Getting it in Writing Always a Safe Bet

Prevent disputes and misunderstandings before they disrupt production.

Producing and developing a motion picture is the sort of work that's ideally suited to a team effort. By pooling skills, talents and resources, a team may be able to produce a film that an individual cannot. However, the advantages of a team can risk being outweighed by the obstacles inherent in working with individuals that each have unique artistic visions. For this reason we always recommend that production team members set out their understanding in a written agreement.
Most often, producers enter into a co-production agreement when they start developing a film. In doing so, they can create a legal relationship between themselves without incorporating a company, which can wait until funding commitments are received. While every co-production agreement is unique, there are a few points that should always be present.

The first relates to the parties' responsibilities during development. The financial contributions of each member and the allocation of overhead expenses should be set out, along with the responsibility for making funding applications, the name in which the applications will be made, and the signing authorities for the bank account. Second, no co-production agreement is complete if it doesn't identify the financial, budgetary, creative and management decision-makers. Either one person should have sole authority on certain matters, or there should be a list of who gets to vote on these matters. If there is any potential for deadlock, a tiebreaker should be identified. While a fully democratic process is often desired, you should be careful not to have so many decision-makers that the process becomes too complicated and bogged down with decision-making votes.

In every team there is the potential for disagreement and conflict. For this reason, a co-production agreement should set out procedures by which disagreements can be resolved. Mediation and arbitration clauses provide some conflict resolution procedures, and it may be wise to further set out the means by which a member of the team can be bought out if a conflict cannot be resolved.

Of course, the development team will have the common goal of seeing the project produced, so the co-production agreement should state how much financing must be raised in order to proceed to production. Most likely a production company will be incorporated to produce the film, and the co-production agreement will set out the way in which the voting shares of that company are allocated.

Each member of the team will want to ensure that their role in the production of the film, whether as writer, director, producer or otherwise, is clearly set forth in the co-production agreement, along with their fees for such roles. As in the development stage, decision-making authorities during production of the film must be clearly spelled out to avoid conflicts on any of those matters. And of course the same applies to post-completion matters; the agreement should set out who is responsible for what once the film is finished.

Unfortunately, not every project will proceed to production. In anticipation of such cases, a co-production agreement should make it clear at what point a project will be abandoned and the co-production team dissolved. The agreement should also declare who will get ownership of any underlying intellectual property in the project, and any new material created during development. Parties who aren't entitled to ownership rights may want to ensure that they'll be reimbursed for their expenses if the film is ever produced without their involvement.

As you can see, a comprehensive co-production agreement improves the odds of a smooth development and production process. By setting out your team members' rights and obligations at the beginning, you can prevent many types of disputes and misunderstandings before they have a chance to disrupt the production your film.
- Kyle Fogden