When Do I Need A Lawyer?

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Contracts and Negotiating Deals

Entertainment contracts can be long and confusing. Many of them contain industry specific terms, such as "net proceeds" which may have their own multi-page definitions. A typical rights agreement, distribution agreement or record contract will have a significant number of contingencies and provisions in it which will require a complete understanding on your part before signing it.

Lawsuits over net proceeds distributions and "Hollywood accounting" are common. Understanding when an artist may be paid royalties or contingent payments such as profit participations and negotiating the most favorable terms possible almost always requires an attorney or an agent, ideally both, but at least one of the two.

If you are about to make a deal with someone, deciding when to hire an attorney is not always easy, especially for an individual or a small company, for whom the expense of an attorney may seem a luxury. There are many "self-help" books out, especially in the entertainment business, that offer contracts and advice on dealmaking, some of which are quite good and useful.

However, unless you are well versed in the meaning of the terms you may encounter in the typical screenplay option agreement or can work your way through all the jargon in a back-end participation agreement, hiring an attorney to guide you through the negotiating process is a worthwhile investment.

On more than one occasion, a client has come to me with a signed contract and asked me what I thought of it. My usual reaction is "Why are you asking me about this now?" The reason for my reaction is simple: Once you make an agreement, you are obligated to perform according to the terms of that agreement unless certain circumstances arise that will excuse your performance. The fact that an attorney may see disadvantages with some those terms does not change the fact that you are obligated to live up to them.

Therefore, if you are unclear as to the terms or the consequences of a contract, don't agree to it before you fully understand it. Vague and ambiguous language that may seem adequate at the time, may lead to disputes that can only be resolved by costly litigation. While certain types of litigation such as personal injury cases may be handled on a contingency basis, don't expect to find someone willing to take on a business dispute on that basis. Therefore, spending the time and money to resolve as many uncertainties in a contract as possible before it is signed, will be worth it in the long term.

For example, an option agreement for a book or screenplay may be eight to ten pages and the terms may vary significantly depending on whether your book or screenplay will be the basis for a feature motion picture, television movie, series or even a video game. What you as a writer are to receive from rewrites, sequels or even merchandising or what your company is obligated to pay the writer all need to be set forth in the agreement. These ancillary rights could add up to a significant amount of money in the future, so the time to be thinking about them is during the negotiations, not afterwards.  While a writer wants to get the most for his or her work, on the other hand, a company needs to be sure that the rights it is acquiring will enable it to get the best return for its investment.

Rights acquisition is a type of dealmaking that almost always requires an attorney. If you are acquiring the rights to a script or book for your company or you are a writer and a company is acquiring the rights to your screenplay, book, idea, film, or other property, consulting an attorney can help you avoid problems that may either prevent you from proceeding with your project or receiving fair compensation for your work.

For example, if you enter into a rights agreement, then find out later the writer had already assigned some of his or her rights to another party, you may find your company unable to sell certain types of merchandise or produce a play based the work you though you owned. Resolving these kinds of issues can prove to be extremely costly.

Film and television production, even if done on a low budget, requires a substantial number of agreements, ranging from the initial acquisition of the script or idea, to the contracts with the cast and crew, financing agreements, music clearances and ultimately the distribution agreement. If you are contemplating producing a feature, consulting an attorney during the initial stages of pre-production will help ensure that all of the agreements that need to be in place are planned and executed before any issues arise that may prevent you from selling or licensing your project.

One more point about contracts-in many circumstances, an oral contract may be just as enforceable as a written agreement. Don't assume just because you haven't signed the deal memo that you don't have a valid agreement - the validity of an oral agreement depends on the subject matter and terms of the agreement.

Stars such as Kim Bassinger and Sean Penn have been sued by producers claiming that the actor made an oral commitment to star in their film. Even if the actor wins, which they often have, suits such as these cost a lot of money to defend and generate lots of bad publicity for all involved. The lesson here is don't agree to anything you don't understand or don't intend to do, even if you haven't signed a deal memo.

Litigation and Alternate Dispute Resolution:

Litigation:

Unless you are familiar with the applicable law, the rules of civil procedure, the various rules of court and are thoroughly prepared to represent yourself, you need an attorney. The procedural rules of civil litigation are not always easy to understand, even for experienced attorneys.  The rules also require companies to be represented by attorneys regardless of whether it is a small or large business.

Although the courts will give a certain amount of deference to anyone representing himself or herself as individuals, a judge cannot show favoritism to a party simply because he or she is unfamiliar with the rules or procedures governing litigation. 

The judge will expect you to adhere to the same standards as an attorney who may have been practicing for many years. Under these circumstances, it is almost always prudent to hire an attorney.

You may see or hear of someone successfully suing a company on their own, but these cases are few and far between, which is why you most likely heard about it, otherwise it wouldn't be news.   

If you have a small claims action, in which case you have to represent yourself, it may be worth an hour or two of an attorney's time, and your money, to review your claim or defense and prepare your case. The better prepared you are, the more likely you will prevail. If you are unprepared or disorganized, even if you are right, it may not appear that way to the judge.

Alternative Dispute Resolution:

An alternative to suing in court is mediation or arbitration, known together as alternative dispute resolution or ADR.

The courts themselves are turning to ADR to ease the burden of heavy case loads that may mean a case won't get a trial date for years after it is filed.  In many cases, the judge will send the case to mediation or under the rules, the case may be sent to mandatory binding arbitration and never get to trial.

What is the difference?  In mediation, the parties agree to meet with a neutral mediator that they choose together. The mediator then works with the parties to help them arrive at a mutually agreeable settlement of their dispute. The mediator may offer suggestions or privately point out the strengths and weaknesses in your case, but the ultimate resolution is up to you and the other party.

Mediation is not just for family law disputes or cases involving small amounts of money.  Mediation is also used to resolve business disputes where millions of dollars are at issue.  The advantage of mediation is that the parties themselves, who may or may not have their own lawyers to assist them, arrive at the resolution together and therefore, the cost is minimal compared to the cost of litigation.

Arbitration is more formal and resembles in many respects a bench trial, where a judge, rather than a jury decides the case.  In arbitration, the parties agree to have their case heard before an arbitrator, who may take testimony, read briefs and consider evidence presented by both sides.

At the conclusion of the hearing, which may go on for several days over a period of time, the arbitrator will make a ruling for one party or the other that will be binding, just like a court judgment would be. The advantage over civil litigation is that much of the procedure of litigation is dispensed with, eliminating time and expense, while still allowing both sides to present their cases. The disadvantage is that, with a few exceptions, there is no right to appeal, so you get "one bite at the apple."  For many people and companies, though, this tradeoff is worth it.

Many contracts will contain agreed upon mediation and arbitration clauses, so that the parties know in advance that they have agreed to ADR to resolve any differences.