SHOW ME THE MONEY

(Candid comments from a big-time entertainment lawyer)


ENTERTAINMENT LAW has become an important component of the industry and can have real relevance to writers. We're often asked about this sometimes elusive area of the biz and how it fits into the career of writers. In this issue of our newsletter, we're privileged to have been able to interview one of the very best entertainment attorney's, Jared Levine of Nelson, Felker, Levine and Dern.

HSC: Jared, please tell us about your background.

JL: I went to Harvard Law School, graduating in 1981. For the first four years of my career I was a litigation attorney, focusing primarily on entertainment cases involving copyright infringement, invasion of privacy, libel, and similar type matters. I primarily represented studios and networks in defending such claims.

HSC: And now?

JL: Currently I am what is referred to as a transactional entertainment attorney. This in a nutshell means that I assist my clients' agents and managers in negotiating and documenting the clients' deals. I represent actors, writers, directors and producers in both television and features. *

HSC: Are there any notables?

JL: I and my firm have represented individuals who have participated in such high profile movies as "The Mummy", "The Mummy Returns", "American Pie" I & II, "Antz", "Scream", "The Fast and the Furious, and "Speed" to name a few, as well as prominent television shows such as "The X Files", "The West Wing", "Spin City", "King of Queens", "Everybody Loves Raymond", and "The Drew Carey Show".

HSC: How do entertainment lawyers fit into the matrix of producers, agents and managers?

JL: In some respects, an entertainment lawyer can be a jack of all trades. Most of my clients have agents and managers who are primarily responsible for soliciting employment for them. But I see the role of a good entertainment lawyer to be able to supplement the efforts of agents and mangers in helping people get jobs. Potentially, entertainment attorneys are able to expand the realm of contacts for their clients through their own business relationships.

We also will assist our clients in making their numerous career decisions at the various points in our clients' careers. Finally, and certainly the most important part of our job, is to negotiate (with our clients' other representatives) the actual deals and to be responsible for the documentation of them.

Once a client is offered a deal, there are several steps in the negotiation and subsequent servicing process. There is negotiating the deal itself, with which we will be very involved; there is documenting the deal, for which we will probably be the primary responsible representative. And then there is servicing the deal, which, depending on what needs to be done, either we solely or in concert with our clients' other representatives will look after.

HSC: There's a lot of mythology out there vis-a-vis the deal itself. Many writers believe that the writer makes a fortune the instant somebody likes their script. But I know from my own knowledge that that's not always the case. Renumeration often comes in stages.

JL: I would say that spec sales have a wide range of numbers. Sometimes you will read about a spec sale which was nothing more than a low dollar OPTION payment, in the neighborhood of as little as $25,000 to $50,000, with additional monies for rewrites, and the purchase price payable only if the studio exercises its option to buy the script and make the movie.

HSC: And that doesn't happen very often, does it?

JL: I haven't seen the particular statistics but just like everything else in Hollywood, most things don't happen. On the other hand, there is definitely deals you will read about where significant money is guaranteed up front. You will read about someone making $1.5 million against $2 million dollars and that will mean that, as a guarantee, the writer is paid $1.5 million dollars for selling his script. Included in that $1.5 million dollars though may be the requirement to turn in multiple rewrites of that script and then, if the movie gets made AND that writer is accorded sole credit, the writer will get the additional $500,000. There would be a lesser bonus for shared writing credit.

HSC: Is the sole credit aspect of it tricky?

JL: Credit can definitely be a tricky environment for writers, particularly writers without a track record. They'll sell a script and they can definitely be at risk for not being around at the end and, as a consequence, their sole credit can be at risk as well. However, the first writer of an original screenplay (that is, a screenplay not based on underlying material) does have a distinct advantage under the WGA's Rules for arbitration because, any writer subsequent to the first writer of such original screenplay must demonstrate a 50% or greater contribution in order to effect the first writer's sole credit. In the case of a non-original screenplay (that is, a screenplay based on underlying material), the percentage requirement for a subsequent writer to receive credit drops to 33 1/3%. And there are exceptions in the case of writers who also receive producing credit.

HSC: So if a writer gets a big paycheck for a script shouldn't the first order of business be that they get the first crack at the revision?

JL: Yes, and the writer will get the first rewrite, but that does not insure by any stretch of the imagination that there won't be multiple drafts performed by one or more subsequent writers.

When a writer sells a script, it is not necessarily the plan that the writer is going to be replaced. When a writer sells a script, the studio is going to want to get its money's worth when the purchase price includes additional writing. So the studio will have the first writer do the additional drafts that are guaranteed. It is at that point where it can get tricky, if either the producer or director or studio does not like the direction the script is going - that is where the first writer becomes at risk.

HSC: Got it.

JL: But that does not mean that the first writer can't come back. I've known instances on movies where I've represented the first writer, who was off the project for a time and then brought back on.

HSC: Besides optioning a script or buying it outright, what are the other wrinkles in these kinds of deals?

JL: Writers will typically be given 5% of the net profits in a movie contingent upon receiving sole credit. A writer for shared credit should receive 2 1/2 % of the net profits. Certain higher level so-called "A List" writers might be able to negotiate for what's called a "prebreak position" which is a far more favorable profit definition.

HSC: And do writers with net profit positions ever get paid?

JL: Sometimes, but it is more rare than common. Typically you need to have a movie that does enormously well at the box office, did not necessarily cost the studio a lot of money to produce, and did not have significant, prebreak participants.

HSC: And "prebreak" means break even, right?

JL: As a quick generalization, "prebreak" participants refer to participants who are receiving percentages of the movie's gross receipts without the customary high studio distribution fees being charged. Also, depending on the stature of the prebreak participant, the applicable definition might or might not require a recoupment of the studio's production costs and/or distribution expenses.

Let me describe a situation where a writer should see net profits.

If a writer were to write a script for a movie that cost the studio fifteen to twenty million dollars to produce, and there was neither a significant "A" list director, nor producer nor star who was entitled to gross points, and that movie were to gross $80 million at the domestic box office, as well as some multiple of that foreign, there should be net profits.

HSC: Do you have any good story to tell about the biggest deal or any good spec script story.

JL: Well, what I always find interesting about spec scripts is when there are multiple bidders. Often, each of the bidders are afraid of "making the market" for the script and then losing to a higher bidder. So what will typically happen (when there are multiple bidders) is that deadlines will be imposed by studio A or studio B or all of them. For example, an offer will come in say at 9:00 am. The studio making that offer might stipulate that you have until 3:00 pm that day to negotiate and close a deal. Then let's say another studio is interested but because a significant executive has not yet read the script, they tell you that they cannot officially make an offer until the next day. What we on the writer's side try to accomplish (when I say "we", I mean the writer's agent and myself), is create a smokescreen where we will be trying to buy more time from the studio who has made the firm offer. This can get tricky. You definitely do not want to be in a position where you have a fairly significant offer, your only official offer at that time, which is about to be taken off the table, and you know that another studio might - but only might -- consider buying the script with a potentially higher offer the next day. And let's say that studio, which has not yet committed, is the studio you prefer the script to go for a variety of creative reasons. In this situation, you wonder, do you not close a deal with the first studio and avoid the risk of losing it for what is an unknown?

HSC: So what you do essentially is kind of punt and play it out until you get all your eggs in order, if you can.

JL: You do the best you can. Sometimes you have to make a tough decision as to whether to negotiate and make the deal with the initial studio or not because, if the initial studio deadline passes, that studio may not come back later, or you try to string out negotiations the best you can. The problem is that to negotiate just to buy time is dangerous. Often the first
studio will continue to negotiate only if it is guaranteed that it is in an exclusive negotiation - that is, there are no other parties with whom you are discussing a potential deal. If in the end, the first studio loses the deal, and you had mislead that first studio to believe that it was in fact in an exclusive negotiation, that studio will definitely hold such action against you and more importantly against your client in the future. The key is to be able somehow to keep as many "balls in the air" while not making misrepresentations so as to besmirch your and your client's reputations.

HSC: Any advice for young writers out there?

JL: To write prolifically. Do not depend just on one script.

HSC: And in terms of representation?

JL: Definitely get the best agent that you can and, at a certain point in your career, you should definitely bring on an entertainment attorney because as your career grows and as your range of choices expands and as the margins on your deal increase, you definitely need another advisor in your life.

HSC: Okay - one other question. Do you run into problems with writers who have producers trying to give them drafts that they're not entitled to? Or requests for drafts before the script is even sold?

JL: The "phantom" draft? I believe that's what you're referring to. My experience is that perhaps, unfortunately from the writer's perspective, it seems fairly common that a producer on a project will try to get writers to do what are referred to as "phantom drafts" or "free passes". A writer has to balance between the desire to get the best script presented to the studio versus doing free work.

However, when a writer is not officially hired by a studio or has not yets old a script (in other words, he is just collaborating with a producer) and the producer asks the writer, before taking the script out to the studios to make some revisions, this is definitely part of the game (often an agent in fact will make the same suggestion to his or her client).

HSC: Got it. Jared, thank you, this is so helpful.

JL: You're very welcome.

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