Getting Paid (Part 3 of 4)

Interchangable Terms:  When negotiating a profit provision in a contract, the definition of profits must be well worded, clearly defined and negotiated very carefully.  Net profits, gross profits, gross revenue, gross points, adjusted gross profits, adjusted net profits, producer net profits—these terms can necessitate extremely different calculations or very similar accountings, depending how they’re worded, when they are calculated (i.e., before or after certain other profit participants) and what deductions are or are not acceptable.

Percentages: Many indie films will offer their actors a percentage of the producer’s net profits, and usually that is defined as 50% of 100% of the total profits.  This isn’t always stated clearly, and it obviously makes a big difference if you’re getting 2% of 50% or 2% of 100%.  These nuances become significant when and if the film earns a profit, and that is why a considerable amount of time is spent negotiating these definitions.

MFN in Profit Definition: If there isn’t time to come to an agreement on the definition before a client agrees to take the role and signs a deal memo, I will push to have the deal memo add a phrase that obligates the producers to give Most Favored Nations (MFN, further discussed in a previous posting) on the definition, i.e., “2% of Producer’s Net Profits, to be defined no less favorably than any other profit participant, including all cast members and producers.”  This way, no matter how they define ‘Producer’s Net Profits,’ as in this example, I know that the actor will be participating in the same pool as all the participants, including the producers. There is no doubt the producer’s will negotiate the most favorable definition they can draft for themselves.

Please note: The information contained herein does not constitute legal advice and is intended for educational and information purposes only.

Getting Paid (Part 2 of 4)

Profit Participation on Lower Budgeted Films:  Sometimes actors receive back end points if they are working below the SAG minimum and on a lower budgeted film.  SAG has 3 alternatives for films budgeted under $2.5 million: Low, Modified Low and Ultra Low Budget Agreements.  These agreements allow producers to pay less in up front fees, so if an actor agrees to work under “scale,” sometimes the producer will add profit participation to the deal to attempt to make the actor “whole” by allowing them to earn their fees if the film does well.  Profit participations attempt to make up the difference between what the actor should have made at full union rates and what the actor actually earned with the reduced fees.  Also, profit participation ‘rewards’ the actor for agreeing to the reduced fee, and allows the actor to participate in the profits of the film for their contribution in its success.

Defining Profits: Now we have to take a brief moment to discuss the definition of ‘profit.’ While it is no surprise that most independent films rarely see a full return of their investment, let alone make a profit, negotiating profit participation becomes one of the most important provisions in a talent agreement.  Frankly speaking, that’s the whole ballgame, folks.  How the profits are defined could make the difference between you getting paid or not.  There have been numerous lawsuits regarding Hollywood accounting practices and the major studios’ creative accounting methods, where it is common practice to inflate the film costs in order to reduce or remove the production company’s obligation to pay profit participants.  What this means is that even if you are entitled to receive profits from a film that is doing well, you may not see dime one if your definition of profits (if any) is overly broad, one-sided or otherwise prohibitive.

Please note: The information contained herein does not constitute legal advice and is intended for educational and information purposes only.

Most Favored Nations (PART 2 OF 2)

Most Favored Nations or MFN is particularly useful for SAG Ultra Low and Modified Low Budget films, where the pay scale is considerably reduced from the SAG Basic Agreement day/weekly rates.  If my client is only getting $100/day on a SAG Ultra Low Budget project (a film budgeted for under $200,000), I want to ensure that all actors on the film are working at this rate as well.  If the producers offer a higher rate to another actor during casting, then they must increase my client’s rate to match the higher rate.

MFN also works with dressing rooms, film festival tickets, transportation to and from set—if my client’s “private dressing room” on location is a curtain in a corner of a high school auditorium, is he or she is driving himself or herself to set, or we can’t get the producers to guarantee a seat at the premiere, then you can be damn sure I don’t want other actors on the film to have their own private air conditioned honeywagon, sedan pickups to and from set, or first class flights to Cannes.  If my client is willing to work at this reduced rate in order to allow the producers to spend their money on hard production and post-production costs, then this should apply to all the actors in the cast.  For this reason, MFN on lower budgeted pictures allows for camaraderie among cast members–all for one, one for all.  If the entire cast is wiling to work on a project for a reduced fee, the success of the project becomes the priority above the desires of the individual participants.

Sometimes, producers will need to carve out exceptions on their MFN obligations.  For instance, if I am negotiating a deal for a client who is being cast in a supporting role on a film that has Philip Seymour Hoffman attached, you can be damn sure my client will not be getting MFN with PSH for anything.  Thus, if the producers agree to MFN, the clause will read: “…no less favorable than all other talent except for Philip Seymour Hoffman. “  Sometimes these carve outs are for character names, instead of particular actors, if the parts have not been cast and it is clear that whoever is playing that role would be in a position to get a better deal than those with less prominent roles.

Please note: The information contained herein does not constitute legal advice and is intended for educational and information purposes only.

Do Actors Need Attorneys?

Since this is my first blog for TAN, I want to start generally as an introduction to contracts in the acting profession.  As a general rule, it’s best not to sign ANY contract unless you have an attorney reviewing the contract and/or you understand EVERY word in the contract and the risks and consequences of signing on that dotted line.  Even if/when you have a full team of advisors, which include an agent, manager, lawyer, business manager and accountant, you should still be educated about the business aspects of your career.  Following is a list of reasons why it is a good idea to get an attorney before you sign any contract:

  1. Industry Standards.  An attorney can inform you about whether the deal terms conforms to industry standard, and if it does not, they can negotiate those changes on your behalf.
  2. Knowledge is Power.  Even if you are in a weak negotiating position (which equates to having little power to change the terms of the contract for your benefit), an attorney can educate you about what rights you are giving away, what your obligations are, and what rights and/or services you can expect from the other party.
  3. Good Cop/Bad Cop.  Using an attorney to negotiate the deal on your behalf allows you to remain in good standing with your director/producer.  With your attorney negotiating the nitty-gritty deal points, you can concentrate on the creative aspects of the project and keep your relationships on the set intact.
  4. Career Development.  A good attorney can help guide and advise you as you develop as an artist, and often they can make introductions to industry folks  (i.e., agents, managers, producers, etc.).

Often actors don’t hire an attorney because they think they can’t afford them.  While attorneys can be expensive, charging  anywhere from $250-$600 an hour depending on their reputation, experience and client roster, some attorneys will work with emerging talent with limited budgets and/or on a percentage basis of talent’s earnings (so they will only earn if you earn), usually at 5%.  It is worth seeking out an attorney who will work within your budget constraints, as the money you spend now could save you a lot of money and prevent considerable headaches in the long run.

Lynn Elliot is an experienced entertainment attorney specializing in representing talent and performing production legal.  If you have legal questions pertaining to your entertainment career, please contact her directly at lynn.elliot@gmail.com.

Please note: The information contained herein does not constitute legal advice and are for educational and information purposes only.