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June 2008 e-EntertainmentLawArticle Negotiating The Writer Employment Agreement Many writers independently create, option and eventually sell screenplays to producers (or studios). Sometimes writers are hired by a producer to write a screenplay based on the writer's idea, or on an underlying property such as: a book; a magazine article; or a play. When negotiating the writer employment agreement the producer must determine whether the deal is governed by the rules of the Writer's Guild of America (WGA). A writer's services will be governed by the WGA if the production company (or studio) is a WGA signatory or if the writer is a member of the WGA. The WGA agreement contains detailed provisions that govern most aspects of the writer's employment agreement (see www.wga.org for details). There are various deal points to consider when negotiating a writers employment agreement. The following article will provide a brief overview regarding some of the major deal points negotiated in these agreements. Services/Guaranteed Compensation When a producer hires a writer to create a screenplay, the producer must decide what specific services (i.e. story, treatment, first draft screenplay, rewrite and polish) the writer will provide. Then the producer must decide whether he is hiring the writer on a "step deal" or a "guaranteed package deal". Typically, the producer hires the writer based on a step deal. Under a step deal, the writer is usually hired to perform the step of writing the first draft with the understanding that the producer reserves the option to hire the writer for additional steps. That is, the producer has the right to terminate the writer's services after each step (i.e. treatment/outline, first draft screenplay, second draft, rewrite and polish) of writing a finished screenplay. The benefit is clear, if the producer is dissatisfied with the writing, he can cut his losses by simply paying the writer for the services of that step. Afterwards, the producer can either shelve the project or bring it to the next writer. Under a "guaranteed package deal" there are guaranteed writing steps. The producer is obligated to pay the writer for each step even if the producer doesn't like the script. The producer may hire the writer to write the treatment, the first draft and the final draft. Here, the producer takes the risk if the writer fails to write a good script. Most well-known writers negotiate to be hired on a guaranteed package deal because the payment is guaranteed for of all steps and the writer is guaranteed the opportunity to proceed to the next step. The WGA agreement sets the minimum fees for the writer's services. The minimum fees generally increase 3.5% each year; therefore, please go to the WGA website or call the WGA office for the current minimums. This is the only compensation a writer is guaranteed under the writer employment agreement. In addition to the guaranteed compensation, the WGA requires that producers contribute to the writer's health and welfare and pension fund. Contingent Compensation Net profits are yet another type of payment. Net profits are not guaranteed. The writer must negotiate to receive a percentage of the net profits. Typically, a writer receives 5% of net profits for sole writing credit and 2.5% for shared credit. The writer receives payment only if the script is produced, the picture is released and the picture generates enough revenue to cover all expenses and fees. Writers very rarely receive any compensation from net profits because distribution fees, distribution expenses and all third parties payments are recouped before any net profit participants are paid. A studio set up payment is another form of compensation a writer can negotiate with the producer. Studio set up payment is not guaranteed. Usually, the writer will receive a set up payment only if the producer enters into a development agreement with a major studio which contemplates financing and distributing the picture. This payment is usually payable upon the producer executing the development agreement with the studio. In addition to studio set up payment, writers may negotiate for a credit bonus. It is fairly standard for a credit bonus to be granted in the event the writer receives sole "written by" credit. However, the typical deal provides that the credit bonus is reduced by one-half if the writer shares credit. Writers should also negotiate for other forms of payment. That is, other forms of payments that are contingent upon the happening of a certain event. For example, if the script goes into production a bonus will be paid. Or, if the picture wins an Oscar an award bonus will be paid. Or, if box sales are above a certain amount (e.g. 50M national, 150M worldwide) a box office bonus will be paid. Credit Whenever the production falls within the WGA's jurisdiction the WGA agreement will determine how credit is allocated. The producer must send the WGA and every writer on the project a "Notice of Tentative Writing Credits." This gives the writers an opportunity to object and request credit arbitration. If there is a dispute, the WGA will make the final credit determination. Typically, film writers can receive the following credits: "Story By" and "Screenplay By." If the story and the screenplay are written by the same writer, then the writer will receive "Written By" credit. If the production does not fall within the WGA's jurisdiction, writers should attempt to negotiate that their agreement run parallel with the WGA agreement. Perks Writers should negotiate for some basic perks such as: 1) first-class transportation and accommodations if a writer is required to travel 2) ground transportation to and from airports, hotels and sets and 3) per diem. Established writers will often request an office and an assistant. The ultimate status symbol is to demand a reserved parking space. Every writer should request a copy of the DVD version of the picture as well as negotiate to be invited to attend the premiere of the picture or the film festival. Conclusion Before entering into negotiations for a writer employment agreement, it is important for both the writer and the producer to understand the various deal points as well as the WGA minimum terms and conditions. These negotiations are best handled with the help of an experienced entertainment attorney. [ back to top ] |