Ridiculous question about film rights

[Prawn]

I am confused by the following part of a Literary Agreement. Can someone help out with a completely unofficial idea as to what this means? No legal obligation, you are not a legal professional etc, I absolve you of all past sins, etc, but please read this and help out. There's a clause where if there are film options (yeah, right!) they will negotiate for me to be producer (yeah, sure!) and then I get confused.



"In the event you become the Producer or Executive Producer of a flim, the compensation set forth above in this agreement for the motion picture or television rights to any literary material covered by the agreement shall be reduced from fifteen percent (15%) to zero percent (0%) of the gross proceeds from these rights. However, until such time that a film officially enters production and you receive your Producer fees, you shall receive fifteen (15%) percent of my gross proceeds from the sale of film or television rights, and at such time when you are actually paid to be the Producer or Executive Producer, you shall reimburse me fifteen percent (15%) of the gross proceeds from the sale of these rights."

This is confusing as hell. It seems like I owe the agent 0% and then they pay me 15%. It seems like towards the end of the paragraph "you shall receive fifteen (15%) percent of my gross proceeds from the sale of film or television rights," the agent is paying me 15%

Ideas from someone who knows a bit about film rights?

[preyer]

sounds to me like *if* you become producer, you lose the 15% than had you just sold the rights *without* being the producer. then, once things are in production, the agent, for whatever reason, pays you 15% until you receive your actual compensation for being producer, then you give that 15% back to the agent. i scanned for a scam, but i didn't see anything that jumped out at me. why is the agent essentially loaning you 15%? beats me, maybe it's standard, just seems... weird to me. look over it again: maybe there's something in there about gross proceeds from the sale of the movie or tv rights as opposed to the gross proceeds of your producer fees. that's what i'd be looking out for, the difference between the two, if any.

maybe it's standard, there's probably nothing wrong with the wording, but i'd ask why the agent would be giving up 15% and then have you repay them. i'm skeptical by nature, so something like this raises some questions, such as why put that in there and for whose benefit does it serve? probably not yours, i'm guessing, and i'm going to go out on a limb here and add that if there's a difference, the agent is the one who's going to the long end of the stick. and what, do you owe interest to the agent for his 'loan' or whatever it is? at what rate? at what point do you receive your producer payment? up front or when production is over, or in weekly installments? what if the production is shut down? is this part of their standard contract or added to those stories with serious movie/tv potential (probably standard, i just don't trust people where money is concerned)?

see, what's a red flag to me here is where it says in the contract 'me.' what the hell kind of lawyer would write 'me' in a contract? sounds as if this agent wrote it up himself, and that in itself is... weird to me. lots of things strike me as... weird ('weird' always needing ellipses in front of it).

i'd ask the agent some questions, mainly 'why?' why all the back and forth money transfers? who wrote the contract? see if you can find some other contracts online and compare them with yours. contract are maleable, after all, and if it's a sticking point if you want something changed, i'd be suspicious.

then again, if the agent wrote the contract himself, he's the one liable for any errors, not you. i'd want to know, though, that from a legal standpoint this doesn't mean the agent is giving you a loan. i know that i can write a contract and make it sound really good to a layman, but i know from personal experience it sucks legal-wise... and this doesn't even strike me as a very good 'legal sounding' instrument, just long-winded gunk with a few 'shall's tossed in.

simply put, if it's confusing it's because it wasn't written well (have no illusions, good contracts don't *have* to make no sense) or it's intentionally confusing because there're hidden clauses in it. invest $60 and have a lawyer look at it to protect yourself, there's something i don't like about it. :)

[preyer]

the more i think about it, the shadier it sounds.

you give up your 15% by becoming producer. agent still makes a commission, i'm sure.

agent loans you 15% until you get paid for being a producer. so far, you've made no money on the actual selling of the movie/tv rights, nor does it sound like you will. you basically aren't getting paid for having written the thing in this deal.

when you get paid for being a producer, meaning added work for you, you pay from that the loan to your agent.

what does this mean? it means you get absolutely nothing for selling the rights, *plus* you lose 15% of your paycheck as a producer to your agent. how is this fair, again? because i just ain't seeing it. i don't see why you shouldn't not only collect your money for selling the rights (15%), but any money you get as producer, caterer, boom operator or gopher is entirely outside the scope of selling the story and is just the agent screwing you out of some money.

that's my opinion, anyway.

[preyer]

on the flip-side, maybe becoming a producer means you're accepting 'points' on the deal and the production company doesn't pay you anything for the rights in exchange for the 'points.' still, i don't see why the agent can't just have you pay the 15% when you get paid instead of giving you the money and having you give it back. that's how a lot of confidence games are run, by putting the money in the hands of the mark in the first place, lol.

[preyer]

besides which, you sell the film rights to the publisher anyway. unless you're confusing 'agent' (which you said) with 'publisher,' i don't see as how the agent has any rights to the film unless you specifically have the deal set-up to retain the film rights separate from the publishing rights. even then, it's not the agent's rights, they still belong to you. you certainly do have the right *not* to sell your film rights to a book publisher. the agent's job is to sell the film rights if you still have them: unless you exchange your 15% for something else (in this case becoming the producer, which this contract is implying that you'd not get your 15% for not selling the story), what you do with the production company afterwards i don't see as having any bearing on the agent at all.

man, this clause in the contract sounds like pure and utter crap, doesn't it? there must be something about being 'producer' that singles it out. what if they hired you on to do revisions to the script or being a consultant? does the agent get part of that? why should he? unless you're getting something out of being producer in exchange for them paying for the rights, thereby shutting the agent out of his commission, it sounds like a scam in which you're just out 15%.

whoever produces the film *has* to secure the rights to make the film from the person who owns the rights.

[Prawn]

Damn, preyer, you are all over this! Thanks! I have e-mailed to ask the agent what all this is about. Does anyone know if this sort of clause is standard?

[preyer]

i found a sample contract between agent and writer and copied this part of it. it's only a sample:

COMMISSIONS: If during the period of this agreement we bring you an offer that you accept in writing, and you and the publisher execute the publishing agreement, you will pay us a commission equal to fifteen percent (15%) of all proceeds received from the publisher. In addition, you will pay us a commission equal to twenty-five percent (25%) from sales throughout the rest of the world and from the sale of any serial, merchandizing, or dramatic (motion picture, television, radio) rights when a sub-agent is required to negotiate the deal. In addition, we will receive the same percentages (15% when a sub-agent is not used and 25% when a sub-agent is used) of all proceeds obtained from any subsequent sale of rights that derives from the initial sale of the Property, including, but not limited to the following: condensation, translation, anthology, periodicals, electronic formats and reproductions, television, audio and video recordings, paperback, and commercial. If you sell or transfer publishing rights in the Property to a person or company to which we submitted a proposal for the sale of rights during the term of this agreement, we will be entitled to our full commission even though the sale or transfer of rights takes place after the agreement terminates. Our right to compensation for a sale or disposition of rights under this agreement, once earned, will continue even after the agreement is terminated, and in case of our death or disability, our successor in interest will have that right and will administer the receipt and disbursement of funds under this agreement.

what's interesting here is the use of the term 'sub agent.'

http://users.erols.com/veritas/AGREE.HTM

[preyer]

just trying to help someone not get screwed. i'm operating under the idea that this clause exists between the writer (you) and your agent, not the publisher, right? i'm looking for some sample contracts to see if this is standard or just... weird.

[preyer]

'For the moment let’s go on to the time when the book is sold to a publisher. Now you have a contract. It is many pages long and laden with whereas and however and all the usual legalese. In essence, that agreement has nothing to do with the agent. It is between the author and the company who are going to print and market the book. The literary representative, the person who brokered the arrangement, is however completely covered. In a clause of that author-publisher contract she, the deal maker, is stipulated as the agent of record. That proportion of the book’s earnings which belong to her are clearly specified, and except with the written agreement of all parties, those terms cannot change as long as the life of the book is controlled by that particular contract. In other words, not unless and until the rights revert to the author. (The when and how of rights reversion is a subject for another column, and like all contractual terms it can vary.)'

sorry, lost the link. i'll find it if you really want it. i just liked how it mentioned that the agent brokered the contract between you and the *publisher.*

anyway, of the few contracts i found, i didn't see anything like your clause in any of them. hope that helps. very curious, indeed. :)

[Prawn]

I am sorry if I screw up by double posting this, but I am going to post this question in the Ask the Agent Forum as well (http://www.absolutewrite.com/forums/showthread.php?p=1631349#post1631349), and see what they say. Thanks again preyer. You're the best!

[nevada]

Okay, here's an idea. GET A LAWYER. we think things make perfect sense, but law world is not like the real world. THere are presedents we know nothing about, phrases that mean certain specific things in lawyer speak but dont sound like that in normal speak.

[Prawn]

Thanks Nevada. I just didn't want to bother a lawyer if this kind of clause was boilerplate legal stuff.

[preyer]

my lawyer charged me $60 for an hour consultation (he otherwise gets $175/hr). in this he'd be able to tell you what's what. you'd obviously want an entertainment lawyer. doesn't sound boilerplate to me.

[wayndom]

It's a conflict-of-interest clause.

A producer makes a movie, and pays the writer for the rights to the story. But he pays the writer with money from investors (1st rule of Hollywood: never spend your own money). So it would be a clear conflict of interest if, as producer, you decide to pay yourself a whopping big fee out of your investors' money for something you wrote, and something you're getting paid to produce.

Unless you're planning on producing a movie, I wouldn't worry about it.

[Prawn]

It's a conflict-of-interest clause.

A producer makes a movie, and pays the writer for the rights to the story. But he pays the writer with money from investors (1st rule of Hollywood: never spend your own money). So it would be a clear conflict of interest if, as producer, you decide to pay yourself a whopping big fee out of your investors' money for something you wrote, and something you're getting paid to produce.

Unless you're planning on producing a movie, I wouldn't worry about it.

Thanks! That makes sense. I appreciate your explanation.
Prawn

[preyer]

frig! i just lost my entire post!

in a nutshell, who is this clause meant to protect? and where exactly is the agent making his commission? and why is the side deal, not brokered by the agent, not handled by a sub-agent?

i don't begrude the agent the difference between the publisher's deal with the film rights versus without the film rights because that's a loss of revenue for him. at the same time, it sounds as if he then bases his commission not on what the writer would have made, but on how much the producer stands to make, which i'm just guessing is more?

it still sounds shady without the clause being elaborated on. i mean, the agent isn't brokering any deal between two parties, yet he's putting up 15% of his own money? that's awful nice of him. seems less a conflict of interest clause than it's got potential for a gimme clause, lol. honestly, i think i'd put a cap on the clause of the difference between the publishing deals of with the rights and without the rights. that's the only harm done to the agent's commission. i wouldn't necessarily use the same agent to broker a deal between writer/producer/investor as that's probably not his speciality and i'd be damned if i would give the agent more than he earned (which ain't much considering he didn't have to broker anything between writer and production company, that's why i think the only thing he might be due is the commission based on what the publisher would have paid for the film rights).

if the writer/producer double pays himself, what does that have to do with a literary agent? we have fraud laws against these things, don't we? that's how the investors protect themselves, by going after a sleazy producer paying himself tons of money for writer, too. the agent isn't protecting himself, no? so, all that's left is the agent making sure he's getting paid. but for doing what?

[Prawn]

So I talked to the agent, and also had a lawyer look at it. wyndom was right. Here's the deal. The agency has put in this clause in case they sell the film rights and want to be co-producers of the project. They can't very well sell the film rights and them pay me a fee from which they as my agent will get a percentage. There is a ref of pro problem in the contract. Here's a version annotated by the lawyer I consulted which makes it clearer:

In the event you [the agent!!] become the Producer or Executive Producer, the compensation set forth above in this agreement for the motion picture or television rights to any literary material covered by the agreement shall be reduced from fifteen percent (15%) to zero percent (0%) of the gross proceeds from these rights. [So I answered your question in the separate email incorrectly. Your payment to the agent is reduced to nothing if the agent becomes the producer/exec of a movie based on your book]

Thanks for everyone's help, especially you preyer. It felt good to know I wasn't being paranoid; that the clause was difficult and hard to interpret.

P

[preyer]

i think i see. carry on then. :)

just for clarity's sake, it's about them becoming the producer, not you?

i'm just very wary of contracts these daze. a few years ago i wrote a purchase agreement based on two contracts written by two separate lawyers and put them into a new purchase agreement for a land contract for a residence and business combined. all i did was take an entire section from one contract and put it with another section of the other contract and changed the names and numbers. it wasn't like i was just making stuff up out of thin air and trying to sound lawyerly. well, i took it to my lawyer, from the same firm what wrote part of the original, and he said it all sounded good to a laymen, but as far as being a lawyer goes it was a mess. i wanted to shout, 'but you're the fuck-nuts that wrote it!' most of it came from that very office! part of it was written out by a different lawyer. when i have a new purchase agreement banged out for me, i have a sneaking suspicion it's going to be very much like the one i've already got. i mean, if these guys are consistent, given how long-winded some lawyers can be, it should reflect what they wrote in the first place, right?

anyhoo, you did the right thing is getting it cleared up. now we both know. :)