Sunday, September 03, 2006

Directors' Agreements

Directors' Agreements
The Director's Chair, July 17, 2006


When directors are hired, they can be employed directly; however, it is often beneficial that a loan-out structure is used. A loan-out structure essentially allows the director to use a corporation to enter into the agreement with the producer, and the corporation will loan-out the services of the director. This kind of structure has the advantage, amongst others, of shielding the director from personal liability.
One issue that directors should consider is whether they wish to offer their services on a "pay-or-play" basis. The pay-or-play commitment generally means that the director will be compensated regardless of whether the production is completed, or whether the services of the director are terminated or replaced. This provision serves as a useful incentive for the producer to use the services of the director, and it provides the director with a certain amount of security that they will be compensated.

A director's agreement will often specify that the director's services will be required on an exclusive basis for pre-production, production, and post-production. A number of other important issues that should be considered include the following:
  • How important is final cutting authority? Will this affect the director's vision?
  • What is the compensation package? What part is fixed,deferred, and is the director entitled to participate in theprofits? How are profits defined?
  • What is the term of the agreement? Does any part of the term interfere with other commitments?
  • How are transportation and other expenses dealt with?
  • How is the director's credit accorded? Is it a separate card? What about teasers, trailers and other ads? What about the right to use the director's name and likeness to exploit the picture?
  • What happens if the director becomes incapacitated due to mental or physical disability?
  • How much control and authority does the director have in hiring people for the production?
  • Is the director assigning and transferring his or her rights in all the results of the director's services?
  • What does the agreement say about termination?
  • Does the producer require the director to become or remain a member in good standing with the various guilds and unions?
  • What laws will govern the agreement? The laws of the State of California or somewhere else

The information in this article is not intended to be legal advice and is of a general nature. Consult a lawyer for advice for any specific situation.

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