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August 15th, 2004
Negotiating a Director Contract?
As production companies compete for commercial directors, the directors also struggle with the decision of which company is right for them. With advertising agencies and their clients being tougher about bids, and with the realities of under-funded jobs and lower markups, production company profits are shrinking, leaving a lot less money to divide up. These factors are making it more difficult than ever to close deals between production companies and directors.
Often it’s a personal relationship, built over many years, that brings a company and a director together. If they trust each other, and truly believe that they’re going to look out for each other’s interests, are written contracts really necessary? When you introduce a contract into the mix, doesn’t that just make everything more difficult?
Sign on the dotted line?
It is almost always better, for both the director and the production company, to have a written contract. When a director is joining a company, there are discussions about many issues, including the length of the contract, exclusivity, and compensation. It’s important to have a document that clearly explains what has been agreed upon, to help avoid any misunderstandings later on about the terms of the relationship. For example, if a company agrees to pay a director (in addition to director’s fees) twenty-five percent of the profits on his or her jobs, the parties should also agree upon how those profits will be calculated, since companies calculate profits in many different ways, and sales and overhead charges vary widely.
Taking the time to write down the terms of the deal is also useful because it helps you to identify what is important to you, so that you can get those issues resolved up front. For example, if you don’t deal with exclusivity, a company may be surprised to find out that a director already has representation for music videos, or a director may be frustrated to learn that a company wasn’t planning to sell him or her overseas.
‘Til death do us part?
One of the most basic questions to be resolved when a director joins a company is, should the company and the director have the right to end the relationship at any time? Or should they commit to each other for a year or two – or even more?
You may say that both the production company and the director should have the right to terminate at any time, for any reason, because it does not make sense for them to continue working together if the relationship isn’t going well. You may want someone to continue working with you because of trust, not because of a long term commitment.
On the other hand, you may want a commitment for some minimum period of time. Why should a company invest time and money into developing a director’s career, for example, if the director can just walk out, or renegotiate the deal, at any moment?
A director may want a commitment as well, so that he or she knows that the company is in it for the long haul and will do what it takes to keep building a reel and bringing in the good work.
Talking about the length of the commitment is only the beginning. It should be the starting point to help you talk about what your expectations are for the relationship. Once you work those out, you should put them in your contract. Contracts do not have to be long or be written in legalese. What is important is that you take a moment to think about, and then define, the terms of a fair relationship, and that you put your agreement in writing, in order to help prevent surprises or disappointments down the road.
This article first appeared in the August 2004 issue of SHOOT magazine. It presents a general discussion of legal issues, but is not legal advice, and may not be applicable in all situations. Consult your attorney for legal advice.
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