Our film and television profit participation forensic reviews have a life of their own beyond the issuance of our report. Therefore, and based on popular demand, we wanted to share further information on what typically occurs beyond that point.
Let’s imagine we have completed our review, and you have our final report in your hands. Now what?
Submitting our Report:
Based on contractual provision requirements, a client’s representative (most likely the attorney but at times, the agent or business manager) is typically required to submit our final report. Therefore, unless specifically arranged between the studio and the client representative(s), we will not send our final report to the studio directly. Ultimately, the client representative has to submit our report as an objection to the participation statements under review.
Getting Ready for the Initial Settlement Meeting:
Once the studio receives our report, it may take some time for the studio to review and formulate a response to each of our claims. Once the studio is ready, a studio representative may reach out to the client representative to schedule the initial settlement call. Such meeting (most likely a teleconference) is intended to discuss the claims included in our report. We are generally included at this meeting since our team can clarify certain items or provide further information on each of the claims, as needed, and as directed by the client representative. As the studio coordinates the initial settlement meeting with the client representative, we may not be aware of the meeting. Also, for confidentiality reasons, it is possible that the studio and the client representative may mutually agree to exclude us from certain discussions. If the client representative wishes us to join the initial settlement meeting, we should be contacted as soon as feasibly possible, so we can make the necessary arrangements. At a minimum, the client representative may consider scheduling a preliminary call with us to discuss the best strategy for the meeting with the studio.
The challenge with the initial settlement meeting is to ensure that the client representative stays on top of the coordination of such meeting and not allow for too long of a period to pass. The longer the wait, the harder it could be for everyone to keep the documentation and/or remember the substance of each claim. Also, there may be tolling requirements to monitor while waiting for the initial settlement meeting to take place. Remember that once our final report is transmitted from us to the client representative, we no longer have control over the process of scheduling such a meeting.
Initial Settlement Meeting:
The initial settlement meeting generally takes about an hour. The primary purpose of the initial settlement meeting is mostly to determine what claims the studio:
- Outright agrees to
- Outright refutes
- Wants additional information and/or documentation for
- Initially declines, but are in a “grey-area” and the client representatives strongly believe in
The claims are rarely settled during the initial meeting, resulting in further calls and meetings between the studio and the client representative. As such, and especially in those instances in which the studio indicates it will continue to research and/or search for additional documentation. It is important to remember that the client representative should continue to follow up with the studio so it is not forgotten and the settlement process continues timely.
Beyond the Initial Settlement Meeting:
At this point, the client representative and the studio continue settlement discussions and enter into a written settlement agreement. Beyond the Initial Settlement Meeting, we are not involved unless the client representative has any questions or are directed by you to perform additional procedures resulting from the discussion with the studios. Our involvement is rare at this stage since the studio may prefer to resolve the claims in a confidential manner.
We hope this additional information will add value and provide you with the necessary tools for the best possible outcome.
About Michael Sippel (Senior Manager, GHJ)
Michael is a senior manager within our Participations Audit Practice and specializes in contract compliance and forensics. Prior to joining the firm, he was a staff accountant at Hagen Streiff Newton & Oshiro, working within their Insurance and Forensic Litigation accounting practice. He earned his bachelor’s degree from the University of California, Berkeley in Business and Economics.
About Ilan Haimoff (Partner, GHJ)
Ilan leads the GHJ Entertainment and Media Practice, and his specialty includes profit participation audits on behalf of talent, investors and co-producers at both the major and mini studios. He currently oversees participation audits at various studios, including 20th Century Fox, Sony and Starz, as well as other prominent studios. He is also a co-author of GHJ 2015 whitepaper, New Media Trends: Consolidating to Meet Consumer Demands.