Act Three is so important that many screenwriting teachers advise their students not to begin writing until the final act is clear and perhaps outlined. In other words, know your ending before you begin.
I do not tell my students this for a variety of reasons. The creative process does not comfortably follow rules, and many professional screenwriters are on record (and other writers as well, including Stephen King) as admitting that often they do not know their endings when they begin writing.
To be sure, as a script nears completion, the "ending" must be part of the fabric of a story's beginning, but for some writers a long process is necessary to discover all the parts of the story plan. For example, I use my first drafts as the process by which I discover what it is I really want to write about -- in other words, my first drafts serve discovery, not fine craftsmanship, which comes in subsequent drafts.
The point I am belaboring is that it's quite all right, at this early stage (writing the first draft), if you don't know as much about your story as you eventually must. That's why writing is called A PROCESS.
The Hero's Recovery
What is certain, however, is that the third act must begin with the hero's recovery after the low point that ends Act Two. In the tradition of Hollywood movies, heroes win. The guy gets the girl, the good guy defeats the bad guy. Even in darker independent films that buck this tradition, the hero must recover in order to participate in the final movement of the story, Act Three.
So your first job is to get the main character out of the fix you created. This should be done by the hero being active, not passive (being rescued by someone else), and of course it should be believable within the suspension of disbelief that your audience will give you if they are wrapped up in your story.
The Ticking Clock
Armed with a second wind, the hero now moves towards the showdown of the movie. In The Graduate, for example, Act Two ends when Benjamin learns that Elaine has been pulled out of school by her father and, worse, is about to get married. Benjamin's task is to find her and stop her from doing so.
Thus he races against "a ticking clock" -- a deadline for the action he must perform -- in order to rescue Elaine from her family. If you can get a ticking clock into your third act, so much the better.
In Shakespeare in Love, the ticking clock happens as the play progresses with a sick actor playing Juliet, who won't be able to make his entrance. At the last minute, Viola plays the role, playing opposite Will's Romeo, and they can play out the tragedy of their "real life" love on stage.
The Big Showdown
The showdown is the final confrontation between protagonist and antagonist, between Benjamin and his love's family, between Will and his writing block. Benjamin steals Elaine away from the altar, and Will uses his loss of Viola to immortalize her in a new play, Twelfth Night. Will loses the girl but he does not lose his Muse.
The Growth of the Hero
The hero usually comes out of this final showdown a victor and a changed person. He or she experiences personal growth in some way. In The Graduate, there's an irony attached to growth: seeing the lovers on the bus, riding into the sunset with everyone staring at them, we don't really know what the future holds.
In Shakespeare in Love, Will's growth as an artist is clear in his ability to move from personal loss to artistic triumph -- Viola as Muse has given him new strength to write, and we don't expect him to drift from muse-lover to muse-lover with this new artistic strength.
There's nothing quite as satisfying as ending act three and writing FADE OUT. When you do this, take time off to be good to yourself. Writing a complete draft of a screenplay is no small achievement.
Next month I'll talk about your next step: which is rewriting.