It's inevitable that, in the pursuit of your career, you'll need to sign a filmmaker contract. No article can cover all of the issues that will arise in connection with that magic moment.
This article will shed some light on the top 10 “pitfalls” related to your review of and entry into contracts and suggest some ideas on how to avoid (or, at least, identify) them before you fall into them.
The Top 10 Filmmaker Contract Pitfalls
As you've probably already discovered, making movies is a business, and there are many ways to get started.
1.) Not Forming A Business Entity To Sign The Filmmaker Contract
Eventually, you'll want to consider whether to form a business entity (limited liability company, limited partnership, other) to hold your business interests. Your selection will consider various factors, but to me, the most important thing is that you go ahead and form such an entity.
Business entities can provide tax and risk mitigation features that cannot be achieved if you pursue your business venture as an individual. So think long and hard about forming some entity, bearing in mind that most can be formed online and at a low cost. The benefits of formation far outweigh your sweat equity in creating the entity and paying associated fees.
2.) Not Having That Business Entity Sign Project Documents
This is an easily avoidable pitfall. So make sure you check the content (especially the signature block) of every filmmaker contract you sign and sign it on behalf of your business entity (e.g., as a member of a limited liability company) and not just on your behalf.
It's essential for distributors and financing parties that every project agreement be in the name of the business entity with whom they're transacting—so measure twice, cut once, and avoid this issue. Failure to do so will likely mean (at best) some document clean-up later, and “later” tends to be at an inconvenient time.
3.) Keep It Simple, But Not Too Simple
Unless you know what terms are “market” in the contract you're signing, you'll likely never know what's missing in the draft. By and large, the industry personnel with whom you'll be contracting are more aware than you of how to make a living in the film industry, and their filmmaker contract forms reflect their desires. The most important of which is to make money off of their relationship with you, with the fewest possible obligations on them.
Take some time to check the internet or relevant books for examples or analysis of the contract you're about to sign. That diligence can help you determine whether or how badly someone is about to take advantage of you. Caveat emptor (“let the buyer beware”) is alive and well in the film industry.
4.) Your Counterparty
Signing a filmmaker's contract without performing due diligence on the other person signing the contract is like marrying someone after meeting them on a blind date: you're now in a legal relationship from which it can be difficult to escape, with no meaningful understanding of whether that other person is the soul of honesty or more challenging to manage than a sack of full of cats.
Reputation matters, so ask for references from a few people in hopes of exploring the counterparty's bona fides. Scanning the internet can help, but you know what they say about content on the internet (and if you don't, suffice it to say that it's not precisely fact-checked before being posted).
5.) Failing To Focus On What Matters
Several excellent scholarly books exist on how to negotiate film industry contracts. These books provide an in-depth analysis of each contract term and suggest variations that track market terms. For a newcomer to the industry, such books are exciting and worth perusing but, by and large, will be useless to you in your negotiations.
Why? Because most of the people with whom you'll be contracting on the production side won't negotiate with you. At all.
Given that, I suggest identifying the critical couple of terms that matter to you and focusing your efforts on them alone. To me, those terms typically revolve around money: What am I paying or getting paid, when and how, for what scope of work, and what room does the other person have to screw me on that arrangement. Think practically, and hope for the best.
6.) Pursuing Market Terms When You Have No Leverage
Consistent with point 5 above, I recommend you not waste time pushing for even market terms when you're just entering the market yourself. Most filmmakers have no track record and are excited just to be speaking with a sales agent, producer, or distributor.
All the learned treatises in the world won't change the fact that, upon emerging from your editing room, passion project in hand, you likely have no leverage in the negotiation—so (as suggested in point 5) focus on what matters (getting your film out there without being screwed in the process) and don't get bogged down in negotiating terms that make senses, but that you're unlikely to get due to your poor negotiating position.
If your film won the Palme D'Or at Cannes, negotiate away since awards like that create leverage for you.
7.) Pursuing Non-Market Terms
One might hope this goes without saying, but newcomers to the film industry shouldn't try to add non-market terms to their contracts. Keep to the middle path, try to be fair, and use examples from the internet or elsewhere with some track record. Spend your energy making your movie, not trying to be a lawyer.
8.) Ensuring Deliverables Are Clear In Terms Of Scope And Time
It's a good idea when drafting the filmmaker contract to ensure that the deliverables—the things you're providing or expect to get from the other side—are as objective as possible, where possible (and when it makes sense to do so).
An excellent example is the materials you'll need to deliver to your distributor. The distributor might ask you to provide whatever it needs to distribute the film. Given such an ask, how will you ever know when you've entirely performed?
It's better to identify the file formats, languages, etc., that the distributor needs as a long checklist that you can mark off as you provide them. Since your right to pay often depends on the completion of delivery, knowing when you're done is very important.
9.) Failing To Limit Your Liability Where Possible
While your business entity (assuming you've chosen to form one) may protect from contract-related liability, it's also helpful to include a provision addressing this issue in the contract.
Provisions like this usually take the form of “Notwithstanding anything to the contrary [my] aggregate liability for all claims, losses or damages arising from or related to this contract shall not exceed X in the aggregate,” with “X” being the notional contract value (e.g., the amount you're receiving for your execution of the contract or that you're obligated to pay as part of the contract.
Suppose you're proposing this kind of language. In that case, the other side will likely seek to get the reciprocal benefit of it as well, so think carefully before adding if you don't want the other side to have its liability capped.
Note also that there are customary exceptions to the cap (breach of confidentiality provisions, intellectual property, and additional indemnification, by way of examples), so expect to negotiate some on this concept.
10.) Failing To Ensure You Have Any Flexibility You Might Need (E.G., Assignment)
It's nice to think that, once signed, a filmmaker's contract is a static object, fixed at the time of execution. That's often the case, but life happens, and it can be helpful to build some flexibility into the agreement concerning matters that sometimes arise. The assignment is one such matter. What's “assignment”? It essentially means a right to transfer.
It's expected as part of the distribution effort to have to assign your project contracts to the distribution company (who may, in turn, need to assign them to their financing parties).
As a result, it's essential to make sure you've included a right on your behalf to assign the agreement to third parties.
Seem daunting? It can be, and you're well advised to engage guidance from a knowledgeable lawyer and accountant as you embark on your moviemaking journey.
Failure to do so may mean you learn a lot of lessons the hard way. Some say that you're an expert once you've learned every lesson. But there are less painful ways to succeed in film.
Namaste.
For a deeper discussion of how entrepreneurs in the film industry might approach and negotiate industry contracts, check out my book: “Moviemaking: A Journey in Documents.” It is available on Amazon.
JT Boone is an award-winning screenwriter who has written, produced, and directed multiple films, including “Taste” (in pre-production), “Reunion” (2014), “Fangoria's Germ Z” (2013), and “Still” (2009). He's the President of Three Sticks Consulting, LLC, a provider of film production, distribution, and business advisory services to writers, producers, and distributors. He also works as a lawyer for Tesla, Inc. Moviemaking: A Journey in Documents reflects Mr. Boone's experiences as a filmmaker and business transactional lawyer who, over the past 20 years, has represented companies of all shapes and sizes in connection with the entertainment industry and other matters.
The materials in this article are provided for informational purposes only and do not constitute legal advice. Transmission of the information in this article is not intended to create, and the receipt does not constitute, an attorney-client or other relationship between you and me. You should not act or rely on any information in this book without first seeking the advice of an attorney and accountant, as applicable. ALL INFORMATION IN THIS ARTICLE IS PROVIDED ‘AS IS WITHOUT ANY EXPRESS OR IMPLIED WARRANTY OF ANY KIND, AND YOUR USE OF THIS INFORMATION IS AT YOUR OWN RISK.
