Everything you need to know about the film-making process, and why you should look no further than Kerry Law for your Entertainment Lawyer needs.
It’s an exciting time to be a filmmaker. Although major studios may be dropping the ball on creating thought-provoking and diverse content, independent filmmakers have never had more avenues to distribute their work due to the many video-on-demand outlets that are both investing in original content as well as purchasing content to distribute to their subscribers. However, the combination of increased opportunity and the ability to make high quality films on a low budget has made it more important than ever that you make your project standout. We know exactly how to do this and can guide you through the process from start to finish.
We at Kerry Law have ample knowledge about how to successfully finance, produce, and distribute both narrative and documentary films. Whether you are a producer, writer, director, actor, or financier you’ve come to the right place for thorough and affordable representation!
Beginning an independent film project requires knowledge about the many business, legal, and tax implications that surround what can be a complicated venture. Before you can even think about hitting the big screen there are many steps that need to be taken in order to protect your idea and bring it to fruition. Here are just some of the initial services we can offer anyone thinking of starting their own film project:
Forming the proper entity is paramount in launching your production. We are experienced and knowledgeable in how to make sure your project starts on the right foot. It is important to keep your movie business separate from your personal assets.
- There’s no film without a good script. If you are writing the script yourself you may need to acquire the rights to someone’s story.
- Writers should also seek our counsel to ensure that their are no potential rights issues in the content of your script such as trademark or privacy violations that could create future headaches. Our pre-publication review is both thorough and affordable.
- If you plan to acquire a script, play, book, or life story, we are here to negotiate option contracts and acquisitions. Rights acquisition agreements need to be extremely detailed and thorough so as to cover all possible uses of the acquired material. It’s important to get the broadest possible grant of rights, including the right to distribute in all formats presently known and that may be invented in the future.
- Finally, hiring a screenwriter to develop your idea requires work-for-hire contracts that ensure you as the producer retains the rights.
- Whether you are writing it yourself or acquiring a script, it will need to be scheduled and broken down so that potential financiers know the cost of your film. We can walk you through this process from start to finish
These agreements need to be made on a work for hire basis so that the producer will own the copyright in the content. Basic terms of these agreements are; the writing services to be performed, payments for each writing step and guarantees if any, credit, royalties, and option to write subsequent productions based on the source material.
It is extremely important to know whether the writer is a member of the Writers Guild of America. Members of the WGA are prohibited from entering into deals with production entities that are not signatories to the Writers Guild of America Basic Agreement. This gives the WGA right to determine the writing credits for the film.
If your story is based on the life of one or more real people, then it is likely that it will be necessary to obtain at least some rights to foreclose the risk of lawsuits for defamation, invasion of privacy, and violation of publicity rights. However, depending on where the production takes place and the content, you may be protected by the First Amendment rights. However, distributors are quite conservative on what they will release without the proper licensing and the same goes for errors and omissions insurance.
These agreements are often option purchase agreements. Basic terms are as follows;
- The length of the initial option period and any extensions
- The price of the option and whether these payments are applicable against the purchase price
- The purchase price either based on a percentage of the budget or a flat fee.
- The scope of the release and information use.
- Control over the screenplay and degree of fictionalization permissible.
- Any use of copyrighted works created by the subject such as music or films
Pitching your idea to financiers and distributors can be stressful. We are here to make sure this process is streamlined and successful. We will counsel you on how to create the perfect pitch, package your idea into a pitch deck no one can ignore, and represent you in selling your idea to the highest bidder.
Before putting your well-thought-out idea on the market, it’s important to ensure your story and characters are protected. We are here to make sure that your idea stays in your hands, and if someone infringes your rights, we will will use our experience and expertise to make sure they pay! More on idea theft here!
Creating an independent film business plan allows you to fully understand the business aspects of your project. You will want to outline your budget and show prospective investors how money will be spent. You will highlight your team, your objectives and importantly, your marketing, sales and distribution strategy. We have knowledge and experience creating independent film business plans and can streamline the process while making your idea standout to potential investors.
A PPM is very different from a business plan and 100% necessary if seeking outside investment. A well drafted PPM will balance disclosure requirements with marketing elements designed to sell the deal.
The basic points of these memorandum are the following:
- Number of LLC shares up for sale and the cost of each unit
- Allocation of net profits
- Information about the film and film business – it should set forth information about the producers as well as a synopsis of the film. You need to educate your investors on how films can and cannot generate income.
- Risks factors involved with the film. This is necessary to defend against any claims regarding securities fraud especially given the risky nature of film investments
Creating a production company of your own can be a complicated endeavor. Let us walk you through the process so that you are thoroughly protected!
Financiers and investors will typically not provide funds without necessary insurance coverage. This can be a costly aspect of film production. To control the costs, the producer must determine how much of a risk it is willing to assume the form of deductibles, policy limits, and the length of the term of coverage.
Special insurance coverage is necessary for things such as filming overseas, when stunts are performed by actors, or use of special equipment such as aircraft or water vehicles.
Typically, there will be cast insurance covering the death or incapacity of principal actors. Additionally, if an actor or director is a key or essential element in a license or presale, then “essential elements” insurance is required.
Errors and omissions insurance protects producers and distributors from claims such as violation of publicity and privacy, contractual claims, copyright infringement, and violations of section 43a of the Lanham Act. However, it does not cover reimbursement for lost profits or production costs or crimes or intentional torts. Errors and omissions insurance always requires the participation of an attorney in a very detailed application! Contact us for assistance!
Funding a film is very difficult! As we all know, the vast majority of films do not make money. Luckily you have come to the right place to find advice and expertise on how to finance your film and more importantly, return money to your investors.
For producers with proven track records, production, finance, and distribution deals are available from major studios. The studio agrees to put up funds for development of the script, finance production of the film subject to its budget approval and approval of all creative elements, and finally in its discretion, distribute and market the film. The studio will retain all rights in the film and the underlying property unless they abandon the project, in which case the producer usually gets a one-year right to reacquire it by getting a new deal and repaying the first studio.
A producers fee is usually anywhere between $100,000 and $2 million as well as some percentage of the net. If the producer has a solid track record they may get a more favorable share of the gross, as profit accounting can get very tricky in the film business.
Progress to Production Schedule – This forces the studio to choose to proceed further with development or abandon the project so that it does not get placed on a shelf and never touched. It allows the producer to repurchase the project if left alone. Producers should also negotiate for a “pay or play” clause after a budget is agreed on with the studio so that producers are paid whether or not the movie is made.
Negative pickup agreements are common ways to finance independent films. Generally these agreements state that if the film is delivered with a set list of requirements, the domestic distributor will purchase the film for a set price. There will also be pre-existing agreements with foreign distributors guaranteeing payment of certain advances upon the delivery of the film. With these agreements in hand, the bank loans the producers the budget of the film secured by the rights under each of these distribution agreements.
A completion agreement is then executed with a completion company who gives a guarantee to the bank that the film will be delivered within the budget to each of the distributors.
These differ from traditional distribution agreements in that the distributor is heavily involved in the production of the film even though it is not providing the cash flow for the production.
In negative pickup agreements the sales agent has an extremely important as they will deliver the distribution agreements that trigger the bank’s loan. The sales agent is responsible for making up the “gap” or deficit that remains after distributors pay advances upon the completion of the film. They do this by selling the film to remaining territories for distribution.
These agreements are more basic about negative pickup agreements because their advance covers less of the budget. Major terms of these agreements are the minimum guarantees, what rights are being granted (typically video and television are granted and other rights such as merchandising and soundtracks are reserved), distribution fees taken by the distributor and royalties to be paid, and the delivery schedule.
A completion guarantor is a company that will provide a guarantee to the bank that the film will be finished on time and delivered to certain distributors. If a film goes over budget it is the completion guarantor’s responsibility to front the additional costs. This is an agreement between the producer and the completion on the company. The basic terms for these agreements are the guarantors fee, approval rights and control of the production, take over rights, and a security interest in the film.
Private offerings are typically used for films with smaller budgets (under $5 million). Here, the producer well formed an LLC and sell units of that LLC to investors. The producer must comply with federal and state securities laws which means applying for an exemption under regulation D of the Federal Securities Code as well as complying with each individual states blue sky laws.
The producer will need to prepare and offering memorandum or private placement memorandum which is covered above.
You should not shoot anywhere until you have obtained the proper permits. Doing so can be a headache. This is especially true when your project is international.
Also, You will want to assure the location owner that the production is fully insured and that they are protected from liability. They will want this in writing. Let us worry about these tedious matters so you can focus on getting ready to shoot.
Many cities and states offer major tax benifits to shoot in their jurisdiction. We can walk you through the process of obtaining these benifits and make sure their is not a better place for you to be shooting your film.
Labor implications are a major part of the film production process. No matter the budget of your film, you are ultimately going to have individuals working for you. Following state and federal labor laws especially when dealing with child actors is a must. Tell us the details of your project and we’ll ensure all I’s are dotted and T’s crossed.
You will need to decide whether to have a union shoot or not. If you go union, you will have to adhere to strict rules on how you schedule your movie. We will help you navigate these rules.
Even if you have your film scored, you may want to include music. To do so you will need a Synchronization & Performance License from the owners of the publishing rights as well as a Master Use License from the sound recording owner. Depending on the artist, this can be expensive or relatively cheap. Let us counsel and guide you through this process.
The entertainment industry is unique in that service contracts and releases with minors are common place. It’s important to keep in mind that minors have the right to disaffirm their contracts. To protect the interests of both minors and entertainment companies, some states, including California and New York, have enacted statutes specifically tailored towards contracting with minors for entertainment purposes. Under these statutes, a court will either approve or disapprove of the contract. If the contract is approved, then the minor loses his or her right to disaffirm it.
These contracts require strict scrutiny by a knowledgeable attorney. This is especially true when involving guardians and parents of the minor. Companies employing minors are also subject to a number of administrative restrictions to protect minor’s health and safety which we can also provide counsel on as these regulations are state specific.
You need to get legal clearance for everybody who works on your movie as well as every element put into your movie. This includes (but is not limited to) your story, cast, crew, locations, logos and equipment. Failure to obtain proper releases can have major impacts.
Many distribution platforms now require that you maintain an active errors and omissions policy. Without having the proper releases, getting an errors and omissions policy may prove impossible.
Furthermore, contracting with talent can be very complicated. You can find the major contract considerations to think about when contracting with talent here. In the film industry, if a performer or director is entitled to “points,” things can get very complicated depending on it they are getting gross receipts or net profits. You should never draft these contracts on your own, and talent should never sign without first consulting an entertainment lawyer. We will ensure that you can sleep soundly knowing you are protected.
The delivery clause of any distribution deal is one of the most important aspects of the contract. Film delivery has two components: physical and legal. Physical delivery refers to the delivery of the technical elements such as the original negative, trailer, audio, and soundtrack. Legal delivery refers to documents such as chain of title, underlying agreements, errors and omissions insurance, cast and crew agreements, MPAA ratings, clearances of any photos or product placements, and any music licenses.
It’s imperative that it is drafted and negotiated in your favor. We can guide you through this process!
Distribution companies can open themselves up to problems and litigation if a clause promising specific promotional and marketing commitments is drafted incorrectly. Let us take a look before signing!
Video-on-demand delivery platforms are great ways to monetize your independent films. We can walk you through the contracts and negotiating points for these deals
Even after your customary revenue producing life-span of distribution, there are often continuing legal issues with copyrights, library sales, archive agreements and film preservation. We work with you on continuing to exploit your motion picture rights long after production.
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