The large majority of lawsuits that involve individuals in the entertainment industry revolve around lost wages or fees.
The entertainment industry is nothing like the traditional job market. A lawyer, banker, or accountant will have tax statements showing their earning capacity to date and can expect salary increases as they steadily progress up the ladder.
It is critical to look at the earnings history and work consistency of the plaintiff, as well as any awards and/or accolades that may boost future earnings. Also, the comparable earning capacities of the individual’s peers is a crucial point; it is important to compare apples to apples in terms of actual work history and money earned.
To illustrate the difference between a claim that seemed highly speculative versus one that was more grounded in reality, let’s look at two actual cases;
Case 1: Feature Film Producer.
The estate sought damages of $90M. The producer produced a very successful film franchise, and had earned $2M-$5M per year over a four year period prior to his death. Although he had no other discernible credits, the estate was claiming that he would sustain those earnings over the course of the next 20 years. This claim was highly speculative; he was not the sole producer. His partners had significant credits before and after the franchise, had financed the film with their own money and had set precedents that allowed them to negotiate a very high revenue split which he, by association, was allowed to participate in.
Now you must also factor in that he had no previous producing credits, the two films he subsequently produced flopped, he had no projects in development indicating future earnings and he had won no awards or nominations.
Plaintiffs mounted their $90M claim based on the concept that because his name was associated with this large franchise, any future projects would carry the glow of the prior hit film. They would surely be produced and achieve equal success. Some statistics that refute that concept are;
- 10 of the top independent production companies had an average 10-1 development to production ratio. Plaintiff had no projects in development, even 4 years after the franchise was a box office success, and thus no prospects to produce a film in the near future, let alone a successful one that would garner him $4M a year.
- One hit wonders: Out of 20 producers with at least one film considered an unqualified hit, (a 10 -1 revenue to cost ratio or better) only 2 had a second or third film that garnered box office success. Even producers whose names were associated with phenomenally successful films, (i.e. “THERE’S SOMETHING ABOUT MARY”,) did not produce a second successful film.
This case settled for a much lower amount than was originally demanded. The settlement was in line with the real projected revenues derived from the existing franchise rather than from speculation of what could have occurred.
Case 2: Photojournalist/Documentary Filmmaker
In the case of the photojournalist/documentary filmmaker, Plaintiffs were seeking damages in the mid seven figures for future earnings, a lower benchmark with more credible criteria to work from.
This was a 4-time Emmy winning photojournalist that won several other awards from peers and authoritative industry bodies. He had consistent track record of work history and of being hired for top projects in his field. His first project as a Director/Producer was a high profile project consistent with successful, award winning filmmakers and he was already in discussions with interested buyers. Also, he had been given accolades by his employer and was viewed as an asset to the team as well as someone with an upwardly mobile career. It was clear that had he continued in his field, he would have been quite successful.
Furthermore, the world of documentary film differs from that of feature film in that the costs of production are much lower and the director/producer has more control over the marketing and distribution of the film because the recoupment costs are smaller.
The attorneys and economist on this case developed a moderate range of earning potential and were conservative in their overall damage claim. Moreover relevant work history, awards and industry documentation supported the claim. Thus overall, the claim was within the realm of reasonable certainty and did not show signs of speculative excess on every front.
The case went to trial and the Plaintiff won the wrongful death suit. Although the jury did not award the family the full requested amount, the settlement was well within the mid range of the earnings pro forma and they walked away feeling well served by justice.
Clearly you need to look at the individual merits of each case. Because the entertainment industry can provide such high paydays, it is enticing for a person with even a little bit of experience or credibility to assume that they will be “the next big thing”. It’s important to do extensive due diligence and work with professionals in the industry who have significant experience in the related field to help you navigate the wild and wooly world of film.