Some studios separate their Business Affairs (BA) from Legal. Even when such departments are combined, the functions are unique.
BA negotiates the material details, most often opposite talent agents, while Legal drafts and negotiates the contractual language. In the past, agreements were not always reduced to written form until Legal drafted a contract.
However, a plethora of litigation and many judicial reprimands led to a shift in Hollywood’s ‘handshake’ culture.
After BA circulates a memo summarizing the principal terms, Legal generally enters to address issues not typically resolved before contracting.
BA’s deal memo is relatively brief — as short as a paragraph to a page, while the resulting contract can exceed 30-40 pages.
Legal will draft provisions relating to reps and warranties, indemnities, insurance, events of default (including force majeure), and supply a detailed net profits definition, if applicable.
Net profits (and any modifications) can be a major point of contention.
BA negotiates the percentage of profits granted to the talent, then attorneys (on both sides) often spend considerable time negotiating the definition’s specifics.
Legal also handles clearances — the production’s right to use artwork, music, or other material.