Entertainment & Sports
Jun. 25, 2002
Know When to Hold
Lawyers must maintain momentum until they have achieved the desired results, which requires that the lawyers recognize when they have achieved the best result possible. By Bradley Small
A great deal of preparation, hard work and marketing goes into making a motion picture, much less "American Beauty," which won "Best Picture" in 2000. The picture, however, could have been drastically altered but for a correct assessment of timing at the beginning. Timing and momentum are keys to closing any transaction, deal or agreement. And they can go awry due to the inability of a person to move forward, a failure to recognize goals and understand when these goals are achieved, and, more important, recognize the potential impact of foreseeable and unforeseeable outside forces.
I represent one of the lead actors in "American Beauty," and in 1998 during the preproduction period of the picture, I negotiated the actor deal. On several occasions, my client and the studio were on the cusp of "moving on." In one defining point, the studio wanted a two-week extension on closing the deal with my client. The client needed to choose whether to give the studio an additional two weeks. Our client's team of representatives were split.
We finally decided to allow the extension, which proved the right thing to do. Dreamworks called with the good news one week later.
Timing made all the difference in giving our client a chance to secure a place in one of the entertainment industry's few historic moments.
Certain attorneys are known as "closers," and certain lawyers are known as not being able to even close a door. Nonclosing lawyers let papers gather dust on their desks, continually trade calls with the other side or repeat the same comments in their markups of agreements without ever moving closer to a signature. Nonclosers fail to understand the importance of timing in the dealmaking process, and the project or deal loses its momentum before it has a chance to move to the next step.
Lawyers must maintain momentum until they have achieved the desired results, which requires that the lawyers recognize when they have achieved the best result possible. For example, my wife's father knows the hotel industry and taught my wife that you should never accept the first room offered when checking into a hotel. Whenever we travel, my wife goes through the same ritual with each hotel we visit. She does, however, leave it to me to decide when the room is acceptable. Otherwise, I believe that we would spend the night in the hotel lobby parked at the reception desk.
In order to ascertain whether the desired results are achieved, the person must know the goals and stick to them. If you deviate from your objective, you most likely will never achieve your desired results, as they will keep changing.
For instance, I encountered a situation of changing goals with a professional wrestler. He makes $300,000 per year. His goal was to make $1 million per year with a guaranteed three-year contract. He then, however, talked to other wrestlers about their salaries (which many of them grossly exaggerate). That is where the problem started. His goals became sidetracked.
I successfully (I thought) negotiated a three-year guaranteed contract with a salary in excess of $1 million, but he now wanted to make more than certain other wrestlers. The deal was close to falling apart until a new chief executive officer tightened the organization's belt, and the wrestler was given an ultimatum. He settled on the three-year guaranteed contract in excess of $1 million per year.
We discussed that keeping up with the wrestling "Joneses" was not more important than accepting a good deal and the one he wanted in the first place. Whether it's athletes, actors or other people in our society, goals are often sidetracked by the desire to receive more favorable treatment than that accorded others. Timing, however, means recognizing when goals are achieved and when the momentum is beginning to wane.
Foreseeable and unforeseeable acts can also kill the deal's momentum or the deal itself. I recently represented an actor in a television series, who, along with the rest of the cast, was not satisfied with his episodic fee, especially since it was a Top-20 show in its fourth season of production. The cast decided to collectively agree to walk off the show and refuse to come back.
The cast missed a few episodes but finally the cast representatives and the studio began talking. Neither side would budge. The attorneys for the cast met with the cast one night when the studio made a proposal. If it were not settled that night, the show would be stopped for the entire season and probably permanently.
Several of the attorneys for the cast, including myself, recommended that the cast accept the studio's proposal, as they could always revisit the matter if the series continued its successful run. The news media was already attacking the cast for asking for higher compensation given the economy. We settled the matter.
A couple of weeks later, the Sept. 11 tragedy occurred. Were the attorneys not tuned in to the timing of the situation and ascertained the momentum in the public and legal environment, the cast would not have been able to settle the matter and the show would have been canceled for good.
No one could have predicted the Sept. 11 terrorist attacks, but this example proves that there is often only a short window of time to close a deal or settle a dispute before a foreseeable result, such as the matter going to trial, or an unforeseeable event, such as Sept. 11, occurs. If you fail to correctly ascertain the timing and momentum of the transaction, you increase the likelihood of a foreseeable or unforeseeable event knocking the deal off track.
Also, when one is close to closing a deal or negotiation, there is a risk that the person with whom you are negotiating or the person on the other side who is the most desirous of making the deal may not be there tomorrow. Last year, I negotiated an agreement for a morning television program host. The program director really wanted our client on his show. Both sides agreed to the key terms and moved quickly to turn the deal over to their attorneys.
In papering the deal, however, our client began to raise issues that could have been handled at a later date. Soon, however, our client realized that his chief supporter was the program director and, were something to happen to him, the unsigned multiyear deal would be off. You cannot predict these outside forces, and it is too easy to sit in the ivory tower and fail to close the deal when the momentum is still strong.
I once represented a producer who held off on closing a deal over $5,000 per episode. The producer had an unproduced quote, which means that he had negotiated a higher episodic fee for a show that was never produced. After months of negotiations, the network walked away, and the show was never made. To this day, the producer with the higher quote has never made a television series. Often these types of producers hold off for so long that the momentum dies, and the network abandons the project. Advising these producers to recognize the momentum of the deal is key. Or, better yet, don't represent these types of producers.
A final disclaimer, however: Timing and momentum don't always imply closing a deal quickly or not closing at all. Timing sometimes requires patience, a conscious decision to slow the deal-making process down.
Bradley Small is a partner in the entertainment department of Manatt Phelps & Phillips, Los Angeles.
Contributing Writer
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