LEGALLY SPEAKING, IT DEPENDS: Where’s My Money? Part 1

Christopher Schiller is a NY transactional entertainment attorney who counts many independent filmmakers and writers among his diverse client base. Follow Chris on Twitter @chrisschiller.

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Everybody wants to get paid. I mean, that’s often the difference between a professional and an amateur. Between a hobby and a vocation. Between employment and the unemployment line. It’s fundamental to the business of show business so there shouldn’t be any confusion about the details and particulars, right? As any of you who have read my columns will anticipate that my answer is: It depends.

This first of a two-part series of columns focus is all about the details of getting paid, what to expect and when, how to specify your needs and realize the requirements for meeting them and how to recognize when what you are due isn’t forthcoming. In short, it’s all about the Benjamins. And I’m mean ALL about them and then some.

Due Consideration

In legalese consideration is a term coopted from its plain, English language meaning taken to stand for an acceptable, valuable (at least to the parties) medium of exchange necessary for the formation of a binding contract. Most often this is the financial or other compensation agreed to as a term of entering into and fulfilling the contract, but it could be anything that one side or the other considers valuable enough to enter into the contract for or accept as sufficient. Some people mistakenly believe that the consideration must be money. This is where you get those mostly fallacious document clauses that require the exchange of a single dollar, even if no actual dollar is exchanged. But in truth, consideration can be anything the parties deem valuable to them. But there must be consideration. Without consideration there is no contract. In order to maintain the broadest possible allowances for what could be considered allowable consideration lazy lawyers have conformed to using generic, stock language in the contract boilerplate similar to:

The stated consideration in addition to other valuable consideration the receipt and sufficiency of which is hereby acknowledged.

You will note that I have highlighted the trailing end of this often seen verbiage. The seemingly innocuous language can become problematic. It literally means that both parties agree that a fair exchange has already taken place so there can be no dispute on the issue. When you are talking compensation, especially complex and multifaceted payment plans, this language could make it difficult to correct an underpayment, over-payment, non-payment or other legitimate disagreement in this important element of the contract.

In general, it is very important to be extremely specific and as clear as possible when establishing the compensation elements of an agreement. And there are lots of elements to be considered, agreed to and timed out.

As stated before, contractual consideration can be more than just money. For entertainment contracts these can include credit, power in decision making, future opportunities beyond the terms of the current agreement (e.g. right to script the sequel.) Being clear on everything you want in compensation for your performing your duties within the agreement is paramount to making sure you get what you expect, when you expect it.

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There are often very simple sounding questions that have no real answer. One of these that I’m asked all the time can be boiled down to this, “How much can one usually get for work like mine?” There’s no way anyone can really answer that question.

Every writer’s property is unique and often has tangible elements that are drastically different from seemingly similar fare. How experienced is the writer? The interested producer? What connections are being brought to the table? What ready market does it fall into? Is that market already too saturated? What’s unique to make it stand out? Is it so different that people might be turned away because it doesn’t deliver what’s expected?

As you can see, there are lots of factors involved in even the most straightforward “worth” calculation that makes it impossible to fairly assess what dollar figure will eventually be the “right” one. A seemingly innocuous detail may lead to an order of magnitude difference with the parties involved. It’s frustrating when I have to answer with my oft told mantra, “It depends.” The only true answer is that you can likely get only what someone else is willing to give you for it. What that dollar figure is is unknown until all the facts are in.

Ballparks

Fans of Major League Baseball may realize that each team’s ballpark is shaped completely differently than all the others. From the dimensions of the field to the capacity of the crowd on down, there’s a great variety among them. Keep this in mind when seeking a “ballpark” figure for your sale. But just like there’s a set 90 feet between the bases, there are some commonalities you can look to to get a sense of the playing field for pricing your works.

For a starting point, a writer can look to the Writers Guild of America or WGA’s Basic Minimum Agreement (BMA) for minimum levels for nearly every facet of writing agreed to between the Guild and their signatory producers. The copious clauses and stipulations set out in detail all the specifics of the minimum dollar figures, requirements, conditions and schedules for each stage of typical agreements. Even with all their years of negotiations and deal making behind them there are still some areas that aren’t quite hammered down, such as just how much of work can be included in a polish before it becomes a new draft and triggers a different pay amount. But most of the minutia is at least addressed well enough to ease a writer’s mind.

Even if you are not yet a Guild member, looking to the BMA for how to structure your own deal with your potential employer is a good starting point to make sure you consider all the elements involved in the project. But just because a clause or amount is in the BMA doesn’t mean that’s what you should or will get. Even Guild members recognize that these are “minimums” and that if they can get more, then they are more than welcome to go for it. And the Guild establishes time structures that may or may not work for the productions you have in mind. Like, for the first draft a Guild writer is given twelve weeks to turn it in. If you are a fast writer and finish in six do you sit on your hands for a month and a half before turning it in? Will you be penalized if you turn it in early to get to work on another film? (WGA has exclusivity stipulations with their signatory producers so writers are only working on the one project at a time – unless otherwise negotiated.)

The BMA deals mostly with actual payments for writing services (along with credit stipulations, dispute regulation and a host of other related fare) but in the world of multi-hyphenates things can get much more complicated. If the writer is also a producer or director usually their fees for those additional services are separately accounted for. But a savvy producer/writer might realize that her usual high dollar writer’s fee might be too high to get her pet project off the ground and so get creative on the negotiation end of things. That’s where equivalent compensation can be considered to meet or exceed the BMA levels.

Same difference

Alternative ways of being compensated for your efforts might make your participation more viable in the eyes of a cash-strapped-at-the-moment producer. You might be offered a producer role in exchange for a lesser fee than you are used to for writing. (Just remember that credit without attached commensurate power or control is as flickering and fleeting a reward at the momentary thrill of seeing your name on the screen.) But if the incentive offered is valuable to you then you might be willing. This is sometimes referred to as the ego nickle, a negotiation point that costs the offerer little or nothing but has significant, real value to the recipient. A writer’s first producer credit might mean the next bargaining table position for them will get more credence. The value has to be evaluated by the recipient for its own merits to them.

Another way of negotiating “other” money is to consider contingent fees that are reliant on future factors that may or may not come to pass to alter the payment arrangement. This may include a clause that sets a beginning value for the services contingent on the final budget being below a set amount. But if the budget is adjusted up during the course of development and production beyond that low figure, the compensation due to the writer is raised accordingly. This allows for a writer to sign onto a project early that may be conceived as a low budget flick, but, if a major star is interested in playing the lead the budget usually ramps up accordingly. The writer stuck with the low budget equivalent rate alone is usually out of luck getting to ride the tide with everyone else because they agreed to do the work at the rate in the contract.

There is also the pseudo compensation tied to percentages of some form of later dollar income. These can be negotiated against a varied list of so called “profit” tabulations that can get complex and nearly incalculable if you are not careful (hint: hire a lawyer or other expert who really knows what everything means.) These are colloquially referred to as profit participation, points or profit share all variations of what is referred to as the back end. All of those terms have no meaning unto themselves. A contract that uses them has to have a section that particularly (and in great detail) defines ALL the terms used so that both sides can readily determine just where the dollars start to change hands. There are so many variations that I’ll only mention a few big ones. We’ve discussed the various definitions of profit before and the vast differences between net or the monies garnered after all debts have been accounted for, and gross, the amount taken in before debt is accounted for (but not necessarily before anything else is) are legendary. It leads to the common believe that promises of a share of “net profits” are as rare to realize as bareback unicorn rides. It doesn’t matter what any other documents define profit as. If your agreement has a definition of just what profit definition your deal adheres to then that’s the one that is used to determine if you are owed money or not. For most films there are countless definitions of “profit” floating around, each applying only to its own, specified agreements.

If you are a keen negotiator, or have more clout, you might be able to garner first dollar gross deals, which are defined to be a specified percentage of the actual first dollars coming in from the project, even before the gross calculations are performed. These deals have been done in the past, though rarely and are nearly extinct now, but, with enough power you can try. More accessible deals are triggered target deals where you get a bonus payment if a specified target is reached. For example, one can get a bonus if the film makes a certain box office figure by a given week in release. Be wary in how these are structured though. Some targets require structures or procedures that can be circumvented by events leaving an expected bonus unattainable. (Like in the above example, if the film doesn’t get a theatrical release, there is no box office to trigger.)

To be continued

In the second part of this article we’ll follow the money, establishing when and how it should be paid and what to do when things go awry.

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