The world of legal contracts can be incredibly daunting, especially if you’re a freelancer or new business owner. They can be difficult and expensive to create, confusing to review, and scary to sign if you don’t completely understand them.
There are sites like LegalZoom and Rocket Lawyer where you can create a basic contract on the cheap, but often there are clauses and language you’ll need that are very specific to video production that won’t be included in a basic contract.
Since this is a fairly dense topic, I’m going to break it up into three parts: Why You Need Contracts For Video Production, What Types Of Contracts Do You Need and How To Create A Contract.
I want to state from the outset: I am NOT a lawyer. I have had to learn about contracts, both production related and otherwise, out of necessity as a business owner.
Over the 10+ years that ECG Productions has been operating, I have gained an immense amount of knowledge, much of it (like many things in business) by making mistakes, suffering the consequences, and learning how to do it better the next time. What I know I have learned from experience, examining contracts created by legal teams for large companies/productions and paying for legal counsel from true professionals.
Reading these articles is no substitute for professional legal counsel. That said, I’d like to at least share what I’ve learned and observed over the years, with the hope that you’ll find some value in it, and maybe even avoid some difficulties and mistakes.
What Is The Purpose of a Contract?
Starting at the most basic level, the purpose of any contract is to protect both parties who will be working together to complete a project. For the purposes of this article I’ll refer to the “Client” (whoever is hiring you) and the “Producer” (you, the person or entity producing the video). There are an amazing number of variables at play once a client engages you to produce something for them.
Beyond the simple things like how much you’re going to get paid and what the final deliverables are, contracts let you plan for unforeseen eventualities that can be difficult (or impossible) to anticipate. For example, what happens if one of the parties has to cancel a shoot? Is there a kill fee? Is the kill fee the same whether it’s canceled with a week’s notice or an hour’s notice? Is there a guarantee as to when the shoot will be rescheduled? What happens if money has already been spent on things that can’t be refunded?
If both parties come to an agreement in advance, there’s no argument over what happens in these situations. You simply refer to the contract and, ideally, act accordingly. Breach of contract is a whole other line of discussion, but by having a contract in the first place you’re at least giving yourself a leg up in the case of an actual dispute. Without one, you really have no leverage at all if one or more parties doesn’t do what they said they would.
When it comes to talent, the contract (in this case, “Talent Release”) typically provides specifics about how the footage and finished product can be used, as well as any behind-the-scenes footage and social media posts or photos.
When it comes to contract/freelance crew members you’re bringing in to fill out your team, you’ll usually want to sign what’s called a “Deal Memo.” This is another contract, this time between the Producer and the outside person or entity that you are hiring for the production. If you’re developing a new show or working with a company on a video about an unreleased product, you’ll likely sign a “Non-Disclosure Agreement” (or NDA) to make sure sensitive information doesn’t get leaked to the public.
I’ll get into more detail about all the various types of contracts utilized in video production in Part 2 of this series.
The Flow of Money
One of the most important things that a contract does for the Producer is lay out how the payments for services will be structured. ECG’s standard contract stipulates that a 50% deposit (along with a signed contract) is required in order for work to begin. If you start working without a deposit, you’ve already opened yourself up to a whole host of risk factors. Beyond that, many projects involve hard costs for things like rentals, travel, and craft services.
Without a deposit, you’re paying out of pocket and waiting to essentially be reimbursed by the client (aka acting like a bank), which can have a huge negative impact on your cashflow, especially if you’re a smaller company or a freelancer who doesn’t have a lot of liquid cash in reserve.
We also usually require the final balance of the invoice to be paid before we hand over any final deliverables. Again, this protects the Producer and ensures that they are paid for their services upon completion. If you hand over final deliverables without receiving payment, you’ve given away all your leverage.
Unfortunately, it is naive to assume that everyone will do the right thing and pay for your completed work as agreed. The contract takes the stress and guess work out of collecting payment. Everyone knows what is expected well in advance.
You may have also noticed that I used the phrase “final balance” when referring to the 2nd payment, as opposed to the other 50% of the invoice. This is because there are often unforeseen expenses or changes in scope once a project is in process. A good contract will lay out how these situations will be handled, as well as when & how they will be paid for.
In our contracts, additional expenses and changes in the scope of the project require written client approval (email is sufficient) to be added to the final invoice. The order of events is also crucial here. If something outside of scope is requested, don’t just do it and expect more money at the end of the job. Immediately call it out, make sure you assign a specific price to it, and make sure the client approves of the expense before moving forward.
“No Surprises” should always be your motto when dealing with billing clients. The same goes for “scope creep,” aka when a client starts asking for things that go beyond the original parameters of the project. When you see scope creep, call it out immediately, calculate a cost and get approval in writing. Otherwise, don’t do it (unless you like doing work for free).
Who’s Responsible For What
The responsibilities on a production don’t just fall on the shoulders of the Producer. A good contract lays out the responsibilities of both parties in as much detail as possible.
As far as client responsibilities, you’ll want to make sure they’re providing things like access to parking (or reimbursing the cost for crew to park), access to clean drinking water, craft services (if not included in your invoice) and that they are guaranteeing that all assets delivered to you (scripts, logos, spelling of names, etc.) are correct and free from errors.
For example, if the client sends you a list of names for lower third graphics that’s full of typos, they should pay for the time it takes you to correct them. If you make a careless spelling error, that’s on you.
There are certain responsibilities that can go either way, like obtaining releases for actors and locations, carrying insurance to cover the production, or even something as simple as paying for shipping costs for final deliverables.
It’s important to figure out which party is responsible for which items well in advance so there is no confusion once the project is underway. As a general rule, anything that’s not strictly stipulated to be paid by the client and agreed upon in the contract is your problem as the Producer. If you find yourself losing money here and there on things you don’t think you should have to cover, it’s time to revise your contract.
Revisions, Revisions, Revisions
No matter how you create your first agreements, be it via a template website, by paying a lawyer to draft them or by adapting contracts you’ve signed yourself on other jobs, they will constantly evolve.
By way of example: our first “Standard Production Contract” when we started the company was two pages long and had six clauses. Our Standard Production Contract today is nine pages long, contains twenty-four standard clauses, and has another 3 optional clauses that we insert or remove for certain types of jobs.
Your contracts will constantly evolve and (hopefully) improve as you encounter new situations, get burned by unscrupulous clients, and discover new challenges you had never even considered. Every project is different and very few of them are easy, even if they are “simple.” If you approach each and every one as a learning experience and a chance to get better, you’ll endure less stress, earn a higher margin and deliver a better product each time out.
The most important thing is that in order to learn from your experiences, you’ve got to survive them. Contracts are your best chance to make sure you live to fight another day when you encounter the inevitable difficult clients out in the wild. They’re out there and they’re ready to make your life miserable, if you let them. Protect yourself with well-written contracts, expert legal counsel (when you can eventually afford it) and, most importantly, a good attitude and a willingness to learn and you’ll set yourself up for success.
Do you have questions about contracts for video production that you’d like to see answered? Have a legal war story you’d like to share? Hit me up in the comments below, I’d love to hear from you!
Stay tuned for part 2 of this three-parter: What Types Of Contracts Do You Need In Video Production.
As always, thanks for reading!