When Hollywood Meets CLM

By Linda Frembes posted 07-19-2023 13:24

You may have heard that Hollywood is on strike – two unions representing writers and actors (Writer’s Guild of America (WGA) and Screen Actors Guild – American Federation of Television and Radio Artists (SAG-AFSTRA), respectively) are currently walking the picket lines. Many of the news stories surrounding the unified strike revolves around production shutdowns and the impact on Hollywood-adjacent professions like craft services, set drivers, agents, and the like. So, imagine my surprise when a familiar phrase caught my eye when reading articles about the strike: force majeure. 👀

What is force majeure?

A force majeure clause is common in commercial contracts and is a term that is very familiar to the legal industry. A force majeure refers to unforeseeable circumstances that prevent a person or company from fulfilling a contract. There are three types of force majeure: an act of God, an act of parliament, or an act of man. 
“As one can imagine the strike in Hollywood is causing production delays, as well as economic issues for studios, who rely upon these professionals to create productions that we all consume daily. Though strikes are part and parcel of interacting with unions, they’re not all that common. The last time these unions went on strike was in 1980 when cable television technology disrupted the industry,” says @Prashant Dubey, Chief Strategy Officer at Agiloft.

Dubey continues, “A strike is uncommon enough that contracts between studios and networks, streaming services, and other distribution channels likely have provisions in them, called force majeure. These provisions provide parties an “out” in the event, that unpredictable or unplanned situations like strikes occur.”

Why Hollywood (and everyone else) needs CLM

While many in the legal community are very familiar with force majeure clauses, non-legal professionals like Hollywood actors and writers are quickly learning that this two-word phrase carries a lot of weight and potential impact. Vulture reports that the Association of Talent Agents sent its members a 22-page summary of the unions’ force majeure provisions in anticipation of it being used to suspend or terminate production deals.
The WGA strike, which is entering its second month, is on the doorstep of triggering 60-day (or 90-day if the strike continues) force majeure clauses that put lucrative development deals in jeopardy. SAG-AFSTRA faces a similar looming timeline with their contracts and clauses as their strike enters the second week.
“In this situation, contracts likely also have provisions around remedies to alleviate some of the burden upon downstream recipients of the outputs of studios. How can these contracts be proactively managed such that when a strike does occur, there isn’t a huge scramble to try to determine remedies and remediation?” adds Dubey. “One of the most foundational steps to avoid a mad scramble is to have a single source of truth, contract repository housed in a Contract Lifecycle Management (CLM) software platform, with all the relevant provisions and metadata, extracted and attributed to the contracts.”
Dubey explains, “A CLM platform allows all contracts to be searched based on force majeure provisions, or relationships, or dates by when obligations need to be fulfilled. In addition to a repository an organization may have a library of provisions that represent precedent agreements that have been made in similar situations. These provisions can be drawn upon to determine how to negotiate with counter parties, to minimize the impact of the disruption. CLM platforms should be able to fluidly allow an organization to create and navigate these libraries.”

What’s Next

The WGA and SAG-AFSTRA unions continue to walk the picket lines, with major sticking points that include the use of AI, residual payments, and studio profits. In the meantime, Hollywood studios and production companies are parsing the details of the contracts to understand the impact of the strike as it approaches force majeure clause deadlines.
“Since the pace of technology change is only going to accelerate, perhaps this can be an opportunity for studios and their actors and crew and downstream customers to all contemplate how they can collaboratively address these changes, so they don’t result in disruptive events such as strikes. This is predicated on human behavior and a desire to avoid conflict,” concludes Dubey. “Sadly, no CLM system can solve fundamentally human challenges….or can it?”

Community members, what are your thoughts about this topic? Discuss in the community!