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Legal Issues in Film Production

9.1.2008

While filmmaking is—and, indeed, should be—a creative endeavor, the time, money and personnel required to produce a high quality motion picture also requires that significant attention and resources be devoted to the legal aspects of filmmaking. A successful project will involve the preparation and negotiation of numerous contracts and other legal arrangements, and also requires a thorough understanding of the business of filmmaking. In fact, addressing these relatively unglamorous issues in an appropriate and timely manner can be every bit as important to the picture's ultimate success as having a great script, memorable performances, stunning cinematography or spectacular special effects. After all, even a completed film can languish in legal limbo if all of the necessary legal issues have not been addressed.

At the outset, as with any other business enterprise, the filmmaker should consider establishing an entity, such as a limited liability company ("LLC"), to act as the production entity, which can be used to develop, produce, own and exploit the picture and its ancillary rights. Forming an entity to serve in this function has a number of benefits. For example, by using an LLC as the contracting party to all picture-related agreements, the individual filmmaker (even if he or she is the sole owner of the production entity) can usually avoid personal liability for breaches of those agreements or wrongful acts committed by production company employees. Additionally, by selling interests in the LLC, the filmmaker can raise money needed to finance production of the picture. The filmmaker should seek legal counsel regarding the optimal type of entity, to assist with the entity's formation, to discuss tax consequences, and, if the filmmaker is raising money to fund production, to give advice regarding federal and state securities law compliance issues (which can be very complex).

Another legal issue encountered in the early stages of a project is the acquisition of rights in the intellectual property (e.g., the book, screenplay, life story rights, etc.) that will form the creative basis for the film. The acquisition of these rights is typically documented in an option/purchase agreement that is negotiated with the owner of the underlying intellectual property (usually the author of the book or screenplay, or the subject of the film), which will give the production company the right to acquire the intellectual property during one or more option periods. When negotiating this contract, the parties will need to address, among other things, the amount of the option payment, the length of the option period(s), the purchase price if the option is ultimately exercised and the on-screen credit that the author will be entitled to receive. In addition to intellectual property considerations, scripts also present potential defamation and invasion-of-privacy concerns (particularly if the script contains characters based on real persons), which should be evaluated by the production company's legal counsel.

Next, the production company will need to start assembling the team of on- and off-camera personnel whose services will be needed during production, including the director, producers, crew members, writers (whether to adapt the screenplay or re-write/polish it) and principal players. Each of these persons should be engaged under a written agreement, which will address fairly standard issues like compensation, working hours and length of employment, as well as more film-specific issues such as profit participation rights, on-screen credits, and travel and lodging requirements. If the production company is going to be working with guild members (e.g., WGA, DGA, SAG, IATSE), the production company's legal counsel should also review the relevant collective bargaining agreements to ensure that its employment agreements conform with union requirements. Additionally, if any of the principal players are minors, the production company should obtain written releases from the minor's parent or legal guardian and otherwise comply with laws relating to the employment of minors. If filming on location, the production company will also need to secure location releases from property owners and permits from governmental authorities if filming on government property.

During post-production, the production company will need to engage additional personnel to edit and score the picture and to acquire additional intellectual property rights for any music to be featured on the soundtrack. As with the personnel engaged during principal photography, the production company's legal counsel should be careful that the agreements with post-production personnel conform with any requirements of applicable unions, or, in the case of composers, performing rights societies (e.g., BMI, ASCAP, SESAC), as well dealing with the more mundane issues of compensation, performance timeframes and on-screen credits. Similarly, the production company should conduct due diligence to determine that it owns (or obtains valid licenses for) any original or pre-existing musical compositions to be included on the soundtrack.

While this article contains a brief summary of a portion of the legal issues likely to be encountered during film production, it should serve to emphasize the advisability (and perhaps the necessity) of engaging experienced legal counsel early on in the process. By ensuring that rights are appropriately obtained, engagements properly documented and funds are raised in compliance with the law, good legal counsel will help the production company avoid lawsuits and other disputes that could otherwise bog down or kill the production. This, in turn, will allow the creative team to focus its energies on the artistic aspects of the picture.

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