Media Law for Non-Lawyers

By Lyndon Sayer-Jones

The first edition of Media Law for Non-Lawyers was published in September 1992 and sold out its entire 10,000 print run in eight months. We clearly needed a guide to navigate the jungle of legislation and complex legal documentation confronting us. I suppose it helped that it was written in plain English accompanied with a few cartoons and jokes.

• Language: English
• Publisher: BookBaby
• Release date: Apr 16, 2014
• ISBN: 9780992397616

Book preview

School

Introduction

The first edition of Media Law for Non-Lawyers was published in September 1992 and sold out its entire 10,000 print run in eight months. We clearly needed a guide to navigate the jungle of legislation and complex legal documentation confronting us. I suppose it helped that it was written in plain English accompanied with a few cartoons and jokes.

Since then, many media guidebooks have been published for other countries (USA, UK, France and Italy) but not here. A thoroughly updated second edition of Media Law for Non-Lawyers was called for, especially in this country, when in 2008 a completely different film subsidy mechanism (Producer Offset tax scheme) was introduced and overseen by Screen Australia, which was established at the same time (merging the Film Finance Corporation with the Australian Film Commission).

But other things also happened globally around this time which rendered every media guide out-dated: the online phenomena of:

Social networking via Facebook, Twitter, YouTube, WhatsApp, blogs and Instagram. Facebook’s growth alone, driven by the smartphone, has been exponential and at publication of this book has more than one billion active subscribers;

Internet Protocol Television (IPTV). Creative programming is being rapidly transformed to the extent that it is now reliably predicted that by 2016 nearly 27% of Australians will have an IPTV service delivered by way of cheap subscription (or for free) using the World Wide Web. It’s already happening big-time in North America where Netflix and HULU alone currently use up an astonishing one-third of the total bandwidth of the US. Imagine that – one-third! Foxtel has already announced its PRESTO streaming service will be available later in 2014 for only $19.99 a month giving subscribers on demand access to thousands of movies and TV series.

This second edition focuses on those extraordinary changes.

My mission is to make Media Law for Non-Lawyers the classic reference guide for our industry with updated editions every two years from now on. To achieve that status I have decided to add real value by breaking the omertà-like code of silence amongst Australian entertainment lawyers to tell you the truth about everything I have learnt in 30 years. In this second edition I reveal, for the first time, the inner details of financing deals as well as profit splits, the contact details of all the gap financiers, commissions and fees, etc. which have been instrumental in supporting my clients’ film, TV and online programming. Much of this knowledge is very difficult (and expensive) to acquire, especially if you are an independent producer.

Apart from thoroughly updating the first edition (a task which has taken me the last 10 months), I realised that simply revealing industry secrets would not be enough however to make this second edition genuinely special.

The ideal scenario in any guide like this is to have several points of view – the inputs of the very best practitioners at the time. It’s very hard to achieve, however, especially if you really do want all the top lawyers. To my pleasant surprise, when I approached them they all recognised the need for a major update and agreed to each contribute specialised chapters. This has tripled the text of the first edition of Media Law for Non-Lawyers, and all of it is superb instruction. You are in for a real treat because many of their chapters, at my urging, also spill the beans. Lots of eyebrows will be raised, for sure.

Use this book as a checklist to instruct your lawyer as well as to monitor their performance.

Every transaction will generate different legal advice depending on what role you play in the project at a particular time. Make allowances for that. This book is aimed primarily at helping producers because necessarily they make up the bulk of our clientele. It is the position most creative people aspire to attain someday, because it comes with the right to control the production process from final script approval, engaging the director and cast to the holy grail right of FINAL CUT.

Lyndon Sayer-Jones

2.

Choosing your lawyer

The first thing any self-respecting person working in this industry needs is a good lawyer. I say good lawyer quite deliberately because there is nothing worse than a bad one (well, I suppose a bad surgeon would be a real worry too).

Competence is essential

This highlights the first golden rule in choosing your lawyer. They need to be competent at what they do. Media law is in a high-end commercial tier with specialist legislation and protocols which are quite different from most industries. It’s very demanding and the neurone count has to be pretty high. In fact, some of the contributors to this second edition are among the best commercial lawyers in Australia.

Your lawyer should not just be good at crossing t’s and dotting i’s – that’s a given. They need to be media savvy and have a mastery of the industry’s jargon, contractual benchmarks and the ever-changing government policies administered by Screen Australia and state funding bodies. They must also know what’s fair in sales commissions, fees, credits and profit splits and how to structure deals that are safe, profitable and tax effective at the same time. After all, isn’t that what you pay them for?

Ideally, too, they will have the contacts with financiers, distributors, funding bodies and networks, thus opening doors for you and your project.

To determine competence, you should ask several professional people whom you trust and who have had dealings with the lawyer in question whether they think he or she is genuinely skilled. I have found over the years that all of my major media clients (especially actors and celebrities) have relied on at least two referrals – one from a heavy professional source, usually an accountant or investor, to confirm technical competence and one from a creative person to vouch for my being sympathetic to legal stresses.

The following story emphasises the need for technical competence.

It happened quite a few years ago and concerned a fairly well-known entertainment lawyer (not a contributor to this book, thank God). Anyone who knows about this story will wince when they recall what happened to his client – a highly respected female producer. The Court’s judgment was that the lawyer had negligently inserted the wrong dates in a writer’s agreement and in particular the date for the exercise of sequels. These rights were potentially valuable as it was a children’s film. Apparently, the dates weren’t even discussed with the producer. As a result the revenue stream was potentially compromised, rendering the investors’ interests in the film’s copyright insufficient and therefore materially flawed.

For nearly two years of the script development and financing stages the problem wasn’t picked up, probably because you just don’t expect an important thing like the option exercise date to be wrong. It’s like a doctor getting your blood type wrong! It is supposed to never happen. Several lawyers (including two from a major bank and one from a top-tier firm) certified that the writer’s agreement was satisfactory. However, just as that medium-budget feature film was about to start principal photography, the error was discovered by a smart junior lawyer in the Film Finance Corporation (the predecessor of Screen Australia). All hell broke loose, with lots of red faces, because it meant the producer had not acquired the requisite sequel rights as warranted to the investors.

This glitch was resolved, of course (they nearly always are), and the film went on to earn critical acclaim and good box-office returns as well but only after an enforced delay of nine weeks, which nearly lost the high-profile lead actor. As the producer’s new lawyer, I can tell you it was not fixed painlessly. To rectify the agreement, my client was forced (did I say blackmailed?) to hand over a good portion of her fee and her profit to a very greedy and opportunistic writer. Unfortunately, her former legal eagle’s mandatory professional negligence insurance proved to be grossly inadequate so my producer ended up losing a lot of money. All the litigation lawyers (both sides) got paid though - funny about that.

Go for experience every time

Would you go to a dental clinic for an implant when they admitted they had never done one before? Would you have your new home built by an apprentice? Of course not: you’d be an idiot.

Same thing applies to us: experience is half the legal puzzle. It’s like riding a bike – we will be wobbly at first and progressively more proficient with subsequent projects. You definitely don’t want to pay for your lawyer’s steep learning curve – let some other poor bastard do that.

For that reason alone, the person you choose should have a minimum level of experience. You need to ask a prospective lawyer questions about their past and current workload. The exception to doing that would be well-known media lawyers. We are a sensitive lot and best not questioned directly. Instead, opt to investigate us by asking our producer clients.

If you have a major creative project, you will need your lawyer to be currently involved in at least three significant media projects with at least one in production using the Producer Offset tax scheme. You should expect that at least 75 per cent of their own work is purely media. The more experience, the better is a good starting position.

Importantly, you would also want to know that they were on talking terms with the lawyers and business managers at Screen Australia and your state’s funding body, be it Screen NSW, Film Victoria, SAFC, etc. That way they can say to Screen Australia’s staff something like, OK, let’s do it like we did on the last one but with 2 per cent off all the profit splits and get resolution from them – it saves time and ultimately saves you money and worry. If this sounds like a club to you, then you are right. The Australian media law industry is as close a club as exists, especially in Melbourne and Sydney. Almost as tight as the sex industry.

Because general law such as conveyancing, debt recovery, mergers and acquisitions, etc is so boring for anybody with a creative bent, there are lots of frustrated solicitors out there. I used to be one of them. Indeed, had I not scored the legal counsel position at the NSW Film Corporation late last century, I would have probably left the legal profession – I was starting to hate practising general law. Often these frustrated lawyers claim to be media lawyers. The sad fact for most of these wannabes, however, is that their knowledge of media is extremely limited. Importantly, too, they will lack the personal relationships which simplify and speed up the contract transacting process. As I said, there is a kind of shorthand in this unusual legal area.

To my mind, though, the real benefit of an experienced professional is that they can save your project if there is a really serious problem. Having a lawyer who is on first-name terms with the funding decision makers means that you are far less likely to suffer an aborted deal. I have personally seen a situation whereby a young wannabe lawyer stupidly insisted on a profit split and a credit in his client’s favour way above the industry norm. Because he would not budge, that deal nearly fell through and it was only because the producer switched at the last minute to a lawyer who actually knew what they were doing that the film was financed.

Don’t let them burn the deal

You want your lawyer to be proactive and seal the deal you have come up with. You certainly don’t want them taking an adversarial position, wanting to crush the other side to prove their power. That negative approach is alive and well in the corporate world of mergers and acquisitions, where litigation is sometimes deliberately used as a negotiation tool, but not in the media world. Creatives react particularly badly to being bullied. Sometimes you need to pull your lawyer back from taking too tough a position, so monitor legal negotiations carefully. To do this effectively, insist on being cc’d on everything and seeing drafts of important letters and documents to approve before they are dispatched. Keep control and don’t let major decisions be delegated to anybody, even to one of us.

Here’s a good example of a client being asleep at the wheel, so to speak, and letting their lawyer burn a great deal. A few years ago one of my advertising agency clients (a major department store) had come up with the idea of using an extraordinary Bonobo chimpanzee named Rocky. His precise hand signalling produced the same vocabulary of 500 words as a typical 4-year-old Australian child (which, these days admittedly is not exactly well read). Nonetheless, it is amazing for an ape and was the sort of advertising campaign that could easily win many prestigious CLIO awards as well as sell a lot of product. It was serious, elegant and incredibly persuasive.

Rocky was being made available by a zoo in Canada. Unfortunately, the zoo’s lawyer was a fool. Indeed I would go so far as to say an idiot. Not only did she demand a ludicrous degree of supervision and control over the chimp but she blew the whole deal with a new demand at the eleventh hour when the director was about to fly out of Sydney with the crew. My learned colleague suddenly insisted on a creative right to veto the project simply if, on a purely subjective basis, the zoo did not like Rocky’s performance on the day. She ignorantly refused to consider my pleas for extra shoot days or any control over the approval, such as the well-used phrase ’not to be unreasonably refused’. This was all despite detailed illustrated storyboards and a half-page script which quite precisely set down exactly what the advertisement would look like. Rocky only had to signal three words to his off-camera minder and respond to her answer with a shrug of his furry shoulders. The agency had rehearsed it with the talking ape [as the tabloids described him] the previous week many times without a problem. But that was not enough for this foolish attorney.

As a direct result of that last-minute demand, our agency and their client spat the dummy and withdrew their interest and with it payment to the zoo of US$680,000. Worst of all, we lost the rare opportunity of seeing a truly amazing primate directly communicating with us – that was the clever PR spin anyway.

I still get regular newsletters from the zoo with Rocky’s cheeky face on them begging for donations. I wonder what they would have done with that generous advertising fee (which probably would have been paid twice with an annual rollover) had the zoo not used an arrogant lawyer who didn’t know when to back off to save a great deal for her client.

You need trust in the relationship

You should be able to trust your lawyer at all times and never worry they are recommending an action simply to line their pockets. In some ways it is like the relationship you have with your doctor. It is important that your dealings are pleasant but also that you have complete faith in their honesty, skill and recommendations.

That doesn’t mean you have to accept whatever they put forward – far from it – but rather nothing should happen in your relationship which would cause you to question their professional ability or ethics. You may need to reconsider your retainer if your instructions are not followed, promises are constantly broken or there appears to be justified blowback from lawyers on the other side for sloppy work your end.

You need to be strong here and not hang on for loyalty’s or friendship’s sake. The wrong lawyer can damage your business and alienate your hard-won investors.

Share your secrets

Once you have made your decision on who to represent you, tell your lawyer the whole truth and nothing but the truth about you and your projects. This is critical to enable your interests to be properly protected.

Failure to inform us about claims or possible claims against your project or you personally (including ex life partner’s property entitlements and the ATO), no matter how groundless, can cause serious problems which are very hard to fix. Don’t be embarrassed as we are used to clients unloading extraordinary stories of personal woe, in fact, most of us (if we were honest about it) enjoy hearing such secrets – it’s what makes a dull day interesting. Seriously though, if you don’t tell us everything that could possibly be relevant then quite unwittingly, we can be misled into drafting warranties in contracts which could expose you to a lawsuit and/or damage your relationship with potential financiers, including government film bodies. Even if there is no litigation your project may be aborted or delayed and a great deal of your time and money thrown away.

Knowledge of claims and potential claims enables us to not just avoid misrepresentations in project contracts but also address the issues at the relevant time and advise you on the best damage control.

Some suggestions

• Do not wait to be asked about rogue claims or possible problems. Volunteer the information with full details as soon as possible. It is understandable that if you believe a claim to be groundless you will not think it worth your lawyer’s time (or your money), but remember that damage can result not from the claim itself but from the simple fact you warrant to third parties that no claims have ever been made. For example, most script development and production applications of the film/TV/online funders like Screen Australia ask if any claims have been made, as do errors and omissions (E&O) insurance policies and many other agreements. Discovery later on can void investments, E&O policies and contracts. Worse, they can destroy your reputation as a reliable player with government funding bodies and industry heavyweights like TV networks and distributors. They all seem to have very long memories. There is a black book in our industry and you don’t want to be in it.

• Known oversights, non-payments and the like need to be fixed or they may raise their head later, with disastrous results. Be brutally honest in your confessions, knowing that they are given in the context of a privileged solicitor/client relationship. Perhaps some revelations involving plagiarism, for example, are embarrassing either for professional or personal reasons. We have to know where all the rocks are if we are to guide your ship to safe waters.

• For tactical reasons it may well be decided between you and your lawyer to let sleeping dogs lie with respect to a potential problem. At least this way your lawyer can ensure your project and all its documentation are structured so you do not get bitten later on.

Blood, sweat and dollars

I suppose I cannot finish a chapter on choosing a lawyer without discussing our fees.

There is no Legal Aid available in this media area, but state funding bodies (like Screen NSW and Film Vic) often assist in the development stage with part of your legal costs (usually only half). Likewise, Screen Australia will allow most of those legal fees to be recouped from the production budget of a feature film, documentary and telemovie/ miniseries as qualifying Australian production expenditure (otherwise known as QAPE) and even online-game projects, too, under the Australian Interactive Games and YouTube initiatives. Most general legal work, including development, is not financed by third parties, however, and has to be paid on a pay as we go basis.

Time is money, as they say, and the charges for a boutique media specialist firm start at an hourly rate of around $500 for a senior partner lawyer and $400 for an associate. I would imagine that independent producers would generally avoid the higher fee scales. This is not usually because their value for money is questioned as such but simply that they can’t afford the greater rates. Sometimes, however, you need senior advice and also seniors’ influence. Remember the saying ’You get what you pay for.’ Just as solicitors obtain opinions from specialist barristers there is no reason, if you feel you have a major issue in dispute, that you can’t ask your media lawyer to seek a second opinion from a senior media lawyer. However I would recommend you do it separately ie behind your lawyer’s back, because if the senior’s opinion is different to your ordinary lawyer’s advice you will at least find that out from the senior face to face. If however you go through your lawyer then you may not get the unabridged version of the senior’s advice, if you know what I mean. Filters and censorship come into play when lawyers fear they will be embarrassed by more experienced minds.

The ease with which legal costs can blow out makes it imperative that you plan your negotiations carefully. Curious as it may sound, when considering keeping control of legal costs it is best practice to involve your lawyer early on to check proposed deals. That way you won’t end up with a bargain you have struck that has to be undone because of legal issues you hadn’t thought of in the initial stages. Doing that makes you look amateuristic and unreliable.

Every project has its special requirements, risks and personalities at the bargaining table. This is often where you need to allow for certain tasks to cost more. Those special elements can dramatically increase the time needed to complete the legal work, especially if it involves a complicated deal where both parties are fighting hard to improve their position.

A good example of how the usual fee for a standard task needs to be increased for special circumstances was when I had to negotiate and draft the location agreement for a cult 1985 Australian film set in an abandoned drive-in.

Dead End Drive-in was shot over 35 days at a drive-in at Matraville in Sydney’s western suburbs. Funding came from the New South Wales Film Corporation.

I had to negotiate with the Malaysian owners, who were Muslim and lived in Kuala Lumpur, and persuade them that lighting massive petrol fires on their Aussie property was completely safe. Even more challenging perhaps was explaining how staging teenage sex and drug orgies in several scenes on set was morally acceptable behaviour, at least in Australia. I used the old When in Rome do as the Romans do adage to counter their concerns that it would be offensive to their Islamic faith. Fortunately, that argument worked – I have to fess up here (he says sheepishly) that doubling the original location fee, at the same time, may have been a factor in their deliberations.

Now, I clocked my professional hours for that three-week horror negotiation at 42 hours. Even at only $400 an hour, 42 of them would have been $16,800. You will appreciate that the drive-in was the only location as such and unless we had all the rights we needed it could be a total disaster. The Completion Guarantor was insisting the Location Agreement would not let the owners throw the production company out for any reason whatsoever until it had everything needed in the can.

It was quite different from the two-page Location Agreement you would need with a dairy farmer to use his paddock for filming a sensitive love scene. They are the ones that only cost $500.

The only thing remembered, these days, about Dead End Drive-In was the fantastic final stunt by the legendary Guy Norris. It cost around $75,000, more than any single stunt performed in Australia until then, setting a world record at the time for a jump of a truck: 51 metres (166 feet). Its worth retelling. I was lucky enough to witness that extraordinarily dangerous feat standing on the rusty flat roof of the fast-food restaurant while the nitro-fuelled truck roared above us at 220 kph crashing through a huge neon sign Star the fictitious name of the drive in (see it in the poster).

When it crashed to the ground, right on top of one of the 6 high speed cameras, the truck broke in half and both sections slammed into a massive barrier of railway sleepers and old tyres. Everything went eerily silent. We all gulped in horror that Guy would be injured or even worse. An agonising 10 seconds passed and then to our collective relief he climbed out of the twisted driver’s door and while clearly very unsteady, punched the air in triumph like Rocky Balboa! Everyone cheered, except me, worrying as to whether the production company had taken out adequate insurance, if it turned out Guy was badly hurt. That’s a lawyer’s brain for you.

Legal costs agreement

Make sure you have a fully detailed Legal Costs Agreement in place.

You’ll appreciate that if lawyers take on a major feature film or online project we are quite often called upon to take the risk that it falls through at the last minute. There are numerous reasons for this: a distributor can get cold feet and withdraw its presale offer, the lead talent can suddenly withdraw because a better offer has come along, etc. Often by that point, the lawyer would have done as much as 60 per cent of the work. The implied understanding these days is that the lawyer comes to an arrangement with the client to defer payment until their next project is up and running. Best to get that understanding in writing. And there you are thinking badly of us when we are really a soft touch!

Finally, here are some wise words from successful media professionals on what criteria they use to choose their lawyers.

Ben Grant- Executive producer

The Sapphires

Early on in my career I looked to lawyers with experience in the project media, in my case either film, or television, here the deals and contracts can be quite different. As I have gained more professional experience, my main criteria would be the availability Availability for me is a 24/7 thing and a one-to-one relationship thing – it is important for me to feel like I am the lawyer’s only client or, more realistically, their most important client.

Ultimately, closing the deal is the most important thing, and not just sometimes but always – it is vital for me to be working with someone who can complement, and not frustrate, my own skills as a producer, as I am endeavouring to negotiate and compromise in order to close the deal and get what I want, which of course is a financed film on acceptable terms.

Ann Sanders – Newsreader / Media Personality:

SEVEN NETWORK National

A legal professional with a good working knowledge of the media industry is essential. Know what you’re trying to achieve and find a lawyer that fits your specialised needs. This person will be representing your integrity and professional values, so ask yourself if they’re a good match for your individual style. It’s important for your lawyer to understand the temperature of the current employment environment especially what’s going on in your TV Network and the other Networks too, as well as contract law. Are they a good negotiator, verbally well skilled to articulate your personal needs while making both sides feel they’ve made a successful deal? A good dealmaker can literally add 20 to 30 per cent more to the offer put forward. When that happens they well and truly earn their fees.

Know your lawyer’s current and previous clients, and in what capacity and how successfully they’ve been represented.

Attention to detail is paramount of course and in this high pressure game, a good sense of humour will go a long way too!

Mike Munro – TV Journalist

TEN NETWORK National

As a journalist I’ve never liked lawyers. Even those acting on my company’s behalf have always tried to stop more stories of mine than ensure they’re published and/or broadcast. Most of the time the law really is an ass.

But personally, it’s a different story. In addition to knowing their area of law backwards, I want any lawyer acting just for me to make me paranoid, to make me even more careful and wary than I naturally am. I need to know that he/she is smack bang in my corner without dollar signs in their eyes. That he/she will be honest enough to say there’s no point in going ahead with an action because we’ll lose, rather than go ahead, hope for the best and still pick up their fee. Above all, I want my personal lawyer to be a genuine and solid friend.

Justin Ackerman – Motion Picture Financier Director of International, THE THIRD FLOOR, INC – USA

EP’d Australian feature SIRENS starring Hugh Grant & Elle Macpherson & the blockbuster movie TOMORROW NEVER COMES

The most important issue for me is to work with a closer NOT a deal breaker. Some lawyers are obsessed with the legal minutiae and clocking up fees. My lawyer thinks commercially as well as legally and ensures that the deal will not crater over non-essential legalese. This involves commercial creativity and flexibility in approach.

Availability and access are also key as in my business I am working 24/7 across several time zones (USA, China, Europe and most recently Australia) and I have to be able to talk when I need to talk. And of course there is a short-hand that develops over years of working together and this is critical in a business world that is very fast paced and competitive.

Gordon Elliott

FOLLOW PRODUCTIONS - NEW YORK Media Personality/Owner and producer of over 25 different TV series including The Chew most watched cooking show currently on US free to air TV.

As a show creator and seller I want a lawyer that will — without fail — get the deal closed with good will intact. All clients and buyers should feel like partners by the end of the process. A good media lawyer should have this skill as a fundamental and keep a collaborative tone throughout. They should also have a complete understanding of what is driving the other parties in the deal. This intelligence can allow for small but important accommodations that get big deals done faster and at less stress and cost to all. It leads to trust and in the longer run, better and bigger business relationships.

THIS IS HOW THE WORLD IS SEEN BY MANY LAWYERS STRAIGHT AND CROOKED - ALL AT THE SAME TIME

3.

Getting all your ducks in a row

by Bryce Menzies

I’ve now been doing film production legal work for more than twenty years. These days I oversee the legal aspects of the development, production and marketing of about 15 new feature films or miniseries each year. I still love it.

A great aspect of media law is that you get to see films from very early on in their development until completion and beyond. I’m still working on films I worked on over 15 years ago, like Muriel’s Wedding and Two Hands.

A feature film can start its life journey in any number of ways and by any number of people.

It may start its life as a novel or a magazine article, a video game or a true story. Its initial driver may be a writer, a director or a producer. It does not really matter how it starts, or by whom, but those who wish to pursue the making of a feature film should ensure that they begin by obtaining the necessary rights.

A feature film producer will be required to have an assignment of the film and television rights to the underlying work, as an absolute minimum.

Depending on the existing underlying work, the more rights you can obtain, the better. Investors, generally speaking, seek more than a single film right, so you need to get sequel and prequel rights, and the success of musicals based on successful films means investors may ask you to also get these rights.

Development then begins: attaching a writer, a script editor, a director and a producer.

During this phase, I always advise producers to seek script development funding, either from private or government sources. While the money is handy, that is not the real reason. It forces the producer to sell the project and work through any perceived problems with the script. More importantly, achieving support gives the film a tick of approval.

The film industry is famous for operating on the bandwagon theory. Only after one of the industry’s opinion makers has made a decision that a script is good is it possible to get funding. As a consequence, it can do you no harm to get an opinion maker (in this case a government film body) to