You’re Doing it Wrong: How lawyering up can ruin your film’s distribution strategy.

“I have just one final question.” He paused, shifting on his feet a bit before finally getting to it: “Why did you bring a lawyer into it?”

***

THE above was part of a conversation in vetting me for taking on the position of Director of Distribution at Alexander Street Press – a job that, among other duties, would eventually have me licensing the rights to four dozen documentaries on behalf of Filmakers Library, a boutique educational distributor Alexander Street Press had purchased a few years earlier.

“I didn’t bring a lawyer into it,” I began, “I would never do—nor recommend—doing so in a case like this. My clients brought in their attorney under their own volition.” I made it clear this was my final answer, and his nod of understanding made it clear it was a sufficient response not requiring further explanation.

I had been targeted for this gig after negotiating the sale of the non-theatrical & educational rights of one of my past clients (THE MINUTEMEN) to Filmakers Library. The question, I suspected, was because a huge part of my job would be bringing in new acquisitions – and a lot of them. High volume licensing means moving quickly and efficiently and, as a rarely-violated rule of thumb, that means doing so without letting either party get too bogged down by legal counsel.

I mention the above because, even if it’s not a conversation that most acquisitions professionals have had, the crux of it is something that informs a great deal of the decisions they have to make – and how they think: If content holders aren’t easy to work with, they better have content which is incredibly valuable . If they aren’t easy to work with and their content isn’t incredibly valuable to us, they better find another distributor to work with.

In a world where content is abundant and audience attention is scarce, where 50,000 feature films are created every year (credit to Brian Newman for his analysis on that issue) and at most, a few hundred get “proper” distribution deals (a number as dubious as the distinction of what a “proper” distribution deal looks like–but that’s another issue entirely) the key to distributors being able to scale up and distribute lots of content lies in working quickly—with both the platforms they distribute to (iTunes, Amazon VOD, Netflix, Crackle, LOVEFiLM et. al.) as well as the intellectual property holders they license content from (you: the filmmakers, producers, series showrunners, etc.).

So why is bringing a lawyer into the mix problematic for most films seeking distribution either through licensing deals or even distribution facilitators that require contracts? There are a few big reasons, which I’ll try to touch on:

1.) Tailoring contract language ties hands.

This is the most important reason bringing a lawyer into a deal can really screw things up for a filmmaker seeking distribution. Contract language is a touchy subject with lawyers—a result of their training, where it’s banged into their heads how different “x may do y” is from “x can do y.” This isn’t a problem in the abstract, but can be deal-breaker for distributors—particularly large volume distributors. Why? Well, the biggest reason is that most licensing agreements have some ambiguity built into them on purpose – as distribution businesses grow and expand, they’re afforded new opportunities—whether it’s through innovating new ways to distribute content (i.e. selling a branded subscription service, a second-screen integration with a film or series, etc.) or simply previously untapped markets (for example, CRACKLE recently tried cutting up a film into 10 parts and selling it as an ad-supported web series) and every single film they have to wipe “off the table” as available to be opened up into new opportunities is a.) a lost opportunity for filmmaker and distributor to both make money and b.) a logistical hiccup which causes them time and (by extension) money—the latter issue leads us to #2…

2.) Tailoring contract language costs you leverage.

Generally speaking, negotiations are exercises in give-and-take. Once both parties are in agreement on general terms (a step I’d usually advocate to be completed before a contract changes hands) every change to the contract is the filmmaker essentially saying to the distributor “I want X.” Since you’ve reached general terms, though, that “X” is almost always a language change – generally the genesis of which is for protecting the filmmaker’s interest by adding clarity or specific restrictions to the contract (more on this later).

Regardless of what you’re asking for, given the fact that you’re asking for “X,” a distributor is emboldened and is all the more likely ask for “Y.” Unlike a filmmaker/attorney team, however, a distributor has language default to what they’re already comfortable with—so their “Y” can be anything from a royalty split being moved more in their favor to a longer initial term. In short, by messing with language changes you’re costing distributors money (as well as yourself, as lawyers aren’t free) and they may (and often will) respond by either making you pay for it somehow or – and this leads us to our next point – leaving the negotiating table entirely.

3.) “Business relationships are based on trust. Lawyers are trained to think paranoid and protect clients.” The two are, in fact, mutually exclusive.

A long-distance friend who works in content production and distribution once offered the above as a concise explanation (paraphrased) as to why lawyers can screw up distribution deals for filmmakers. Reading/modifying language in a contract is the big reason most content-creators would want a lawyer in the first place – you can come to general terms with a distributor, but unless you trust them to answers questions about or requests for clarity on the contract clauses accurately and/or to make changes that reflect the intent of your negotiations, you’ll “need” a lawyer to verify everything. And therein lies the problem – if you’re a hammer (ahem, the lawyer) everything looks like a nail (“over-reaching” language in a contract).

I’ve been involved in more than a handful of deals where a lawyer came in, traded 30 messages between distributor and content creator and, when the dust settled, all that’s functionally changed is that the deal has taken 6 additional months to close, the content creators have a large legal bill to pay and the distributor has spent considerable time (which may or may not have resulted in vying for better terms for themselves) by changing the language of the agreement to “protect” the content holder…despite the fact that the content-holder didn’t need the protection. Why didn’t they need it? Any time you deal with a distrib, middle man, etc. – you should vet them before doing so. If they’re reputable, a disagreement isn’t going to come to a lawsuit, anyway – for the most part, distributors aren’t in the business of “screwing” filmmakers — and if they aren’t reputable, you probably shouldn’t be dealing with them—contract be damned.

4.) You’re likely to be an attorney’s least important client, which means they’re going to be slow (and/or “I don’t have time for this shit”)

Most films that do get distribution deals these days won’t make a ton of money. Don’t get me wrong – if you’re dealing with a reputable distributor, you’ll start seeing checks – even if it takes a couple of royalty statements to recoup the initial delivery/ingestion expenses– but that doesn’t mean a 5-figure check will be landing in your mailbox every quarter. Far from it, in most cases. This is problematic for any “normal” filmmaker for a litany of reasons, and one of them is that there are people to pay – including, in some unfortunate cases, their attorneys. Lawyers are pretty expensive – period. They’re used to getting paid well and their entire industry relies on that – they have loans to pay back, offices to keep open (usually complete with assistants or paralegals) etc. In many cases, they charge their clients up front – at a rate of hundreds of dollars per hour – which few filmmakers – even those with distribution deals – will be able to afford with their proceeds from the film. Another common form of payment is commission, much like a sales agent, distribution consultant or producer’s rep.

I point a finger at attorneys, though, for two reasons – they have higher costs and most of their clients will pay them handsomely in cold, hard cash. As a result, if they’re paid on commission, they’re pretty de-incentivized to prioritize closing a film deal, as they have “more important” deals to focus on. The result? Often times, lawyers will significantly slow down negotiations – in some cases missing a necessary deadline set by a distributor and killing a deal or, in some cases, keeping the filmmaker & distributor from capitalizing on an enormous time-sensitive opportunity to promote and sell a film. Why? Put yourself in their shoes and you can pretty easily hear yourself saying “I don’t have time for this shit.”

Lastly, and not to be dismissed, the same is true for the distributors’ side of things. If you’re dealing with a large-volume distributor (which, by the numbers, most filmmakers who get distribution deals will be doing) then it’s highly unlikely you’re one of their most important acquisitions targets. What does this mean for you, the filmmaker? Unless you have the leverage of a high-value film, it’s pretty easily to have your film pegged as “more trouble than it’s worth.”

“Oh, you didn’t clear any of your music rights yet? Screw it, not interested.” “Oh, there’s a lawsuit against the film from an actor whose release you didn’t get signed? In that case, it’s a pass.” If you’re an acquisitions exec closing dozens—even hundreds—of films a year, it’s pretty easy to shrug your shoulders and say “on to the next one” if things don’t work out – but having an attorney return an agreement that’s half re-written using their own preferred  language is just about the fastest and most effective way.

***

There are, as always, a litany of exceptions to any positions I take in these posts – but this one is more clear-cut than most, and really it boils down to one big, fat exception: Can everyone immediately see the value in your film? i.e. – Does it have a “name” cast? Did it win awards or make a splash at a top-tier festival? Did the film have a respectable 10 city theatrical run? Was the film an NY Critics Pick? Basically – is it obviously a high-value piece of content that distribs would fight over? Go ahead and lawyer up if you feel like you really need to – but unless it’s one of the top 50 specialty films released that year and will be pulling down lots of revenue, chances are a good sales agent or really seasoned producer could close the deal without any hiccups. The real, nasty secret about contracts and licensing agreements? They only get legitimately “complicated” when there’s an enormous amount of money at stake.