The Wrong Choice of Words Can Be Costly
Stories of so-called “stage collapses” have recently swept the entertainment industry, the nation and the world. As a staging professional for over 20 years, I was both saddened by the tragedies and dismayed by the incongruent journalism. The damage sustained during the recent collapses involved equipment falling from above onto innocent bystanders below. A stage, of course, is a raised platform, which is walked upon, while a roof covers a stage and hangs overhead. Reading these stories of “stage collapses,” I quickly grasped that a roof structure was actually the equipment in question. In the staging industry, we are now realizing that the mis-education of the public has costly and far-reaching consequences in terms contracts and insurance.
Running a business in the entertainment industry has become increasingly complex. The days of “spit and a handshake” agreements are over, and instead lengthy legal contracts and three-page insurance requirement exhibits have taken their place. When dealing with high-profile artists and multi-million dollar tours, it is important that both the vendor and client take steps to protect their respective investments. However, misunderstandings over the nature of a stage have resulted in a string of one-sided, unyielding legal agreements from client attorneys who are not educated in our trade.
Essentially, we are seeing a knee-jerk reaction to last year’s tragedies. The exposure and the revenue from a roof is obviously not in the same ballpark as a stage or a set, but there is limited comprehension of the difference by the legal profession. Client attorneys are presumably reading articles in the newspaper about “stage collapses” and proceeding accordingly. The legal and requirements have become unrealistic, and insurance requirements do not reflect the exposure risk with the cost exceeding the revenue in some cases.
As a business owner, it is important to weigh the cost benefit ratio — that is to say, if the contract is too biased in protecting the client and offers no protection to the vendor, the amount of risk may be too high to complete the job. While larger companies can afford to jump through many of these hoops, smaller businesses may suffer in the wake of this media blunder.
There have been a few alarming trends in the world of contracts and insurance recently, which I have outlined below.
“Ultimate Control” Wording: Many clients who are disturbed by the recent “stage collapses” have added what we like to call “ultimate control” wording, which states that the stage is subject to approval or ultimate control of the Tour Manager. While the Tour Manager is certainly welcome to inspect a stage at any time and should red-flag anything questionable, the ultimate approval of a stage’s safety should come from the Head Carpenter or a designated tour technician who is the expert on the build. This clause is often added by attorneys who do not understand the roles of personnel on tour.
One-Sided Indemnification: In a contract, an indemnification clause protects a party to a contract from legal issues related to the other party performing the contract. Our company routinely requests mutual indemnification, which means that we protect the client and the client protects us. When indemnification is one-sided in favor of the client, it means that the client can use our equipment incorrectly and cause an accident, and we have no legal recourse; however, if the opposite occurs and we cause an accident, the client can sue us.
Refusal of Responsibility for Lost or Damaged Equipment: This one is always puzzling. If you rent a car from Hertz, you are responsible for loss or damage of that vehicle. Why would staging equipment be any different? If you have a tour tech out on tour with your equipment, this clause is negotiable, but if you are simply renting equipment, the client should be liable for its well-being, regardless of any eventuality that may occur (with the exception of an act of god).
Unrealistic Permitting Requirements: Engineering requirements have become increasingly stringent, and in some locations, it is so stringent that it may just be an additional source of income for the city. Tours are putting more responsibility on the vendor for permit acquisition, and while engineering is to be expected, securing permits for a tour is often difficult, especially with the volatility of many tour schedules. Nonetheless, this is a new trend in client contracts. Tours may be interested in skirting the more complicated regulations and fees from the local and federal government.
Unrealistic Insurance Requirements: While well-intentioned on the client’s part, insurance requirements have completely spiraled out of control. Here are the most uncomfortable requests:
• Extensive General Liability Insurance: As of late, many clients have requested a doubling of the umbrella policy for items like a rolling stage. Depending upon the length of use, the revenue for a rolling stage may be less than the cost of securing the insurance.
• Errors and Omissions Professional Liability Insurance: E&O is another expensive coverage that is requested more and more. Essentially, this coverage would respond if our operations resulted in a monetary loss to the client without any property damage or bodily injury involvement. Basically, if the stage thrust blocks the merch table and causes a loss of profits, the vendor would be liable for that loss.
• Third Party Property Damage: This coverage should only be required if you are renting a venue. Even though we simply lease equipment, this is often added to the insurance requirements.
• Waivers of Subrogation: Waivers of Subrogation are not in a vendor’s best interest, and it is my company’s standard policy to negotiate this out of the requirements. A Waiver of Subrogation prohibits the insurer from attempting to seek restitution from a third party that causes any kind of loss to the insured. If an incident occurs and the insurance company is not able to recoup costs from an associated insurance company, this causes increased premiums. This coverage essentially exempts the client from having financial responsibility, regardless of whether they were negligent.
The items listed above merely scratch the surface when dealing with contracts and insurance. It seems that the length of contracts has increased each year, and the complexity of requirements has exploded exponentially since the reported “stage” collapses. Proper understanding of equipment is a necessity in order to avoid Draconian, one-sided legal agreements. It is possible to assert that sensationalist journalism has caused this evolution of red-tape.
Ballasts and overhead truss are different from a drum riser or wood flat, and industry media should be able to discern between them. Unfortunately, that may not be the case since every trade magazine used incorrect terminology when discussing the tragedies that occurred due to a roof structure’s stability. It is time for the industry media to recognize this semantic issue and correct their mistake. Nationwide publications have potentially damaged smaller businesses ability to navigate the legal landscape of our changing industry. Assumedly, journalists for the Associated Press are not all privy to the intricacies of the entertainment industry and staging construction, but they are relying on our trade publications for information. Let’s get it right.
Clive Forrester is CEO of All Access Staging & Productions.
