In this video, Entertainment Lawyer Gordon Firemark answers a question about life rights option deals.
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In this Asked & Answered Video, I'll be explaining how life rights option deals work, and sharing some things to watch out for.
Hi, I'm Entertainment Lawyer Gordon Firemark, and this is Asked & Answered, where I answer common Entertainment Law Questions to help industry professionals realize their dreams.
RC wrote in with this Question:
” I'm going to be optioning the life rights to an amazing true story from the man who lived it. I'm going to write the script and come on board as a producer. Is there anything I should be aware of regarding this possible sticky situation? It will be my first foray into this type of agreement. Any advice/warnings?”
Well, first off, taking an option on life rights is a relatively straightforward matter. It's actually the best way to protect your position as either a writer or a producer, or both. By owning the option, you are in position to strike the best deal possible for yourself.
First, let's talk quickly about how option contracts work.
When you buy an option, whether it's to a book, screenplay, a stage musical, or life rights, you essentially give the rights holder a nonrefundable deposit, the so-called “option price”, in exchange for a promise of exclusivity. For a specified period of time, “the option period”, You will hold the exclusive right to EXERCISE The option and acquire the full package of rights to do whatever it is you're bargaining for; in this case,writing and producing a screenplay and film about this person's life story. During
the Option period, the right holder cannot sell these rights to anyone else.
Usually, you exercise your option by paying money, the “Purchase Price” before the option expires.
But if you don't exercise the option within the allotted time frame, they revert to the owner, and he or she is free to sell them to someone else.
So, for starters, it's important to negotiate the key terms of the deal carefully. These key terms are:
1. Option Period – Make sure you negotiate for enough time to get the screenplay done, the project packaged, and set up with a studio, or if you're going the independent route, financed.
2. Option Price – It's not uncommon these days to see free or $1 options. But I'm not a fan of these deals. I actually give this same advice to my producer clients AND my writer clients. It doesn't matter which side of a deal I'm on, I think producers should put their money on the line. Nothing motivates you more than having some “skin in the game”, and it'll keep you on track, moving the project forward. In fact, scientific research bears this out. People place much more value on things they've paid for. So, come up with some cash for an option payment that makes sense. Every deal, every producer is different, of course, but some money really ought to change hands.
3. Purchase Price / Compensation – This can involve a cash payment, some deferred payments, bonuses and back-end compensation.
4. Rights Granted. Make sure you get all of the rights you'll need. Life rights deals are interesting, since it's not always strictly necessary to even have a deal with a person you're telling a true story about. But what you ARE buying is this person's cooperation, involvement, participation, and promise not to sue. Consult a lawyer on this one. Make sure you've got a comprehensive release in the document.
5. Option Extensions. (it's not at all uncommon to see several additional years' extensions for modest payments that usually aren't applied toward the purchase price). Again, this is about putting your money where your mouth is.
So, are there other pitfalls to watch out for?
Well, if you're both the producer and the writer, take care to ensure that you're remaining objective about the project. Get some third party input from time-to-time, so you don't spend the next 2 or 3 years swimming against the current. I've seen producers get too attached to their own material, and wind up spending too much money to make a product that could have been fixed before the cameras ever started rolling.
Finally, a word about negotiating with this rights holder. It will almost certainly behoove you to have a representative handle these negotiations. Since you're going to be writing the piece, you want to ensure you've got a rapport with the subject. If you play hardball in the negotiations, you could undermine this, but if you don't you could undermine the whole project. This is where a lawyer or agent's objectivity, experience and skill at negotiations can be very important.
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