Saw this tip today on WIll Martels useful site (scriptsecrets.net) and thought I'd pass along..
YOUR FIRST CONTRACT
The good news: A producer loves your script and wants to buy it!
The bad news: He doesn't want to pay you much (or anything) up front, but assures you that this can be your big break into the business! Your name up there on the big screen!
You need a lawyer. Anyone who represents himself has a fool for a client. There is no such thing as a standard contract - everything is negotiable. The contract a producer offers you is stacked in the producer's favor... it was drawn up by HIS lawyer. You need your own lawyer to balance it out. But lawyers can be expensive - how can you tell if this deal is worth the expense?
Here is some quick, lay-advice on contracts. I am not a lawyer, but I've sold enough scripts to know what a bad deal looks like, so here are some things to watch out for...
DEFERRED SALARIES
Are worthless. If a producer offers you no (or little) money up front against a percentage of the finished film's sales, run away! There are garages full of completed films that have no distributor and will never earn a cent. My friend runs a large film crewing agency - he crews about 3,000-4,000 films a year. Less than 1,000 of those get ANY form of release. The rest don't get theatrical or video or cable or shown in drive-ins or on airplanes or in prisons or even video release in foreign countries. Nobody ever sees them and they never make a cent. They LOSE money! If the film is made and NEVER RELEASED not only do you make nothing off a deferred salary deal, your script is dead forever (unless you have a clause returning it to you). You have just sold your script for a percentage of profits that don't exist! You sold your script for nothing. My friend with the crewing agency tells his people not to work for deferred salaries, and that's my advice, too.
On any film where you are not paid up front, you are a PRODUCER - you are investing your screenplay into the project. If they have the cajones to offer you a deferred salary, are they also offering you a producer credit and gross participation in the profits?
They are going to spend actual money to rent equipment, buy raw stock, pay lab fees, hire actors. The crew will be getting paid (my friend at the crewing agency will see to that) so why should the writer be the only guy not paid? If they can afford to pay for equipment, they can afford to pay for the script. If they CAN'T afford to pay for the script, the film is probably so low budget that it has no chance of being released (so that deferred pay means nothing). Movie distributors want stars (some level), and professional production values. The film is sitting on the shelf at Blockbuster next to some big Hollywood blockbuster - the consumer needs some reason to rent THIS film over the one that stars Bruce Willis and his asteroid. (#2 has to try harder). If this film is offering NOTHING, it will not be picked up... and end up in someone's garage forever.
Exception: If you're doing it for love. If this project's value to you is NOT as a commercial venture. Know that when you enter into any deal, the money in your contract is all you will ever get. Those "monkey points" are worthless. The back end deal just means the writer takes it in the back end. Any money contingent on something else happening is no money at all. If you want to DONATE your script to a film - that's your call. You can screen the film in your garage, and be happy.
WHAT YOU SHOULD MAKE
On a low budget (including non-WGA) movie a screenwriter should make about 2%-3% of the film's budget (you may make more or less, but that's the ballpark). You should have your lawyer try for additional "bumps" based on the film's performance in ancillary markets. These "bumps" will be bonuses if the film sells a large number of videos or has a successful foreign theatrical release or shows on additional cable networks. My contracts have "bumps" for HBO, Showtime, USA Network sales and for over a certain number of videos & DVDs sold. These "bumps" cost the producer nothing - but if the film is successful, I participate in all of that cash pouring in... as I should. I made up the story.
Greg Godell's Independent film budgeting book says to budget 5% for script purchase and development overhead (I think it's on page 72). That percentage is echoed in every budgeting book I've ever seen. If your producer thinks 3% is too much to pay, have him look it up (he'll probably be using that budgeting book anyway, since it focuses on low budget films). Paying a writer 3% of the budget is completely reasonable.
You should also get "net points" - also known as "monkey points" - a percentage of any net profit. You should get somewhere between 2% and 5% depending on how important your script is to the over-all deal. "Monkey points" are usually worthless - creative book keeping makes sure that even the biggest hit film never makes any actual profit. Remember that COMING TO AMERICA grossed hundreds of millions of dollars... but was still in the red when Art Buchwald sued Paramount for his "monkey points"!
I have written very low budget films (CYBERZONE) and got my 3% (plus "bumps"). The average low budget contract pays the writer part of the fee on signing the contract, a fee for each rewrite (usually three), and the rest of the money when the film actually goes into production (called a "production bonus"). It isn't a lump sum, it's paying for each task as it's performed. Most have a "buy-back" clause in the event the film never goes into production. Make sure your lawyer puts a buy-back clause in your contract! You don't want to have any scripts in limbo - you don't own them, but the producer has no plans to make them. My COURTING DEATH script was sold to a company on the Paramount lot who has no intention of ever making it.
Last: There are two types of low budget, and two types of criminal activities. Organized and small time wackos. Organized crime makes money, they wear suits, they are businessmen. They have offices. You can depend on them. They've been doing this for years. They play by the odds and don't take any chances. Small time wackos rob a liquor store because they need a heroin fix. They are undependable, have no idea if they will live out the day. Everything is a long shot. You don't want to work with the wackos. There are plenty of organized low budget guys out there with offices, distribution deals in place, and plenty of past credits. The thing that separates a REAL producer from someone who just claims to be a producer is... What have they produced?
That should be the very first question you ask after they tell you how much they loved your script - "Great! I'd like to get a feel for the kind of films your company produces, can you recommend one of your films for me to rent?"
Then really go out and rent the movie. It will give you a very good idea of what you're getting in to!
copyright 2005 by William C. Martell