The Need For An Entertainment Lawyer In Film Production

Does the film producer really need a film lawyer or entertainment attorney as a matter of professional practice? An entertainment lawyer’s own bias and my stacking of the question notwithstanding, which might naturally indicate a “yes” answer 100% of the time – the forthright answer is, “it depends”. A number of producers these days are themselves film lawyers, entertainment attorneys, or other types of lawyers, and so, often can take care of themselves. But the film producers to worry about, are the ones who act as if they are entertainment lawyers – but without a license or entertainment attorney legal experience to back it up. Filmmaking and motion picture practice comprise an industry wherein these days, unfortunately, “bluff” and “bluster” sometimes serve as substitutes for actual knowledge and experience. But “bluffed” documents and cture production procedures will never escape the trained eye of entertainment attorneys working for the studios, the distributors, the banks, or the errors-and-omissions (E&O) insurance carriers. For this reason alone, I suppose, the job function of film production counsel and entertainment lawyer is still secure.

I also suppose that there will always be a few lucky filmmakers who, throughout the entire production process, fly under the proverbial radar without entertainment attorney accompaniment. They will seemingly avoid pitfalls and liabilities like flying bats are reputed to avoid people’s hair. By way of analogy, one of my best friends hasn’t had any health insurance for years, and he is still in good shape and economically afloat – this week, anyway. Taken in the aggregate, some people will always be luckier than others, and some people will always be more inclined than others to roll the dice.

But it is all too simplistic and pedestrian to tell oneself that “I’ll avoid the need for film lawyers if I simply stay out of trouble and be careful”. An entertainment lawyer, especially in the realm of film (or other) production, can be a real constructive asset to a motion picture producer, as well as the film producer’s personally-selected inoculation against potential liabilities. If the producer’s entertainment attorney has been through the process of film production previously, then that entertainment lawyer has already learned many of the harsh lessons regularly dished out by the commercial world and the film business.

The film and entertainment lawyer can therefore spare the producer many of those pitfalls. How? By clear thinking, careful planning, and – this is the absolute key – skilled, thoughtful and complete documentation of all film production and related activity. The film lawyer should not be thought of as simply the cowboy or cowgirl wearing the proverbial “black hat”. Sure, the entertainment lawyer may sometimes be the one who says “no”. But the entertainment attorney can be a positive force in the production as well.

The film lawyer can, in the course of legal representation, assist the producer as an effective business consultant, too. If that entertainment lawyer has been involved with scores of film productions, then the motion picture producer who hires that film lawyer entertainment attorney benefits from that very cache of experience. Yes, it sometimes may be difficult to stretch the film budget to allow for counsel, but professional filmmakers tend to view the legal cost expenditure to be a fixed, predictable, and necessary one – akin to the fixed obligation of rent for the production office, or the cost of film for the cameras. While some film and entertainment lawyers may price themselves out of the price range of the average independent film producer, other entertainment attorneys do not.

Enough generalities. For what specific tasks must a producer typically retain a film lawyer and entertainment attorney?:

1. INCORPORATION, OR FORMATION OF AN “LLC”: To paraphrase Michael Douglas’s Gordon Gekko character in the motion picture “Wall Street” when speaking to Bud Fox while on the morning beach on the oversized mobile phone, this entity-formation issue usually constitutes the entertainment attorney’s “wake-up call” to the film producer, telling the film producer that it is time. If the producer doesn’t properly create, file, and maintain a corporate or other appropriate entity through which to conduct business, and if the film producer doesn’t thereafter make every effort to keep that entity bullet-proof, says the entertainment lawyer, then the film producer is potentially shooting himself or herself in the foot. Without the shield against liability that an entity can provide, the entertainment attorney opines, the motion picture producer’s personal assets (like house, car, bank account) are at risk and, in a worst-case scenario, could ultimately be seized to satisfy the debts and liabilities of the film producer’s business. In other words:

Patient: “Doctor, it hurts my head when I do that”.

Doctor: “So? Don’t do that”.

Like it or not, the film lawyer entertainment attorney continues, “Film is a speculative business, and the statistical majority of motion pictures can fail economically – even at the San Fernando Valley film studio level. It is insane to run a film business or any other form of business out of one’s own personal bank account”. Besides, it looks unprofessional, a real concern if the producer wants to attract talent, bankers, and distributors at any point in the future.

The choices of where and how to file an entity are often prompted by entertainment lawyers but then driven by situation-specific variables, including tax concerns relating to the film or motion picture company sometimes. The film producer should let an entertainment attorney do it and do it correctly. Entity-creation is affordable. Good lawyers don’t look at incorporating a client as a profit-center anyway, because of the obvious potential for new business that an entity-creation brings. While the film producer should be aware that under U.S. law a client can fire his/her lawyer at any time at all, many entertainment lawyers who do the entity-creation work get asked to do further work for that same client – especially if the entertainment attorney bills the first job reasonably.

I wouldn’t recommend self-incorporation by a non-lawyer – any more than I would tell a film producer-client what actors to hire in a motion picture – or any more than I would tell a D.P.-client what lens to use on a specific film shot. As will be true on a film production set, everybody has their own job to do. And I believe that as soon as the producer lets a competent entertainment lawyer do his or her job, things will start to gel for the film production in ways that couldn’t even be originally foreseen by the motion picture producer.

2. SOLICITING INVESTMENT: This issue also often constitutes a wake-up call of sorts. Let’s say that the film producer wants to make a motion picture with other people’s money. (No, not an unusual scenario). The film producer will likely start soliciting funds for the movie from so-called “passive” investors in any number of possible ways, and may actually start collecting some monies as a result. Sometimes this occurs prior to the entertainment lawyer hearing about it post facto from his or her client.

If the film producer is not a lawyer, then the producer should not even think of “trying this at home”. Like it or not, the entertainment lawyer opines, the film producer will thereby be selling securities to people. If the producer promises investors some pie-in-the-sky results in the context of this inherently speculative business called film, and then collects money on the basis of that representation, believe me, the film producer will have even more grave problems than conscience to deal with. Securities compliance work is among the most difficult of matters faced by an entertainment attorney.

As both entertainment lawyers and securities lawyers will opine, botching a solicitation for film (or any other) investment can have severe and federally-mandated consequences. No matter how great the film script is, it’s never worth monetary fines and jail time – not to mention the veritable unspooling of the unfinished motion picture if and when the producer gets nailed. All the while, it is shocking to see how many ersatz film producers in the real world try to float their own “investment prospectus”, complete with boastful anticipated multipliers of the box office figures of the famed motion pictures “E.T.” and “Jurassic Park” combined. They draft these monstrosities with their own sheer creativity and imagination, but usually with no entertainment or film lawyer or other legal counsel. I’m sure that some of these producers think of themselves as “visionaries” while writing the prospectus. Entertainment attorneys and the rest of the bar, and bench, may tend to think of them, instead, as prospective ‘Defendants’.

Enough said.

3. DEALING WITH THE GUILDS: Let’s assume that the film producer has decided, even without entertainment attorney guidance yet, that the production entity will need to be a signatory to collective bargaining agreements of unions such as Screen Actors Guild (SAG), the Directors Guild (DGA), and/or the Writers Guild (WGA). This is a subject matter area that some film producers can handle themselves, particularly producers with experience. But if the film producer can afford it, the producer should consult with a film lawyer or entertainment lawyer prior to making even any initial contact with the guilds. The producer should certainly consult with an entertainment attorney or film lawyer prior to issuing any writings to the guilds, or signing any of their documents. Failure to plan out these guild issues with film or entertainment attorney counsel ahead of time, could lead to problems and expenses that sometimes make it cost-prohibitive to thereafter continue with the picture’s further production.

4. CONTRACTUAL AFFAIRS GENERALLY: A film production’s agreements should all be in writing, and not saved until the last minute, as any entertainment attorney will observe. It will be more expensive to bring film counsel in, late in the day – sort of like booking an airline flight a few days before the planned travel. A film producer should remember that a plaintiff suing for breach of a bungled contract might not only seek money for damages, but could also seek the equitable relief of an injunction (translation: “Judge, stop this production… stop this motion picture… stop this film… Cut!”).

A film producer does not want to suffer a back claim for talent compensation, or a disgruntled location-landlord, or state child labor authorities – threatening to enjoin or shut the motion picture production down for reasons that could have been easily avoided by careful planning, drafting, research, and communication with one’s film lawyer or entertainment lawyer. The movie production’s agreements should be drafted with care by the entertainment attorney, and should be customized to encompass the special characteristics of the production.

As an entertainment lawyer, I have seen non-lawyer film producers try to do their own legal drafting for their own pictures. As mentioned above, some few are lucky, and remain under the proverbial radar. But consider this: if the film producer sells or options the project, one of the first things that the film distributor or film buyer (or its own film and entertainment attorney counsel) will want to see, is the “chain of title” and development and production file, complete with all signed agreements. The production’s insurance carrier may also want to see these same documents. So might the guilds, too. And their entertainment lawyers. The documents must be written so as to survive the audience.

Therefore, for a film producer to try to “fake it” oneself is simply to put many problems off for another day, as well as create an air of non-attorney amateurism to the production file. It will be less expensive for the film producer to attack all of these issues earlier as opposed to later, through use of a film lawyer or entertainment attorney. And the likelihood is that any self-respecting film attorney and entertainment lawyer is going to have to re-draft substantial parts (if not all) of the producer’s self-drafted production file, once he or she sees what the non-lawyer film producer has done to it on his or her own – and that translates into unfortunate and wasted expense. I would no sooner want my chiropractor to draft and negotiate his own filmed motion picture contracts, than I would put myself on his table and try to crunch through my own backbone adjustments. Furthermore, I wouldn’t do half of the chiropractic adjustment myself, and then call the chiropractor into the examining room to finish what I had started. (I use the chiropractic motif only to spare you the cliché old saw of “performing surgery on oneself”).

There are many other reasons for retaining a film lawyer and entertainment attorney for motion picture work, and space won’t allow all of them. But the above-listed ones are the big ones.

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Question by Jonathan E: How do I form an LLC for a film production company?
I am having a slight problem conceptualizing how an LLC would work with a sole owner production company. I have filled out the articles of organization and an SS-4. In the state of Nevada an operating agreement isn’t required. I am going to be distributing deferred payment contracts to the actors and crew members of my next production. Do they need to be listed as members of my organization? Do I need an operating agreement? Can I simply draw up a contract that stipulates each receive a percentage of the net profit of the film after distribution? Any help would be greatly appreciated.

Best answer:

Answer by jerry-the-bookkeeper
If I were you I would form a separate LLC for the new production.

As to your basic question — contact a Nevada lawyer who specializes in business law.

But before you do that. If you are based in California and are seeking to register your business in Nevada because the tax situation is more favorable you may have a problem. I have been told that anyone doing a substantial portion of the business in California is subject to California taxes even if registered elsewhere. So, you should check to see if this applies to your business and if it might be less expensive to register in California.

Hope this helps
Jerry-the-bookkeeper

Know better? Leave your own answer in the comments!

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