Does the film producer need a film lawyer or entertainment attorney as a matter of professional practice? An entertainment lawyer’s own bias and my stacking of the question notwithstanding, which might naturally indicate a “yes” answer 100% of the time – the forthright answer is, “it depends”. Several producers these days are themselves film lawyers, entertainment attorneys, or other types of lawyers, and so, often can take care of themselves. But the film producers to worry about, are the ones who act as if they are entertainment lawyers – but without a license or entertainment attorney legal experience to back it up. Filmmaking and motion picture practice comprise an industry wherein these days, unfortunately, “bluff” and “bluster” sometimes serve as substitutes for actual knowledge and experience. But “bluffed” documents and inadequate production procedures will never escape the trained eye of entertainment attorneys working for the studios, the distributors, the banks, or the errors-and-omissions (E&O) insurance carriers. For this reason alone, I suppose, the job function of film production counsel and entertainment lawyer is still secure.
I also suppose that there will always be a few lucky filmmakers who, throughout the entire production process, fly under the proverbial radar without entertainment attorney accompaniment. They will seemingly avoid pitfalls and liabilities like flying bats are reputed to avoid people’s hair. By way of analogy, one of my best friends hasn’t had any health insurance for years, filme xxx and he is still in good shape and economically afloat – this week, anyway. Taken in the aggregate, some people will always be luckier than others, and some people will always be more inclined than others to roll the dice.
But it is all too simplistic and pedestrian to tell oneself that “I’ll avoid the need for film lawyers if I simply stay out of trouble and be careful”. An entertainment lawyer, especially in the realm of film (or other) production, can be a real constructive asset to a motion picture producer, as well as the film producer’s personally-selected inoculation against potential liabilities. If the producer’s entertainment attorney has been through the process of film production previously, then that entertainment lawyer has already learned many of the harsh lessons regularly dished out by the commercial world and the film business.
The film and entertainment lawyer can therefore spare the producer many of those pitfalls. How? By clear thinking, careful planning, and – this is the absolute key – skilled, thoughtful, and complete documentation of all film production and related activity. The film lawyer should not be thought of as simply the person seeking to establish compliance. Sure, the entertainment lawyer may sometimes be the one who says “no”. But the entertainment attorney can be a positive force in the production as well.
The film lawyer can, in the course of legal representation, assist the producer as an effective business consultant, too. If that entertainment lawyer has been involved with scores of film productions, then the motion picture producer who hires that film lawyer entertainment attorney benefits from that very cache of experience. Yes, it sometimes may be difficult to stretch the film budget to allow for counsel, but professional filmmakers tend to view the legal cost expenditure to be a fixed, predictable, and necessary one – akin to the fixed obligation of rent for the production office, or the cost of film for the cameras. While some film and entertainment lawyers may price themselves out of the price range of the average independent film producer, other entertainment attorneys do not.
Enough generalities. For what specific tasks must a producer typically retain a film lawyer and entertainment attorney?:
1. INCORPORATION, OR FORMATION OF AN “LLC”: To paraphrase Michael Douglas’s Gordon Gekko character in the motion picture “Wall Street” when speaking to Bud Fox while on the morning beach on the oversized mobile phone, this entity-formation issue usually constitutes the entertainment attorney’s “wake-up call” to the film producer, telling the film producer that it is time. If the producer doesn’t properly create, file, and maintain a corporate or other appropriate entity through which to conduct business, and if the film producer doesn’t thereafter make every effort to keep that entity shielded, says the entertainment lawyer, then the film producer is potentially hurting himself or herself. Without the shield against liability that an entity can provide, the entertainment attorney opines, the motion picture producer’s assets (like house, car, bank account) are at risk and, in a worst-case scenario, could ultimately be seized to satisfy the debts and liabilities of the film producer’s business. In other words:
Patient: “Doctor, it hurts my head when I do that”.
Doctor: “So? Don’t do that”.
Like it or not, the film lawyer entertainment attorney continues, “Film is a speculative business, and the statistical majority of motion pictures can fail economically – even at the San Fernando Valley film studio level. It is irrational to run a film business or any other form of business out of one’s bank account”. Besides, it looks unprofessional, a real concern if the producer wants to attract talent, bankers, and distributors at any point in the future.
The choices of where and how to file an entity are often prompted by entertainment lawyers but then driven by situation-specific variables, including tax concerns relating to the film or motion picture company sometimes. The film producer should let an entertainment attorney do it and do it correctly. Entity-creation is affordable. Good lawyers don’t look at incorporating a client as a profit-center anyway, because of the obvious potential for a new business that an entity creation brings. While the film producer should be aware that under U.S. law a client can fire his/her lawyer at any time at all, many entertainment lawyers who do the entity-creation work get asked to do further work for that same client – especially if the entertainment attorney bills the first job reasonably.
I wouldn’t recommend self-incorporation by a non-lawyer – any more than I would tell a film producer-client what actors to hire in a motion picture – or any more than I would tell a D.P.-client what lens to use on a specific film shot. As will be true on a film production set, everybody has their job to do. And I believe that as soon as the producer lets a competent entertainment lawyer do his or her job, things will start to gel for the film production in ways that couldn’t even be originally foreseen by the motion picture producer.
2. SOLICITING INVESTMENT: This issue also often constitutes a wake-up call of sorts. Let’s say that the film producer wants to make a motion picture with other people’s money. (No, not an unusual scenario). The film producer will likely start soliciting funds for the movie from so-called “passive” investors in any number of possible ways and may start collecting some monies as a result. Sometimes this occurs before the entertainment lawyer hears about it post facto from his or her client.
If the film producer is not a lawyer, then the producer should not even think of “trying this at home”. Like it or not, the entertainment lawyer opines, the film producer will thereby be selling securities to people. If the producer promises investors some pie-in-the-sky results in the context of this inherently speculative business called the film and then collects money based on that representation, believe me, the film producer will have even more grave problems than conscience to deal with. Securities compliance work is among the most difficult of matters faced by an entertainment attorney.