Film Law – The Contract Review Process

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If you are working on a deal where the business terms are still being figured out and/or negotiated by producers, don’t waste time over-proofreading early drafts of the contract.

In a nutshell, here’s how the process should lay out.

1.  EXPLAIN.  At the beginning of a film production, explain your contract process to the production team, put it in writing if you must.

2.  DRAFT v1. Create the first draft contract (V1)  based upon deal points provided by the producer. Do a light proofread, make sure everything is where it should be, but most importantly – ensure all key deal points (fees, screen credits, profit points, intellectual property rights etc) will jump off the page to even the most disinterested multi-tasking contract reader.  Remember, this will be reviewed by a producer, someone who may be simultaneously reading email and/or talking on the phone while looking over the contract. If the result of your contract is 15 minutes of stupefied silence while everyone stares at it and tries to figure out what is going on, counsel failed. Rewind, draft.

Contrary to some schools of thought – Rule #1 – Never hide anything in a contract. I believe you want everyone involved in a transaction to see what is going on. I want mistakes, or terms that need to change, if any, brought to my attention quickly, not discovered on set. If you hide terms in a contract (never a good idea), there is a chance that your producers, who probably do not read contracts on a daily basis, could miss a big error.

3.  LABEL THE CONTACT.  When you have a good draft V1 – type something similar to the following in small red ALL CAPS on top of the contract, just underneath the title, so everyone understands exactly what they are looking at.

DRAFT V1 INTERNAL PRODUCER REVIEW ONLY (NOT PROOFREAD)

4. PRODUCTION TEAM REVIEW.  The production team reviews the document (i.e., the individuals on your movie designated as approving, negotiating and/or signing the contracts). If someone points out a typo or two, fine, but it’s more efficient at this stage to tell the team to simply ignore the typos, focus on deal terms.

5.  FINALIZE THE CONTRACT. Incorporate the input from your production team.

5. INTENSIVE PROOFREAD.  When the business terms of the deal settle to the point where the contract is ready for final executive approval or  signature (depending on circumstances); THEN do the intensive proofread.

Contract proofreading at this stage is not college level proofreading, it’s not even law school level proofreading.  It’s book publisher level proofreading, a different game altogether. This is where you go over a contract line by line, word by word, using whatever technique works for you to proofread at a high level. You might have the computer read the final draft back for you in headphones as you follow along, maybe you read the contract out loud, or maybe you go into a zone and stare at a contract like a snake. Whatever works, works, but your final product must be excellent. Subject to attorney-client confidentiality obligations, the more eyes you get on a contract to proofread, the better. You’re making a film, it’s not about lawyer ego, it’s about production team execution.

SAFETY TIP – The most difficult skill in transactional law to teach to law students and young lawyers, by far, is the level of proofreading required to finalize a contract. This is the #1 reason new lawyers usually fail miserably at their first attempt to draft a contract.

6. INCORPORATE PRODUCER FEEDBACK.  Revise the deal based upon producer and other relevant input.

DRAFT V2 INTERNAL PRODUCER REVIEW ONLY 

7.  PRODUCERS SIGN OFF, SEND THE DEAL OUT.  Send the contract off, and off you go.

LEGAL DISCLAIMERThis is a blog article casually written during a coffee break on a Thursday morning. This is out of context, probably laden with typos, and I could be wrong about everything, including my selection of coffee. 

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