreement does arise, emotions can run high and cloud the parties’ judgments; however, your Studio Policy can objectively remind clients of the terms and conditions they specifically agreed to, with their signature as proof. The corollary, of course, is that your Studio Policy serves to remind you to treat your clients fairly, too.

Legal Enforceability of Studio PoliciesStudio teachers might assume that their Studio Policy is legally enforceable, but depending on how the Studio Policy is written, local judges and small claims courts have held that a Studio Policy may not be sufficient to meet the requirements of a legally-binding contract.

To protect your passion for music and teaching, you have to protect your business too

Legal Corner

FINE TUNE YOUR STUDIO POLICY

Elaine Dai, MTAC State Attorney

Elaine Dai is the MTAC State Attorney. She has been practicing law for 11 years, and maintains a solo practice advising non-profit organizations and businesses. She previously worked as a corporate attorney at Morgan Lewis & Bockius LLP in Los Angeles. Elaine graduated from the University of British Columbia Law School in Canada, where she won several prestigious scholarships and received the distinguished honor of serving as Editor-in-Chief of the UBC Law Review. Elaine is an active musician and former piano studio teacher. She has a master’s degree in music education from Boston University, where she graduated at the top of her class.

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At the most basic level, a legally-binding contract must include an offer by one party, an acceptance by the other party, and sufficient “consideration” or value—which may take the form of money, services, actions or goods—that is exchanged between the parties. Some Studio Policies only state the obligations and promises that the student must undertake, but do not state that the teacher, in exchange, will provide the service of teaching lessons. While this seems obvious, neglecting to explicitly state the teacher’s promise to deliver services can cause problems later on.

Many years ago, I knew of one teacher who wished to terminate lessons with an adult student who was constantly argumentative and belligerent at her lessons. Eventually, the teacher terminated lessons. The teacher’s Studio Policy stated that the student must pay for each month’s lessons in advance, and that the teacher did not provide any refunds if lessons were cancelled before the end of the month. The student sued for the teacher to refund the month’s tuition. The judge held in favor of the student, stating that the Studio Policy was unenforceable because it did not promise teaching services in exchange for payment.

In another instance, a music teacher’s Studio Policy stated that the teacher would offer lessons for a specified term of eight months, but had no provision stating the circumstances in which either party could terminate lessons before the end of the term without further legal obligations. The student had paid in advance for all the contracted-for lessons. The teacher in that case wanted to terminate lessons in the middle of the term, but the student’s parents wanted their child to continue with lessons until the end of the term. The judge ruled in the parent’s favor, and relied on the Studio Policy as an enforceable contract between the parties—since there was no termination provision, the teacher was legally obligated to provide the lessons until the end of the specified term.

In both cases, a well-written Studio Policy would have helped the teachers protect their businesses and incomes, and may have avoided the time, stress, and expense, of going to court.

Essential Provisions for Your Studio Policy

Studio Policy as ContractStudio Policies vary widely to accommodate the diverse ways in which teachers operate their businesses. Given the broad range of issues covered in a Studio Policy, it may not be clear to your clients that your Studio Policy is indeed a contract. You can help your clients understand that there is a legal agreement by stating explicitly: “This Studio Policy is a legal contract made between Studio and Student on this date, for the provision of private music instruction services by Studio to Student. Student has received and read the Studio Policy and agrees to abide by its provisions, as a condition to Teacher providing music lessons to Student.” End the contract with a statement that further confirms the parties’ understanding: “The undersigned has read this Studio Policy, and fully understands its terms, conditions, and provisions. The undersigned agrees that if any portion of this Studio Policy is held to be invalid, then the remaining portions shall continue in full force and effect.” Conclude with the appropriate signature and date lines.

Lessons; Services ProvidedEvery studio has a unique way of delivering music instruction services. Given the vast array of lesson offerings on the market, don’t assume that prospective students are familiar with the types of lessons that you are offering. Tell them clearly in your Studio Policy: “Private individual piano lessons are provided on a weekly basis, with lesson times of 30 or 60 minutes. Lessons are conducted weekly at a specific day and time, which is reserved for each student. Enrolled students are expected to attend monthly musicianship or theory classes, in addition to weekly lessons.” If you offer additional services, such as group classes, theory workshops or lessons in a secondary instrument, include that in your Studio Policy too.

TuitionYour tuition policy lies at the heart of your business. Ambiguous tuition policies can lead to conflicts, which may in turn hinder your ability to make a living. Tuition provisions should address tuition amount, services and/or materials covered by tuition, additional fees (e.g. recitals/activities fees) that are not covered by tuition and will be charged separately, and refund issues. A common tuition structure is the provision of lessons based on an hourly lesson rate (or portion thereof), with monthly tuition paid in advance at the beginning of the month, and ongoing throughout the year (except for studio closures or holidays) until terminated.

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At minimum, the tuition fee should take into account a studio’s ongoing business and administrative expenses, which might entail small business licenses or taxes, studio rent, business owners’ insurance, medical insurance, self-employment taxes, retirement, instrument repair and maintenance, professional memberships and subscriptions, recital/venue expenses, equipment purchases or rentals, lesson preparation time, computer/technology expenses, teaching and office supplies, printing, postage, and travel expenses. Other factors for calculating tuition may include your location and market, the average income of families in your community, supply and demand for studio music instruction in your area, teacher training and experience, and tuition charged by other independent studio teachers or for similar private education services (e.g. dance, karate, art, academic/language tutoring).

Music teachers are sometimes hesitant to raise tuition rates, but fail to account for rising inflation rates, which can have a subtle but corrosive effect on business income. Service professionals who use hourly rates, such as lawyers, accountants, career coaches, and therapists, often set an annual rate increase commensurate with inflation rates. Conduct a yearly analysis of your income and expenses, and check inflation rate indexes, such as the Consumer Price Index, to determine whether you are due for a raise. If you do adjust your rates, make sure to provide sufficient

advanced notice to your students – for example: “Tuition fees are subject to an annual increase of 5%, upon 30 days’ written notice to Student.”

Payment ProceduresYour Studio Policy should explain detailed payment procedures to prevent future problems—and excuses—for late or non-payment of tuition, which can have a serious impact on your business cash-flow. Specify when payment is due, to whom and where payments are remitted, methods of payment, late fees, and charges for returned checks. Consider language such as: “Monthly tuition payments must be personally delivered to the Studio or mailed to [address]. Acceptable methods of payment are by check or cash. Tuition not received by the 10th of the month will incur a late fee of $20.00. Checks returned for non-sufficient funds will incur a fee of $25.00.”

Technology has provided new ways for studio

teachers to receive tuition payments. You might wish to explore these options to encourage timely and consistent payment. Some private educational services, such as dance studios and preschools, are moving towards requiring clients to set up automatic monthly online bank payments. Survey your clients, and find out whether online methods of payment would be welcomed—you might find that your technically-savvy clients prefer to pay via mobile app or PayPal.

It’s Your Business, and only you can protect it.

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38 California Music Teacher Winter 2012

Holidays; Studio ClosuresAs with other professions, studio teachers and student are entitled to take some well-deserved time-off during the year. Some teachers choose to align their calendars with the academic year, particularly if the majority of their students are of school age, taking a 2-week Winter break and a 6-8-week Summer break. Many teachers close their studios for national holidays such as Labor Day and Thanksgiving.

In your Studio Policy, be clear about studio closure dates, and how such closures affect tuition payments or lesson scheduling. Are lessons rescheduled, credited, or refunded? Or does your tuition structure already account for the cost of these lessons? For example, some teachers have a tuition structure based on 12 equal monthly payments, in which tuition amount covers a set number of lessons and accounts for winter and summer breaks, studio closures, teacher vacation time, and a few “teacher sick/personal days.” This type of structure may lessen the amount of credits and reschedules for the Studio to track and ensures a steady cash-flow, while providing certainty and practicality for the student.

CancellationsCancellations are a two-way street. There will be times when the student or the teacher will have to cancel lessons, due to emergency, injury, illness, or conflicting obligations. Teachers must calculate the “opportunity cost” of cancelled lessons—you have reserved a weekly, specific space for the student, and you have virtually no chance of filling that space with another student to recoup the cost. Therefore, students should be required to provide adequate notice of cancellation so that teachers can plan ahead and use that time for other studio business.

If students have provided sufficient notice, teachers can give students an opportunity to reschedule the cancelled lesson, although it is impractical to hold out that opportunity forever. Consider a provision that strikes a fair balance: “Students must provide 48 hours’ advance written notice to cancel a lesson. Without adequate notice, the student forfeits the lesson’s tuition. If notice is provided in a timely manner, the student may reschedule a lesson within two weeks, or receive credit in the following month. Lessons cancelled by the teacher will be rescheduled, reimbursed, or credited.” Some students may attempt to misuse the notice provision,

racking up credits for frequent cancellations, so close that potential loophole—don’t abide constant cancellations. Let them know that frequent, repeated cancellations, even with sufficient notice, may result in termination of lessons.

Termination of Lessons The termination provision is one of the most important clauses in your Studio Policy, and is often the source of conflict between teachers and clients. While Studio Policies might cite specific grounds for termination, teachers may not want to become embroiled in long and involved debates with clients over those reasons. For example, if you seek to terminate a middle-school student for rude behavior, don’t assume that the parents will agree with you—a battle may lie ahead.

To avoid such extended conflicts, you might opt for a clean break and provide a termination policy that allows either party to terminate lessons for any reason. Consider building in a notice provision to mitigate the costs of filling the vacancy: “Student must provide at least two

weeks’ written notice to terminate lessons. Without such notice, students are responsible for the amount of two lessons’ tuition as a termination fee. If the Studio terminates lessons, tuition will be prorated up to the last lesson taken.”

Media ConsentOver the past ten years, Studio websites have proliferated on the internet, which is a fantastic way to promote your studio teaching business and reach new markets. However, if you intend to post photos or videos of your students’ performances to promote your Studio, you must get consent. Add a media consent and release provision to your Studio Policy; for example: “Parent hereby consents to and authorizes the Studio to capture and use video-audio recordings and photographic images

of my child and/or my child’s musical performance or quoted statements in print, electronic, or online media, for educational and Studio promotional purposes only, and without any compensation to me or my child. Parent agrees to waive and release any and all claims Parent may have against Studio relating to the use of these recordings, images, or statements. This Consent is binding upon heirs and future legal representatives.” You might also wish to assure parents that any images or recordings you post will not personally identify a child, or ask for specific consent to use a child’s first or full name.

Waiver of Liability; IndemnificationStudio businesses often offer activities outside of the teacher’s studio, such as participation in a local competition, or attendance at a live musical performance. Treat these activities the same way schools and athletic programs do – seriously. Survey any local private educational or sports program, and you will find language

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similar to this in their policies (in all caps or boldface): “PARENT HEREBY WAIVES, RELEASES, DISCHARGES, AND COVENANTS NOT TO SUE ORGANIZATION, ITS OWNERS, EMPLOYEES, AGENTS, OR REPRESENTATIVES FROM ANY AND ALL LIABILITY, CLAIMS, DEMANDS, LOSSES, OR DAMAGES ARISING OUT OF, OR RELATED TO, PARENT’S OR CHILD’S PARTICIPATION IN THE EVENT/ACTIVITY/PROGRAM, WHETHER BASED IN CONTRACT OR TORT, INCLUDING ACTUAL, COMPENSATORY, INCIDENTAL, SPECIAL, CONSEQUENTIAL, PUNITIVE OR EXEMPLARY DAMAGES. IF, DESPITE THE WAIVER, ANYONE MAKES A CLAIM AGAINST ORGANIZATION, PARENT AGREES TO INDEMNIFY, DEFEND, AND HOLD HARMLESS ORGANIZATION FROM ANY AND ALL CLAIMS, DEMANDS, LOSSES, ATTORNEYS’ FEES, COSTS, LIABILITIES OR DAMAGES AGAINST ORGANIZATION ARISING OUT OF PARENT’S OR CHILD’S PARTICIPATION IN EVENT/ACTIVITY/PROGRAM.” While this provision offers broad protection, it does not immunize you to lawsuits. The costs of defending a lawsuit can escalate quickly, even if it is ultimately determined that your Studio is not liable, so be sure to check your business owners’ policy which may cover such costs.

Dispute ResolutionDespite your best intentions and efforts, disputes may arise in your Studio that have no clear resolution. The parties may be at a deadlock, or not communicating at all. Including a dispute resolution provision in your Studio Policy gives the parties an agreed-upon course of action so that all can move forward to resolve the disagreement, without necessarily going through the expensive and often time-consuming process of litigation. Two alternative methods of dispute resolution are mediation and arbitration. Mediation brings the parties together to discuss the issues in the presence of a third-party neutral mediator who is mutually-selected by the parties. Mediation is a form of assisted negotiation, with the goal of encouraging the parties to come to their own resolution. While mediation itself is non-binding, if the parties come to a settlement agreement through mediation, the settlement agreement is binding.

Another form of dispute resolution is arbitration. Arbitration calls for an outside, third-party arbitrator to review the case, and impose a decision that is legally binding on both parties. While a mediator attempts to find a middle ground for compromise between the parties, an arbitrator acts more similarly to a judge in that he or she is not involved in the negotiation or settlement process but provides a final adjudication. Arbitration can be more cost-effective and efficient than litigation in court. The American Arbitration Association recommends this standard clause for parties agreeing to arbitrate, rather than litigate, their disputes: “Any controversy or claim arising out of or relating to this contract, or the breach thereof, shall be settled by arbitration administered by the

American Arbitration Association under its Commercial Arbitration Rules, and judgment on the award rendered by the arbitrator(s) may be entered in any court having jurisdiction thereof.”

Miscellaneous Provisions Studio Policies are all-encompassing documents, ideally covering every essential aspect of the Studio’s business and legal relationships. You may, however, wish to set other Studio expectations without imposing legal ramifications. Consider listing these items in a separate “Studio Guidelines” document, covering issues such as your pedagogy and philosophy, minimum practice expectations and homework assignments, Studio etiquette such as washing hands before lessons and keeping fingernails short and clean, or protocols related to parents and siblings observing lessons.

It’s Your BusinessSamples of Studio Policies are abundant on the Internet, and pre-printed Studio Policy and document packages are even available for purchase. It may be tempting to simply copy one of these templates and fill in the blanks with your Studio’s name or letterhead, but be aware that someone else’s studio policy may not adequately address your specific studio situation. While such samples are a great starting point for conducting your own research, your day-to-day experiences in the studio serve as the best guidance for crafting a Studio Policy that suits your unique business needs. Ultimately, it’s your business, and only you can protect it. ♫

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