July 19

NO FREE LUNCH

QUESTIONJoseph from Los Angeles asks:

A production company has shown interest in optioning my script. They seem very enthusiastic, but have little experience as producers and want me to option my script for free. I have looked at a few sample options online. However, since this would be my first option, I still have a few questions.

1) They mentioned when I met with them that if they are able to set up a deal with a studio they would like to purchase my script for a flat fee (as opposed to a percentage of the film’s budget or script’s selling price). If they state this in the contract, what would be a reasonable fee to pay to a screenwriter who is un-produced? Should I even agree to such a deal or should I hold out for a percentage of the film’s budget or a percentage of what the studio pays for the script? What is to keep them from stating in the contract that they will buy the script from me for 50 grand, but in a year’s time they find a studio that is interested in buying it for 100 grand or more?

2) During the optioning period am I allowed to use the script to try and get an agent or writing assignments?

3) Is the option agreement my only time to negotiate or do writers usually re-negotiate with the studio once the screenplay is sold? In other words, do I need to take care of re-write clauses, sequel rights, screenplay credit, etc now or will this happen once the script is actually purchased?

I plan to find and meet with a lawyer once I get the contract (which should be within a week) but would like to iron out the contract as much as possible beforehand because I am of limited income.

Thank you very much.

Joseph –

(Standard disclaimer – this is not legal advice, just thoughts on a blog.)

Congratulations on getting interest in your screenplay. Chances are, others will be interested, too.

Your questions present common dilemmas for beginning writers. Many writers (including me) feel that the producer should always pay something for an option. If they were WGA producers, they would be prohibited from asking for a free option. Why should a producer (especially an inexperienced one) have the right to tie up your screenplay for a long period of time without paying you anything? What do the producers intend to do during that time? Based on what they have told you, which is that they want to set it up with a studio, they do not really even need an option. If they want to present your script to studios, you can give them permission to do that without an option. Let them tell you who they wish to take it to and, if you want them to submit it, give them permission to submit it. Then, once they present it, you are free to negotiate your own deal as they are free to negotiate theirs. This is a common practice in the industry; it happens every day.

If, on the other hand, they intend to “package” the project themselves (which means, they intend to raise money and attract talent, director, and distribution without a studio), they should pay you money up front, especially if they have never packaged a film before. This is not a matter of greed or materialism on your part. Rather, it is a reality of the producing business that producers lose interest in projects when the next best thing comes along. They are not lying to you when they ask for the option. They are just under a tremendous amount of pressure to find the right project and, two months from now when they have gotten nowhere with your project, they are likely to feel they have a better shot with something else. If they have paid you money, they have a much stronger incentive to keep working on your project instead of jumping to the next thing. In addition, at least to a small degree, you are compensated for the lost opportunity.

If the producers are as excited about your script as they say they are, they will certainly not let it get away because you ask for a few thousand dollars up front. If your request makes them go away, that should tell you something about their real level of commitment.

As for the answers to the specific questions you asked:

1. If you enter into an option, percentage of the budget deals are not very common. A good place to start for your writer’s fee in the event the option is exercised is 110% of WGA minimum with negotiated bumps for specific events, which can include budget bumps, sole writer bumps, and box-office performance bumps. (For example, if the budget exceeds $75 million, you get paid an additional $250,000.)

2. If you enter into an option, you should make sure before you sign the option that you are entitled to present the script to agents and for writing assignments. If not, you should be compensated at the time you enter into the option for this additional loss of opportunity.

3. The option agreement is ordinarily the only time you negotiate your fees (and credits). If you enter an option, you should make sure it is a deal you can live with if the option is exercised.

Good luck….