Producers are exploring ways to protect themselves against the possibility of another industry-wide shutdown caused by coronavirus, with experts predicting changes to the way contracts are drawn up in future.
While the industry is still coming to terms with the immediate effects of enforced theatre closures – now in their eighth week – the question of whether lockdown could return in future is causing a “paralysing uncertainty”, which some of the country’s leading specialist lawyers anticipate could impact producers’ agreements with venues, performers and creative teams.
Future contracts could include arrangements allowing producers to delay up-front payments, as well as inserting wider-ranging force majeure clauses to cover disruption to rehearsals or future performances.
Force majeure alters or removes parties’ liability when circumstances beyond their control mean they cannot fulfil agreed obligations. While commonplace in theatre, these clauses have rarely attracted much attention, but could face significant changes in future, according to entertainment lawyer Neil Adleman.
Adleman, of Harbottle and Lewis, said force majeure provisions were likely to come under scrutiny as producers look to minimise their financial responsibilities if rehearsals or performances are stopped again, particularly as it is now “impossible” to insure against Covid-19. He said in some instances, these clauses “haven’t helped people out in the current Covid-19 scenario as they hoped they would”.
“Many agreements only have force majeure provisions that come into play if performances are cancelled, and producers are thinking about a situation where they’re still in rehearsals but know that performances will be cancelled in future... so if it’s reasonable to anticipate the production won’t go ahead, they can cut things off rather than being forced to incur costs throughout the rehearsal period,” Adleman said.
“Of course, the situation varies from producer to producer. A number I’ve seen are taking the view that this is very specific to Covid-19 and therefore we should just have a clause that covers that rather than have these clauses that could inadvertently have unexpected consequences in the future.”
While acknowledging this additional protection is more likely to protect producers than cast and crew, he added it would enable employers “to take bolder decisions” in terms of bringing people back into work.
A producer who works regularly in the West End told The Stage that possible enforced closure would become an important consideration in future. “When you experience something [like this], the next time you apply that knowledge to an agreement, you’ll think more carefully about it, so force majeure is definitely a focus, as well as being more granular about what the processes are of cancellation,” they said.
The producer, who asked not to be named, added they anticipated force majeure clauses becoming “significantly more sophisticated”, but also raised concerns about long-term planning.
“We have to start making these decisions and committing to contracts now, not knowing whether next February we might be in lockdown again. For us to weather the storms and provide employment again, we have to think carefully about that second set of risks. It’s tricky because there’s less money around so everybody’s going to try to get the most they can and protect their position, but it’s more difficult when the entire ecosystem has taken a blow,” they said.
Standard contracts with cast and crew are likely to be less affected because of the existing union agreements in place. However, independent theatre lawyer Sean Egan said producers might be looking to delay payments that are ordinarily made at the start of rehearsals or on opening, for example, to secure star names or to writers.
“These might be pushed back. The impact will be more for top-end talent but equally those individuals will want to ensure payments are received as soon as possible,” he said.
“Producers will also be assessing whether venues are going to be able to keep trading and meet all their commitments in agreements.This may mean deals are delayed until the financial position of venues and the sorts of audiences they can expect is clearer. This paralysing uncertainty is going to affect attitudes not just up to reopening but long afterwards.”
Lawrence Harrison, who specialises in entertainment for commercial law firm Swan Turton, also raised the issue of producer-venue contracts, and said producers might be seeking to tighten agreements over payment timelines and increase transparency.
In the more immediate term, he said he had already noticed producers showing greater interest in generic, also known as boilerplate, clauses, such as force majeure.
“Boilerplate clauses are not supposed to be attracting interest from general clients, so the fact we’re having to look at them indicates there is a serious issue going on,” he said.
“What this has brought home to all of us is that something can come out of the clear blue sky and have a dramatic effect, and in that respect, whatever changes are going to be in contracts, people will be aiming to deal not just with Covid-19 but with other possibilities. There is going to be a greater willingness to try to deal with the unexpected.”