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Co-productions: Opportunity or legal minefield?

No one would claim that the international co-production model is perfect, but there’s no question it has a key role to play in both the film and TV industry for a number of reasons.
 

The most obvious is the opportunity to pool financial resources. Sometimes, co-pro is the only way a producer can raise the necessary budget to get something made. On other occasions, it’s a way to share risk and avoid financial over-exposure. In certain circumstances, it can also be a way of taking a good idea and making it great, by putting more money on the screen (improved cast, better VFX, more lavish use of locations).
 

Alongside these budgetary basics, co-pro can be a way of harnessing government incentives and subsidies in another country (usually via bilateral treaties). It can also provide access to great locations and cheaper crew/studios. Other benefits include the access to the co-pro partner’s market, the opportunity to transfer skills and knowledge, and cultural dialogue.
 

While most co-pro partners would admit that the impetus to collaborate is usually driven by financial imperatives, there are times when co-pro can lead to a creative win-win situation.

(12 Years a Slave)

The problem with co-pro however, is that there are downsides that can derail the production. The most obvious is the need to make creative compromises in order to please all the partners. Projects that go the co-pro route can sometimes be creatively diluted and lose their cultural uniqueness. There are also costs attached to co-pro, some of which may not be obvious at the outset. Aside from travel and accommodation costs, for example, unexpected problems with permitting, shortage of kit/key crew-members and unanticipated weather stoppages can quickly erase the benefits of the co-pro financial model.
 

It’s also important to keep in mind that, if things do go wrong, you’re dealing with more than one legal jurisdiction. In theory, it should be relatively straightforward securing a legal remedy within the European Union. But the further afield you go, the more likely there will be differences of interpretation over liability and obstacles in accessing fair legal process.
 

In order to minimise the risk of a legal headache, there are a number of basic things you can do. The first, and most obvious, is to work with a partner you trust. Many producers spend a long period of time in dialogue with potential partners before actually going as far as commencing a co-pro. Not only does this provide an insight into the way they work, it also helps illuminate the kind of pressures they are under within their own market.

(Tinker,Tailor, Soldier, Spy)

Once you do take the plunge, you need to be crystal clear about the nature of the co-production and the parties contracted to it. The law is all about clear definitions, and can be pretty unforgiving towards vague or ambiguous terminology.

  • Is the co-production operating under an official treaty or not?
  • Is it seeking to access tax incentives and, if so, what are the mechanisms being used to trigger them?
  • Is the co-pro partner the only company working outside your own enterprise, or have they sub-contracted to third parties? If so, what is the legal character of those relationships?
  • And what happens if the budget of the project rises because of actions taken by the partner over which you have no direct control?
     

Even at the early stages of preparation, the legalities of co-production can look pretty daunting, so it’s wise to have a lawyer on board as early as possible. Getting an experienced lawyer involved during contract negotiations could save a lot of grief (and expense) later. Lawyers (like insurance) can seem like an unnecessary expenditure until you need them. But they can preside over wide range of crucial matters – such as what currency/exchange rate the co-pro is operating under, how copyright and insurance laws differ across jurisdictions, auditing responsibilities, and what constitutes legally-binding communication between two parties. This latter point is especially important in the era of email communication.
 

Poor communication is one of the biggest contributors to failed co-pros and it’s important to be meticulous about what you mean and whether your partner understands you. For English-speakers, it is dangerous to assume non-English-speakers have understood everything, even if you speak and write clearly and they seem fluent. Polite, frequent communiqués can ensure that there isn’t a gulf in expectations between partners.

(Fortitude)

Lawyers will typically advise producers to draw up detailed documents in advance that spell out the allocation of responsibilities under the co-pro and the plan in terms of rights allocations and recoupment. The latter is particularly important these days because of the complexity of rights windowing. This kind of pre-contractual effort (which may take the form of a memorandum of understanding) can help clarify the situation in the event of a later dispute. In a similar vein, it also makes sense to keep good notes as the production progresses.
 

All of this can seem onerous, but it has to be seen in the context of what may occur if something goes wrong. A failure on the part of a co-production partner can have a knock-on effect on a whole host of pre-existing producer commitments.
 

A growing number of producers have experience of the co-pro model. The European Union, for example, has supported around 1500 co-productions since the inception of its MEDIA (now Creative Europe) programme in 1988. Any of the programme’s local offices can provide guidance on how to put together a co-production.
 

There have been a growing number of co-pro successes in both film and TV. 12 Years A Slave, Mr Turner and Tinker Tailor Soldier Spy have been both commercial and creative hits, belying the notion that co-productions end up as unsatisfactory compromises. The more co-pros of this calibre that come through, the better the templates and processes to ensure no one falls foul of the law.








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