what's so funny about peace, love and sequential liability?

Sequential liability is language in the production contract between vendors and ad agencies. It states that the agencies act as third party agents on behalf of their clients but cannot be held accountable for making payment on the good and services they solicit. This has become a heated issue throughout the production community for obvious reasons.

For me the battle is not the actual sequential liability clause in the contract. If the clause is removed and payment is delayed the agencies still claim they cannot release funds until they are paid by the client. Essentially de facto sequential liability. Then, what is our course of action? Sue our clients?

The battle isn’t about a contractual clause. The battle is payment schedule. Ideally we should get 100% of the money put into escrow knowing the funds are committed and accessible. The next best solution is 75% up front with the final 25% payable within 30 days of the last shoot day. If we can’t win on either of these points, at the very least, we need hard dates of payment not the ambiguous language that currently exists (i.e. payment upon approval of dailies). Along with specific dates, we need direct contact with individuals who have access to the funds, i.e. Account Exec, CFO or better yet, the Client.. Ultimately, we need someone of authority to be held personally accountable for meeting the contractual obligation.

I believe this issue will resolve itself by years end, if for no other reason than the holding companies (Omnicom, WPP, Publicis, etc.) began implementing this policy because they are floating a lot more cash than we are. There is no longer honor amongst thieves and liquidity is a real bitch.

I assume the holding companies are in the process of reworking the payment schedules in their standard agreement. Once reworked, they’ll most likely pass this onto vendors. Certainly not out of a sense of fairness or a magnanimous gesture but because the individual agencies will demand it. In the perfect world, while this transition is happening, prodcos should ban together and refuse work with agencies that won’t negotiate fair payment schedules. Very doubtful. Bad economy. Not enough work. Liquidity problems. And, stiff competition. Reasons enough to prevent unity.

In the meantime, its economic Darwinism at it’s finest.