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Screenplay Scam: The Risk of Upfront Payments to Producers, Agents, and Managers

Ethics Before Profits
Law Offices of Ernest Goodman > Entertainment Law  > Screenplay Scam: The Risk of Upfront Payments to Producers, Agents, and Managers

Screenplay Scam: The Risk of Upfront Payments to Producers, Agents, and Managers

The American Film Market 2023 has wrapped up. We rented a booth at this event, where I met numerous filmmakers. Many are looking for an entertainment lawyer, and someone is needed to handle contract drafting. Additionally, many need assistance with immigration matters, and I am happy to help.

Today, we will discuss contracts for management services that border on being scams.

Some management contracts are borderline scam

In my recent interactions with new filmmakers, I’ve observed a concerning trend involving management contracts. These filmmakers approach me to review contracts they’ve been offered, which often require substantial upfront payments — typically $2,000 or more.

Novice filmmakers have been approached by individuals, usually with some experience in film, who offer these services. Let’s refer to them as “individuals.”

These contracts, supposedly for managerial services, promise to find financiers and sell screenplays, especially at prestigious venues like the American Film Market (AFM) or the Cannes Film Festival. However, these promises often verge on being scams.

Here’s why these offers should be approached with caution:

  1. Upfront Payment Demands: The requirement for significant upfront payments is a major red flag. Genuine industry professionals typically do not charge aspiring filmmakers upfront to sell scripts or secure financing.
  2. Unrealistic Promises: The promise of selling a screenplay at prominent festivals or markets like AFM or Cannes, especially for new filmmakers, is highly suspect. The process of selling a script at such events is competitive and complex, and success is never guaranteed.
  3. Misleading Credentials: Some individuals offering these services might have IMDb records, but this does not necessarily validate their ability to deliver on their promises. IMDb listings do not equate to success in navigating the film market or festival circuit.
  4. Exploitative Tactics: The analogy of “selling snow in Alaska” aptly describes these offers — they are selling something that seems abundant or easily attainable. They are asking for money for something you can do yourself; you can attend all these events and offer your screenplay. In reality, securing screenplay sales or financing is a challenging endeavor, and such services often exploit the hopes of new filmmakers.
  5. Lack of Regulation in Managerial Services: The absence of licensing requirements for managerial services in many states means that virtually anyone can offer these services, increasing the risk of scams.
  6. Industry Norms: In the film industry, agents, managers, and producers typically earn their fees after securing a deal or sale, not before. Therefore, asking for money upfront to cover administrative or promotional costs is not a standard practice among reputable professionals.
  7. Power Dynamics Post-Script Approval: Legitimate agents or producers, upon finding a script they genuinely value, would not risk alienating the writer by demanding upfront fees. This shift in dynamics is crucial; a valued script gives the writer a position of power.

Are you considering paying a person who is former filmmaker to act as your manager?

Typically, managers are professionals working for management companies, distinct from agents. While it is legal for managers to charge a flat fee for their services, caution is advised.

Typically, managers don’t have IMDb records as filmmakers. Managerial services are a separate type of business.

If a former filmmaker offers management services, it is always a red flag.

Upon reviewing their contracts, I often find that they could be interpreted as both agency and management contracts. In most states, artist agents must have licenses.

These contracts sometimes include not only a flat fee, which is legal for management services, but also a percentage from the sales of a screenplay or movie production, typically associated with agency contracts. Such contracts can be problematic because these individuals often don’t possess the necessary agency licenses, and they blend elements that should remain separate.

My experiences, including a situation where a production company or person attempted to charge for improving a script, demonstrate that these offers often aim to exploit inexperience.

If you’re a filmmaker who has encountered similar offers or are considering a management contract, I urge you to exercise caution. Always consult with experienced professionals and perform thorough due diligence before making any commitments. If you have stories to share or have encountered tactics used by scammers, feel free to contribute in the comments section. Staying informed and vigilant is crucial in navigating the film industry’s complexities.

These individuals are not legitimate agents or managers, even though their contracts may appear to be legitimate management or agency agreements, with legal flat fees and sales percentages.

These individuals are opportunists preying on novice filmmakers, film school graduates, and others trying to break into the industry. Despite making grand promises, they often fail to deliver due to a lack of genuine industry connections.

What’s the difference between an agent and a manager?

When deciding between a manager and an agent, it’s important to understand their key differences, which include aspects like licensing, union status, their legal capacity to act on your behalf, client volume, and commission rates.

Licensing and Legal Rights: An agent typically works for a state-licensed talent agency, which may also be franchised by a union. This licensing grants them the legal authority to seek employment opportunities for their clients and negotiate contracts on their behalf. Managers, conversely, are not bound to be part of a management company and can operate independently. Their primary role is to provide guidance rather than to solicit work.

Audition Opportunities: Legally, only agents can arrange auditions for clients, while managers are not authorized to do so. However, in practice, proactive managers often find ways to connect their clients with audition opportunities in an effort to maintain client satisfaction.

Contractual Assistance: Agents are equipped to assist with contracts, but it is legally impermissible for managers to engage directly in contract work. Despite this, managers often play a crucial role in negotiations and other aspects of the contractual process.

Client Roster Size: The client list of an average talent agent can range from 125 to 150 clients, whereas a manager typically works with a more select group, often fewer than 20 actors. This smaller client base theoretically allows managers to offer more personalized attention, although this is not universally the case.

Commission Structures: Regarding financials, union guidelines restrict agents to a maximum of 10% commission on their client’s earnings. Managers, however, are not subject to this cap. Many managers charge a 10% commission, but it’s not uncommon for them to ask for 15%, or to use a sliding scale based on earnings. For example, they might take a 15% commission on earnings up to $50,000 within a year, reducing to 10% for earnings exceeding that amount. Managers typically commission all forms of earnings in the entertainment industry, including theatrical, commercial, and voiceover work.

Under the laws of both California and New York, talent agents must have a license, while talent managers are not required to have licenses in these states.

Under New York law, the specific licensing requirements for artist managers differ from those for talent agents and agencies. While talent agents and agencies are required to be licensed by the Department of Consumer Affairs, the same stringent licensing requirements do not typically apply to artist managers.

Artist managers often work in a more advisory, strategic, and career-development capacity, as opposed to talent agents who primarily focus on securing employment and negotiating contracts for their clients. Because of these different roles, artist managers are not usually subject to the same licensing regulations as talent agents.

However, artist managers are still bound by general business laws and regulations in New York. They must conduct their business in a lawful manner, adhering to contracts and avoiding deceptive practices. It’s also important to note that if an artist manager begins performing the functions of a talent agent, such as actively seeking and negotiating employment opportunities for their clients, they may then be subject to the licensing requirements that apply to talent agents.

It’s always advisable for artist managers and those seeking their services to be aware of the specific legal requirements and industry standards in their jurisdiction to ensure compliance and protection for all parties involved.

Aforementioned individuals often offer both types of services in one contract. Because these individuals lack a license, the parts of their contracts where they offer agent services are void or voidable. In California, you can file a complaint with the Labor Commissioner to potentially get your money back.

The Bottom Line

If you are contemplating engaging with a person, possibly a former filmmaker, to act as your manager, exercise caution. Although it is legal for managers to charge a flat fee, some contracts presented may blur the lines between agency and management roles, potentially leading to legal complications, especially since many of these individuals do not possess necessary agency licenses.

From my personal experience and professional observations, it’s clear that such offers are typically designed to take advantage of the inexperience of aspiring filmmakers.

I advise filmmakers who have encountered similar offers or are considering entering into a management contract to seek advice from experienced professionals and perform thorough due diligence. Your experiences and insights on encountering such tactics are valuable – please feel free to share them. Staying informed and vigilant is essential in navigating the complexities of the film industry and avoiding opportunists who prey on newcomers, despite making lofty promises they often can’t fulfill.




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