Lights, Camera… Litigation?: Film Industry Law

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By Paige Zandri
| Legal Basics

As a director or producer opening up a production company, you might have thought that putting up with diva-esque actresses and alpha-male actors would be your biggest problem. But the pre-production process presents countless challenges of its own, including financing your project and finding investors, dealing with copyright infringement, location scouting, and negotiating contracts with unions, and renting equipment.

Producers are left with a lot to consider before filming can even begin. This can be intimidating for most, and a proactive approach towards obtaining legal counsel is an essential first step. Face legal dilemmas head-on so that you can avoid litigation, and release high-quality, award-winning projects instead.

film-camera 

Here are some examples of typical legal hurdles that production companies may encounter:

Formation

Corporate Form: The majority of independent media and entertainment companies establish their business as either an LLC (limited liability company) or a corporation. As the entertainment industry necessitates large -- and often risky -- investments, many companies elect to declare their business in one of these two formats to protect themselves from personal liability in the event of large financial losses. While LLCs can be more flexible when distributing profits amongst the producers and business owners, a production company may have to establish themselves as a corporation in order to obtain investors, who oftentimes serve a critical role in financing a film project.

Joint ventures: Producers can act as investors or coordinators of the production of the film or pilot itself. Since producers take on enormous amounts of work during the pre-production process, many producers form joint ventures to split up the responsibilities. Fallouts between producers occur frequently, and so it is essential to create contracts that delineate the expectations, responsibilities, and rights of each producer, as well as the distribution of profits and arrangements in the event that a producer decides to drop the project. Furthermore, producers, seeking to maximize profits, and directors, seeking to preserve their artistic vision, often radically disagree over what the final project should look like. Because they are in control of the finances, producers, for better or worse, sometimes have the final say. Establishing a partnership agreement early on with the help of an attorney is necessary to determine who has the power to make the ultimate decision.

Depending on the size and budget of the film or television pilot you want to produce, both types of business entities have their advantages and drawbacks, especially since tax incentives vary across states. Hire a lawyer to discuss the various projects that your production company plans to work on in order to choose a business structure that serves your best interests.

Financing

The film and television industry is incredibly expensive. You want helicopter shots of the New York City skyline? That will set you back thousands of dollars. With large Hollywood studios folding and credit collapsing, even major companies cannot finance big budget projects entirely on their own, and multiple investors are frequently needed to fund films and television pilots.

Sometimes crowdfunding platforms like Kickstarter or Indiegogo just won’t cut it. For most independent film companies, producers must either rely on debt, or gap and equity financing in order to fund their projects. Financing a project with debt can be very costly in the long run, as producers are required to pay interest, and the debt must sometimes be repaid years before a project actually makes profits. As a result, companies usually primarily rely on equity financing. Federal and state security laws can be convoluted and confusing; hiring a lawyer with experience in entertainment and securities regulations can help producers avoid financial losses, or worse, criminal and civil penalties.

Intellectual Property

Safeguarding intellectual property and avoiding copyright infringement is vital within the film industry, especially when it comes to submitting your projects to film festivals or television networks. Projects must be cleared by production companies -- confirming that the script does not potentially violate any pre-existing copyrights -- before even beginning the production process. Knowledge of films and television programs that have already been released, as well as careful monitoring of your intellectual property (and that of others) will enable you to more successfully market your work.

  • Copyrights: Original works should be be registered with the U.S. Copyright Office to establish proof of creation, and paperwork should be filled out in order to protect your material and prevent other filmmakers from ripping off your hard work. In order to control the commercial use of your project, you must also obtain the right of publicity.
  • Infringement: Accidentally infringing on another’s artistic works can lead to expensive backpedaling and perhaps even litigation. If you’re considering using film and audio clips -- or even other media such as paintings, photographs, newspapers, or magazines -- in your work, you need to consult an attorney, rather than simply assuming that these resources are subject to fair use or are within the public domain. Additionally, if you plan to use music in your project, you should look into purchasing a synchronization license. If you want to adapt a novel or a short story, the motion picture rights must be negotiated with the respective author. Similarly, when purchasing a screenplay from a writer, producers often require a screenwriter to waive the right of droit morale -- a concept that limits the changes that a buyer can make to the author’s work -- so that they can adapt the material to suit the film’s needs as the producers and directors see fit. Materials based on facts or fictionalized accounts of past events can be equally tricky: although technically permitted by the First Amendment, it is necessary to consult a lawyer before writing such a script, as filmic adaptations can sometimes be construed as defamation or a violation of privacy.

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Location scouting

Many locations require permits in order to film in the area. Requirements differ across cities and states, and are regulated by multiple, overlapping commissions. Some permits also require the production company to pay various fees or necessitate the purchase of liability insurance. A lawyer can be helpful to disentangle the complex web of rules surrounding location shooting, and sometimes negotiate contracts and permits with these commissions to obtain the right to film in tightly controlled areas.

Unions and Employees

SAG-AFTRA, DGA, WGA, IATSE -- the separate professional unions each have their own stringent set of rules and specifications for everything ranging from payroll, to worker responsibilities, to providing employee meals, and all of the guilds require producers to sign contracts in order to work with union members. Especially for larger productions, union representatives are often present on set to ensure that union members’ rights are being followed.

Producers must also collaborate with agents in order to negotiate work contracts, and it is necessary to have an attorney present to supervise the terms and conditions of the agreement. Some employees must have liability insurance. Stuntmen, in particular, work under highly dangerous conditions, and must be well-insured; Universal Pictures is notoriously in the midst of filing a $50 million insurance claim regarding the death of actor/stuntman Paul Walker.

Contracts

Filmmaking is a collaborative process, requiring a multitude of employees, equipment, locations, and you guessed it -- contracts.

  • Equipment: It’s easy to accidentally damage property on a film set, and film production companies are liable for everything from high-quality film equipment, to their props. Most equipment is rented, and contracts must be signed with rental companies to ensure that all of their property is returned in perfect condition. A lawyer can aid film producers during the claims process, and provide advice on the terms and contents of insurance contracts.
  • Distribution: Once your film or television pilot is finalized, you’re eager to get your project noticed -- but it’s not always that easy. While some films are distributed in-house, other times, producers must negotiate a contract with an outside distributor to package, market, and release films across the world. A lawyer is needed to create a contract to stipulate the responsibilities of the distributor, and the share of the profits that the distribution company will retain.

Lawyer Up

For all the legal pre-production nuances involved, finishing a film is incredibly satisfying. But you entered the business because you love the artistic process, seeing a project progress from the storyboards to the big screen -- not to deal with nitpicky subclauses of contracts and insurance policies. While every director and producer should be aware of and knowledgeable about the legal logistics and responsibilities of the production process, you shouldn’t have to do it all by yourself. Hire a lawyer through Priori Legal, and let an attorney guide you through the maze of laws and regulations.

 

Special thanks to Ella Gibson for her research and editorial contributions to this article.

Photo Credit:

niekverlaan via Pixabay

dcondrey via Pixabay

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