Why Cutting ‘Entertainment Attorney’ from the Budget is a Bad Idea
January 19, 2015 by Katherine Imp
If you’re like every other independent film producer, you’ve asked yourself the following question at least once: what can I cut from my budget without affecting the overall production value of this film?
If your answer was, is, or might be “legal fees,” think again and here’s why:
If you are using money that is not your own, and not from a legitimate reward-based crowdfunding platform, you could be in danger of violating federal and state securities laws. In other words, a violation, even if accidental, could result in monetary fines, jail time, or the end of your film career.
Investment in the film industry is highly speculative and inherently risky. There is no assurance of the economic success of any motion picture because revenues are dependent upon acceptance of the motion picture by the public, as well as other tangible and intangible factors like competing films in the marketplace or the general economy at the time of release. The entertainment lawyer (or securities lawyer as the case may be) is there to help you not only comply with securities laws, but also protect you from angry investors who don’t see the return on investment they’d hoped for.
2. Legal Entities
A motion picture or television series is an asset. It’s an asset comprised of intellectual property, cast and crew attachments, sweat equity, and capitol that can be bought, licensed, or sued. Legal entities, such as LLCs or corporations, help protect the people involved from personal liability while also providing a vehicle for investors to hold stake in. Though many states make it easy to create an entity, a lawyer can help you work through the specifics: Should I create an LLC, s-Corp, or c-Corp? Which state should we file in? If LLC, should the entity be manager-managed or member-managed? What other documents do I need to complete the entity’s formation? These details are important and need to be accounted for when creating your legal entity.
After working at a litigation firm for 3 ½ years I can tell you this with all certainty: litigation is more expensive than hiring an attorney to draft your production contracts. Too many times I’ve seen a relationship go sour, a project fail, or a partnership go in different directions, and the parties don’t have a contract that clarifies distribution of assets, ownership, and/or remedies. You need strong contracts. Even if you negotiate all the deal points yourself, you need to make sure the proper “legalese” is on paper.
Well-drafted contracts are also important to establish “chain of title.” A “chain of title” is the proverbial chain of documents that clarify ownership in a film or television series and that are crucial in obtaining distribution from a third party. Because motion pictures require the expertise of numerous people—e.g., actors, producers, writers, directors, DPs, editors, sound mixers, graphic designers, photographers, music composers, and the like—to come to fruition, ownership can become extremely muddled without clear documentation. Entertainment attorneys will ensure that your contracts have all the necessary provisions to establish “chain-of-title,” satisfy distributors and guilds, and protect your creative work.
Katherine (Kate) Imp is an entertainment attorney at Ramo Law PC and Chicago native. She specializes in film finance, production and distribution for clients in Illinois and across the country. Contact Kate at @KatherineImp or email@example.com.
Disclaimer: The information in this column is intended for general information purposes only and should not be construed as legal advice.