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May 2008 e-EntertainmentLawArticle Negotiating The Director's Agreement The film director is often one of the first persons hired in the making of a film. The director typically participates in every creative phase of the film-making process, including but not limited to: developing the script (pre-production); coordinating the actors and crew (principal photography); and supervising the editing of the film (post-production). Since a director is potentially involved in all of the creative elements of a film, the negotiation of the director's agreement involves a broad range of issues. A full discussion regarding all of the possible aspects of this negotiation is not within the scope of this article. However, the article will address some of the material terms of the director's agreement. Services The amount of time a director will be given to complete each phase of making the film is an important area of negotiation. Many times the director's contract provides for a minimum of a two-week pre-production period before starting principal photography. During principal photography directors seek to have as much time as possible to shoot the film. However, producers must, in order to stay within the budget and stay on schedule, narrow the amount of time by stating a specific number of days to shoot the picture. Also, the producer must include in the agreement a specific period of time for the director to edit the film and deliver the director's cut. Accordingly, when negotiating the deal, the producer must strike a balance between providing the director with sufficient time to create a great film, yet keeping within the budget and schedule. The Directors Guild of America (DGA) provides that the director's cut must be delivered within ten weeks after the close of principal photography or within a period of time after the close of principal photography equal to one day of editing time for each two days of originally scheduled photography, whichever is greater (see www.dga.org). A project is subject to DGA terms if the director is a member of the DGA or if the producer is a signatory of the DGA. If a project is not subject to DGA terms, all the terms of the contract are freely negotiable. Another area of negotiation is the director's availability. That is whether the director is hired on an exclusive basis, preventing him from accepting outside employment and working on more than one film at a time. During the pre-production period, producers usually engage directors on a "non exclusive but first priority basis." During principal photography, post-production and through the delivery of the director's cut, producers always negotiate to have the director available on an exclusive basis. However, depending on the director's stature, the director will insist that his services are "non exclusive but first priority" upon completion of principal photography. "Pay or Play" versus "Pay and Play" Many director's agreements are "pay or play" deals which means that if the producer does not use the director or replaces the director with someone else, the director is still entitled to his compensation, subject of course to the director's breach of the contract, the director's disability or force majure (acts beyond the producer's control). Well sought after directors negotiate to work based on a "pay and play" basis which means the producer is not only obligated to pay the director but also must use the director's services to make the film. Obviously, any wise producer knows there is always a possibility of having creative differences with the director, problems with the director being on schedule and staying within the budget, etc. and therefore will avoid, by all means, hiring a director on a "pay and play" basis. Compensation: Guaranteed, Deferred and Contingent Guaranteed Compensation Generally, the director's fee varies according to the director's reputation and stature. To begin the negotiation process, producers often base the fee on the director's prior quotes and the size of the budget. Often the director is hired on a flat fee basis and payments are made in installments with most of the fee being paid during principal photography. The DGA agreement provides the minimum amount of compensation to be paid to the director based on the budget of the film. In films budgeted less than $2,570,000 dollars, the compensation is subject to negotiation between the producer and the director. However, according to the DGA, in films budgeted between $2,570,00 and $3,605,000 the director must be paid $70,000. In films budgeted between $3,605,000 and $7 million dollars, the director must be paid 75% of scale (scale is $14,597 per week). In films budgeted between $7 million and $9.5 million dollars, the director must be paid 90% of scale. If the film's budget is over $9.5 million dollars, the director must be guaranteed 13 weeks of work at a weekly pay rate of $14,597, which is a total of $189,761. As of July 1, 2008, all minimum compensation rates will increase 3.5%. While the DGA provides guidelines for the director's compensation, many independent films are not subject to the DGA and consequently are fully negotiable. Deferred Compensation Frequently when a producer is unable to provide the director with the guaranteed compensation they will negotiate a deferred compensation provision. Therefore, the director may take only part of his salary up front and then the rest of his fee is paid on the back-end. The point at which the deferred compensation is payable is a highly negotiated area. The problem arises with determining the definition of back-end. Generally, when an independent film has been funded by private investors, the director's deferred compensation will be paid after they have recouped their initial investment plus any premium. On the other hand, if it is a studio film, deferred compensation is usually made payable at some point where the studio receives a certain percentage of the negative cost (the actual cost of producing the film through to the manufacture of a completed negative). The definition of "negative costs" is a subject of heated negotiation. It may be defined to include overhead charges, interest and other expenses that may increase the amount way beyond the actual cost to make the film. Contingent Compensation Directors often negotiate a profit participation in the film. The area of negotiation is whether the director's contingent compensation is payable from the adjusted gross receipts or from the net profits. The studio/distributor's gross receipts are comprised of box office money from ticket sales, home video, television, foreign sales and merchandising. Generally, adjusted gross participants share in the studio/distributor's gross revenue with a few deductions including: taxes, checking, collection, etc. However, net profit participants share in the net profits which is the amount of money left, if any, after all allowable deductions including: distribution fees, distribution expenses, the negative cost of the picture, any interest and financing charges, overhead charges, gross participations and deferred participations. Needless to say, net profits usually amount to nothing. Producers will always attempt to negotiate a net profit or a modified gross receipt deal, whereas, the director will negotiate for the best possible profit participation deal. At the very least, the director should seek to make the director's definition of net profits/adjusted gross receipts no less favorable than any other participant (i.e. actor, writer, producer) in the film. Credit If the production is subject to DGA jurisdiction then negotiating the director's credit is relatively simple. The DGA requires that the director of the film is accorded credit on all positive prints in size of type not less than fifty percent the size in which the title of the picture is displayed or of the largest size in which credit is accorded to any other person, whichever is greater. Also the DGA provides that no other credit may appear on the card which accords credit to the director of the film. Finally, the DGA requires that director's credit be the last credit to appear in the main titles on the screen. Although not required by the DGA, directors generally negotiate a credit known as the "film by" credit. This credit is very prestigious and is one of the few credits that can appear before the title on screen. Many independent films are not subject to DGA rules and therefore all aspects of credit will be negotiated. The negotiation will include when and where credits will appear. It is customary to negotiate whether or not the credit will appear on: posters, bill boards, video box artwork, soundtrack, album covers or liner notes. Also, the size of the director's credit is very important. Usually, the director's credit is 50 to 100% of the size of the picture's title and 15 to 35% of the size of the artwork title of the picture. Cuts As a general rule producers reserve the right to cut, edit and revise the picture. Nevertheless, it is customary to allow the director to complete his edited version of the picture. Under the DGA, this edited version is referred to as the "director's cut." Most directors, unless they are Steven Spielberg or Oliver Stone, do not have the right of "final cut", which is the power to determine the final edited version of the picture. Those directors who are not in the position to negotiate for final cut of the theatrical release version of the film, should negotiate for the right to create a "special director's cut" for home video/DVD release. Approvals Directors negotiate for approval to select key personnel with whom they will work such as: the director of photography, production manager, art director, editor and composer of the picture. In general, depending on the stature of the director, directors will also seek to obtain approval of key creative decisions affecting the picture. Customarily, the producer will retain final approval rights, but may appease the director by conceding to mutual approval rights with the producer having final approval of every aspect of the picture. Conclusion All experienced producers know that the director is the producer's key artistic partner in the making of the film. It is important for the producer to set the right tone in the negotiation of the director's agreement and take into account the director's status, personality, experience and the budget. And in reaching an agreement, it is extremely important to address all the material issues to avoid any potential problems that could jeopardize the budget, schedule or integrity of the film. [ back to top ] |