Get a damn good lawyer: Revisited

Remember when I wrote a Business of Screenwriting column called Get a damn good lawyer? Here’s more evidence why you should heed that advice. From THR:

The creators of the hit 1980s sitcom Head of the Class have suedCAA claiming the agency has reaped huge “package fees” from the show but failed to disclose that its own profits would prevent its clients from sharing in the success.

Michael Elias and Richard Eustis created and executive produced the Howard Hesseman high school comedy, which was produced by Warner Bros. and ran on ABC from 1986–91. The show has generated $200 million in revenues, according to a complaint filed today in Los Angeles Superior Court and obtained by The Hollywood Reporter.

But while Elias and Eustis claim they were entitled to 50% of “net profits” from the series, they have received zero profit participation while CAA, which packaged Class, allegedly has received $9 million. In addition to receiving a package fee on the series (a common arrangement where agencies that represent several pieces of talent on a show take a percentage of license fees from the studio rather than a traditional commission), CAA allegedly negotiated “an oral ‘side deal’ with WB that allowed CAA to receive 10% of contingent compensation on a more favorable basis than plaintiffs.”

That means CAA continues to receive payouts from the show (with no distribution fees deducted) while Elias and Eustis say they have not been paid any net profits. Worse, CAA allegedly failed to disclose the nature of the package fee, which has been treated as a distribution cost by WB. The complaint says this “imputed commission” has allowed the agency to profit on the backs of the clients it was hired to represent.

I covered the subject of the utter valuelessness of net profits in another TBOS column here. But wait, there’s more goodies from the article:

Elias and Eustis claim their lawyers recently asked CAA for a copy of its agreement with WB but the agency said it was oral. The duo claim they first learned about the agency’s arrangement with WB when CAA accidentally sent them its own participation statements from Class.

Two things. First it may shock you to learn that Hollywood operates on oral deals all the time. Deal memos and contracts can take weeks, even months to finalize. So people move ahead on the agreement as negotiated by agents, managers, lawyers and business affairs. The fact that CAA claims the original “Head of the Class” deal was “oral” in nature does not surprise me. For example, I remember hearing years ago that Alan Alda never once had a written contract, all his deals were verbal. It’s probably safe to say those days are pretty much gone.

Second that poor soul who accidentally sent CAA’s participation statement to the writers? I wonder what remote part of the world s/he is located in nowadays.

For more of the article, go here.

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