Two years ago, when Ashni Parekh left Nishith Desai and Associates, its entertainment law practice wasn’t exactly flourishing. A newly corporatised Bollywood wanted legal advice but was still not used to paying high legal fees, so the firm had accumulated bad debts disproportionate to the size of its film industry portfolio. “It was obvious that charging Indian film-makers $200 an hour was not going to work,” says Parekh, who has since launched out on her own. “You have to adapt your practice to suit this industry, which is extremely personality driven.” Parekh now operates from home and business is booming. Among her clients are Saif Ali Khan, Priyanka Chopra and Sushmita Sen and she says, “I get a new client ever day, including people who are new to the industry and signing a contract for the first time.” There was a time when a legal contract in Bollywood was a simple affair. The producer signed a standard one-page deal with the record company for the music rights and another deal with the distributor for distribution to the cinema screens. More important than the paper was the handshake, for nobody was really interested in taking anyone to court. The cosy arrangement collapsed with the coming of home viewing technology, when there was flurry of litigation to determine whether the rights to video were vested with the producer or the distributor. The courts said it depended on the contracts, and for the most part, the contracts loosely gave away “all rights” to distributors and record companies, with no provision for new technologies. Today, things are getting more complicated with revenues from ring-tones outstripping the revenue from music sales, foreign distribution — including screenings on aeroplanes and cruise liners — becoming more lucrative than domestic distribution and actors earning as much from product endorsements as films. “Bollywood is definitely signing more contracts than before, though we are still a long way from the Hollywood model, where everyone is represented by a lawyer,” says Anand Desai of DSK Legal. Desai’s star client is Aamir Khan, for whom he’s recently structured a complicated financing-cum-distribution deal with PVR. He is also the one who structured the co-production between Sanjay Leela Bhansali and Sony Pictures for Saawariya and says, “This is the first time a major foreign company is co-producing a movie in India. Sony has a lot of experience in exploiting the rights to a film and that’s reflected in the contract.”Exploiting the rights to a successful film, includes turning it into a video game, merchandising clothes and accessories connected to film, remix rights. For the party selling the rights, it’s all about keeping the scope of the contract as narrow as possible, while for those buying the rights, it is about negotiating terms that are as broad-based as possible. Needless to say, nobody hands over “all rights” to a film in perpetuity, as was often the case in Bollywood contracts before. “The idea is to break down the rights into details, keeping room for technologies that may develop in the future,” says Desai. As a full-service firm, DSK is also advising its film industry clients on tax. For example, with Indian films gaining increasing revenues from abroad, some producers are looking at the option of vesting the rights to their films in Mauritius, thereby putting their films on par with Hollywood films for tax purposes. Says Desai, “At the upper end, Bollywood clients are no different from coporate clients. At the lower end, it gets difficult. They just don’t want to pay up. Still, some lawyers don't mind, because they get a kick out of representing stars.”
Courtesy : The Economic Time
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