Entertainment lawyer Robert L. Seigel on the need to review contracts, what to expect from insurance companies, and the what the future will look like for film production
by Carole Dean
Robert L. Seigel, Esq. is a brilliant film entertainment lawyer. He has been helping and supporting filmmakers for over thirty years and is a donor for our Roy W. Dean Grant. His expertise has helped many filmmakers beginning with production through negotiating successful distribution contracts.
I interviewed Robert and asked him to share some of his wisdom on where the film industry is going with the new coronavirus restrictions.
Robert, many standard contracts have what is called “boiler plate.” Should all these contracts be reviewed and modified under the threat of the new Coronavirus situation?
We have a couple of issues. One issue is regarding productions that were pre-virus and then we have post virus.
To give you an example, I have a client with a production where we had four days left and eventually the two leads and their representatives just didn’t feel comfortable continuing. So, he had to stop production. And then we were reworking their contracts saying that they’ll pick up subject to professional availability and good faith negotiation. We thought that was a reasonable way of doing it.
Then, we got this bizarre letter from SAG-AFTRA that was stating, “For the first three weeks after the interruption, you pay people half their salaries and then you pay them the full salaries until it’s over.” We don’t know when it’s going to be over. If we keep paying them, we’ll pay them more money than the budget probably.
So, the producers contacted SAG-AFTRA and said, “That’s not going to work. We would continue working when everyone is comfortable, and when that is, we don’t know. Basically, we would try to schedule and just finish the shoot.”
That’s just the most reasonable way of doing it at the moment. Then SAG-AFTRA said, “We have to give some thought and we have to come back to you.” We are waiting to hear from them before we can finish revising the agreements. That’s a very concrete example.
Will insurance cover the cost of the shut down for the virus?
Going forward, I think all insurance companies are going to say that the Corona virus or things like that are not going to be covered in most production insurance policies.
You might think something like shutting a film down would be covered by many insurance policies for independent productions. Well, no, not really because most insurance, especially for independent productions, is bare bones. You have workman’s comp to protect people who work on the project for usual injuries. And then you have property damage and other basic types of insurance.
But something like coronavirus, which is not foreseeable, a lot of insurance companies are not going to pay off because it’ll be listed among a list of exclusions.
People say, “Oh, it’s business interruption.” Well an example of business interruption is when a theater on Broadway is shut down by New York because you’re not an essential business. That’s business interruption of production. And you know what, you can calculate that by the attendance on the average for a Broadway theater or even a movie theater. But, for a production, you don’t know how well financially the production is going to do.
It’s just too speculative in nature. That’s the issue.
Insurance companies will cover if you have a fire or a typhoon or, or some kind of “act of God” like lightning or an earthquake. Now you have basically a lot of arts organizations and other companies all trying to put claims in and they’re all getting bounced back because the insurance companies are saying, “If we pay everybody, we’re going to go bankrupt.” And we are saying, “All these years you’ve been issuing policies and we have been paying premiums and now something like this happens and you’re saying ’You’re not going to pay?’”
They’re actually going to court. The problem is most people really can’t afford to go up against insurance companies in order to get payout and the question is, what is the payout going to be? It could be a hundred thousand dollars; it could be millions.
I just read a story about The New York Metropolitan Opera. It didn’t have any provision like this because it was cost prohibitive. And that was the case with a lot of these small film productions. They weren’t going to cover all the possibilities. I remember after 9/11, there was anti-terrorist insurance, but later they said eventually it became something that was a risk of doing business.
What can we expect to see in the film industry going forward?
I think for productions, especially narratives, there will be a waiver of liability. You’re going to have fewer crowd scenes and only after a period of time when there is more testing or possibly a vaccine. And that’s a whole separate issue. There will be these waivers saying that there is density and there is the possibility of contracting something like the Corona virus and you assume the risk in order to take the job.
What producers, networks and studios are going to say is “If you don’t sign this, then you don’t work. Life is a risk.” There is something to be said for that. Basically, there will be some kind of waiver in all of these provisions. And I think in terms of casting a crew, at the moment there aren’t any really any laws. You have OSHA, Occupational Safety and Health Administration with basic guidelines for any industry, not just film.
I think what the studios and the networks are going to do is they’re conventionally going to put together a series of protocols in order to move forward, such as limiting the crew. Shooting as much in house, not on location, but using studio facilities and separating out into groups. people possibly will be quarantined for certain period before they can come onto sets. Maybe they will have their temperature taken and/or they are going to be giving rapid response tests. Now we have such an issue now with testing that this is something that is going to have to really get much, much better before it’s doable.
In Europe where film and theaters are starting to open, theaters are saying people in rehearsals must be at least three feet away, not even six feet. And if they’re close, they must wear a mask. How do you rehearse? How do you do shows with people wearing masks? I think a lot of people are going to basically in the case of symptoms of fever with live actors and directors, they may just say, “we may have to wait until there is more extensive testing or there’s a vaccine.” It will be January, maybe later than that before we may have all we need, now it is undetermined, it is unknown territory.
Tell us the meaning of force majeure in contracts.
The idea of force majeure is an interesting situation because sometimes it’s better to have a very broad force majeure and sometimes it is better to have a very narrow one. The wording for force measure is going to be redefined to talk about foreseeable and unforeseeable.
The idea with force majeure is that is that it’s an excuse for when or if you can’t perform so you won’t be held in breach or if someone else doesn’t perform so they won’t be held in breach. It’s a defense against claims of breach of contract. That’s what force majeure, is. It’s not necessarily a kind of a golden ticket in order to get money from an insurance company.
Here is an example.
If an actor doesn’t want to act, producers and insurers are going to say that’s not force majeure because they’re concerned about their health. When the state shuts down production because it’s not an essential business, then that’s something that could be considered either a business interruption or possibly a force majeure, because it’s something that’s out of producer’s control as the state is basically shutting you down.
That’s the argument whether the insurance company is going to agree to it given the fact that if the insurance company pays one policy it will have to pay a lot of claims, and they say we’re going to go bankrupt.
What will happen to the window for theatrical release?
The experience of going to a movie theater is unique and special, especially for certain types of films such as science fiction, blockbusters, the superhero films and comedies. However, the idea of opening a theater with 25% capacity limitations, is it worth it?
I mean, that’s a question restaurants need to deal with too. Is it worth opening up when you can only seat a limited amount of people? This is a question that goes beyond just the theaters. Companies such as AMC, for example, are talking about filing for bankruptcy. The AMC chains find during the week fewer people come the weekend and they don’t have a packed weekend audience, are the theaters going to survive?
But, if we take a step back, then realize that attendance was really going down. We have a whole generation of people that watch things just on phones, TVs and computers screens. Basically, this audience uses streaming services. When movie theaters do open, they must deal with reduced capacity. How well that will work? I don’t know.
The new releases are now available on Amazon for $19.95 to stream it at home. if you have a family of four that’s very reasonable, so perhaps the streamers will be the new initial release window and not the theaters for many films.
Going forward what should we expect?
Basically, filmmakers have got to really sit down with their attorneys before they start shooting to get clear on how to issue their contracts, how to write their contracts or change their contracts. They need to consider how to hire people and what conditions to put together on the set.
It’s really the set conditions. Certain items may not appear necessarily in a contract, but there will be a kind of a protocol that producers will use because of business concerns and liability.
And what’s been interesting is in the trades, like in Deadline and Indiewire, there have been a series of articles about reopening and they’ve had different producers giving their tentative plans for how they will move forward for productions. And some of them are really detailed. They started naming some of the elements in terms of cast and crew size and sanitizing and basically no more buffets, you need food that’s pre-wrapped, having doors that are without handles, ones that push open. I mean it’s getting really complicated.
The Florida film commission does have a very good website where they have a series of trade articles, from the trade publications concerning going back into production. There is a large amount of homework that’s involved.
There’s an article that has to do with how the Europeans are handling COVID-19. And Sweden says the maximum number of people allowed is 50, which is a good number because in the US it can’t be more than 10 or 20 on set depending on the state. The restrictions in the US are how to handle interior shots that deal with maintaining social distance.
I think you’re not going to see many projects with multiple performers on screen. You may see people shooting one actor at a time and then maybe editing them into one scene in a two shot or limiting the number of actors in the frame. How do you shoot a two shot with social distancing? When the testing has been hopefully perfected, maybe they’ll be a certain comfort level so they can have two shots or three actors in a scene. Again, this is speculation for the moment.
Mediamakers are using zoom for production meetings, so development is doable. Post-production is somewhat doable because it can be done remotely as well as distribution especially online. Production will be small crews with safety protocols, getting waivers of liability and things will take longer and cost more. You now need to buy sanitizers and packed lunches and your production schedule is going to be stretched out because you may have to do it in shifts to prevent crowd density.
Tell us about waivers of liability.
As I stated before, I believe there will be waivers of liability that would protect production if someone gets ill during the shoot so that they could not sue the production. That’s the idea of a waiver of liability. You’re taking a risk when you put people on the set. To minimize your risk, you need to put protocols in place.
People will say I’m taking a risk just getting on the set, so what are you doing to help me be more safe and secure? What protocols are you putting in place to minimize my risk? Without this the actors may not show up. Then the next question is, will the audience in the theaters show up? There’s a lot of unknown territory at this point. For mediamakers, it’s trying to spot the issues, create protocols and get waivers of liability.
So, until there is more information, this is a work in progress, which is to be continued.
Robert L. Seigel can be reached at email@example.com From the Heart Productions highly recommends him.