Film Production Law: A Legal Guide for Filmmakers and Film Producers for Short Films, Feature Films, and Film Projects

freeimage-4533348-webThe legal and business issues that accompany film production can be daunting. Whether you are a filmmaker, producer, production company, or other film professional, we’ve prepared a guide to walk you through the issues that will come up during the course of a film production. This guide is not intended to cover each and every single issue that could arise during the course of film production, just the major ones that tend to come up frequently.  If you  need specific advice on a specific issue, we suggest that you contact a film attorney or give us a call to make sure you are getting reliable advice.

#1 – Legal Structure of Your Production Entity versus Investment Entity

Most filmmakers and producers do not do business individually. They create production companies that they do business under. However, one of the legal issues that comes up a lot in film law is whether it makes good business sense to set up separate production or investment entities for that particular production that will bear the responsibility for the variety of obligations that will be undertaken as part of the film project. You probably already know that the first step in the legal aspects of film production involves the creation of a production company (often an LLC or a C Corp) so that the production company is structured correctly. Because filmmakers and producers are often involved in multiple projects at a single time, and projects can vary wildly in success and profitability, often times production companies are created per project, not only to keep the revenue streams clean, but to also keep liability and obligations limited to the particular project being developed.  Why do this? Imagine the circumstances that would arise if there were a dispute about the film, its production, finances, accounting for sales, etc. Would you want the aggrieved party digging through all of your individual production company’s bank records and financial documents to figure out where the money has been spent? Some producers and production companies dissolve and set up new business entities every few years to avoid “cross-contamination” of revenue streams involving their personal projects and projects in which they receive film investments.  This is also an issue when it comes to seeking tax credits and whether all expenses for which credits are begin given are related to film activities.

#2 Screenplays, Screenwriters, and the Option/Purchase Agreement

Unless the filmmaker is also the screenwriter, the next step often involves optioning or purchasing a screenplay, or commissioning a screenplay from a screenwriter. The most traditional legal vehicle is called an “option-purchase,” by which the producer pays X to a screenwriter for the option of developing that screenplay and exclusive rights to market and solicit it to investors for investment to fund the film project.  If the producer can ultimately connect all the dots and locate investors to help finance the film, the film production can begin and before it does, the rights to the screenplay will be purchase in total. This usually includes all rights to the work, including the right to develop sequels, prequels, audio materials, streaming content, merchandise, etc. Specific rights can be added, excluded, or carved out depending on the agreement and negotiations of the parties.

#3 – Film Finance and Film Funding

The hardest part of filmmaking from a legal or business perspective is often getting funding for the project. There are strict rules by U.S. and state law limiting the extent to which filmmakers can solicit funds from the public at large, and the extent to which investors must be “accredited” investors investing in a film project. Film investors can be anyone – other entities, individuals, and the filmmaker or producer themselves.  Generally, during this phase, the film production is financed by selling shares or participation rights in the revenues of the film to the investors, in exchange for the investor’s contribution of cash, loans, convertible notes, or other types of debt- or equity-based securities.  If enough money is raised to meet the film’s budget and anticipated costs/expenses, then all systems are go! The thorny issues arise, however, when the producer or production company innocently forgets that the film finance process falls within the regulatory scheme of U.S. securities laws, including the rules promulgated by the U.S. Securities and Exchange commission. Running afoul of the rules can create problems on the distribution side, because acquisition rights agreements will often want warranties that all of the formalities have been met during the course of production.

#4 Talent, Location, Logistics, Production, Distribution

During the film production process, a variety of agreements are necessary to handle all of the individuals and entities that are an integral part of the process. These include agreements with actors/actresses, day actors, stylists, set pesonnel, location/shooting arrangements, the permitting/license process, agreements with directors, sound/lighting, camera operators, and of course the ubiquitous guild, union, and labor law issues that have to be dealt with. If dealing with children or minors, a separate set of issues relating to minor’s rights, labor laws, Coogan trust accounts, and similar matter also come into play.  There are a number of sites on the Internet that purport to sell “200 agreements” for filmmaker or producers that cover all of these issues. We have downloaded them. They are terrible.  They are not professionally prepared, not “legal-grade,” and are missing many key provisions that are common to the film industry.  In fact, one of the things we are asked to do often is clean up poorly written agreements that contain vague, ambiguous, or in some cases, flat wrong provisions or have resulted in unintended consequences or a gross distortion of the rights of one of the parties involved.

#5 – Intellectual Property

Another critical part of the filmmaking process involves getting the right intellectual property protections for the film. This will often include copyrights for all works of authorship, such as the screenplay, film itself, any promotional content, including photographs, posters, merchandise, and all other creative works that are capable of being protected through U.S. copyright laws. The company may often want to trademark its own name as well as the name of the film by filing a trademark application with the U.S. Patent & Trademark Office. Before finalizing the names, titles, etc. of a film, it is always a good idea to have the necessary searches done by your legal team to make sure that you will not have problems from existing intellectual property rights-holders.

Getting Legal Help

If you are starting a film project and need legal assistance, contact AXIS Legal Counsel today. Axis has assisted a variety of film professionals, including filmmakers, producers, production companies, actors, actresses, screenwriters, and others with various aspects of the film production process.

AXIS Legal Counsel represents numerous types of entertainment clients across the country  in entertainment negotiations, opportunities, deals, and disputes. Whether it is agents, managers, talent, musicians, artists, visual artists, producers, filmmakers, directors, photographers, actors/actresses, models, writers, authors, filmmakers, composers, television, singers, songwriters, publishers, or technical talent, AXIS Legal Counsel offers strong representation to all those within the entertainment industry.  For information on retaining AXIS Legal Counsel for legal advice on any entertainment matter, contact info@axislegalca.com or call (213) 403-0130 for a confidential consultation about your legal issue, or visit our Entertainment Portal for more information.  AXIS is a Los Angeles entertainment law firm representing clients with numerous types of entertainment matters and disputes.

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