Need an Entertainment Lawyer? Look No Further than this (Free) Indie Film Clinic
There's no way around it: your film needs a lawyer whether or not you have the budget for one. Here's what to do.
Despite the fact that the film industry is built upon contracts, we filmmakers are notoriously ill-equipped to deal with legal matters. (No, they don't teach us these things in film school.) Whether we need to incorporate an LLC, license music, clear a copyright issue, or negotiate contracts, every film inevitably faces legal challenges. That old adage "Better safe than sorry"—which may as well have been coined by a lawyer—applies to filmmaking in spades.
But, as we all know, many low-budget indie films and documentaries, though in major need of their services, can't afford to hire an entertainment lawyer. This puts them at high risk for legal quagmires. Thankfully, David Morrison of the Benjamin N. Cardozo School of Law in New York City has made it his mission to offer small films legal services for free. In 2011, he founded the Indie Film Clinic, a clinical program for law students that provides counsel for films through all stages of production. We spoke with Morrison about how the clinic helps independent filmmakers, and legal considerations that every filmmaker should be weighing.
"Clinical programs are like teaching hospitals, in a way," Morrison told No Film School. "They're an opportunity for law students to get real experience with real clients while they're learning the material and developing their skills, engaging in practice in a limited capacity under the supervision of attorneys."
Cardozo has a vested interest in the intersection of law and creativity. "We're trying to identify really talented filmmakers," Morrison continued. "People with really unique perspectives that we want to continue to make films."
"Filmmakers have a lot of obstacles. If you make it extremely difficult for people to focus on their creative efforts, then you're hollowing out talent. [Our work] goes a long way toward encouraging them to make a second film."
No Film School: What are the main legal services the clinic offers to filmmakers?
David Morrison: The idea is that we provide transactional legal services on a pro bono basis to independent and documentary filmmakers. Transactional meaning that we draft and negotiate production contracts. We advise the producers, the filmmakers, the writer/director, or the production entity that's formed on how to organize and administer rights in their film. How to transact on behalf of an LLC or another corporate form that's going to then be engaged later on in the licensing of rights in the film. We negotiate these agreements. We do essentially all of the production legal work that an attorney would do on these kinds of projects.
NFS: How early on in the process should a filmmaker contact you?
Morrison: If we can provide advice early on in the project, that's going to put filmmakers in a better position to capitalize on their work, to negotiate terms in their agreements that are going to make it easier for them to recoup money for investors, or make it easier to earn money for themselves.
Filmmakers have a lot of obstacles. [Our work] goes a long way toward encouraging them to make a second film. It promotes the idea that the big problem in creative communities—especially the New York City creative economy—is that if you make it extremely difficult for people to focus on their creative efforts, then you're hollowing out talent. Film thrives on talent. Without the people who are writing these films, who are directing the films, who are working with the filmmakers to produce the films, then eventually you just don't have a community that can effectively contribute to film. Film's a big part of New York City culture.
NFS: How often do you meet with filmmakers?
Morrison: We'll meet with projects that we're considering representing. We typically ask them to send us any information that they have that's going to be helpful in issue-spotting—budget information, pitch books, things like that. We try to get as much information in that initial interview as we can so that we can start to try and forecast what the work on the project is going to be like.
We start with questions about underlying rights in the project: are there any issues with literary rights? Is the script an adaptation? Is it an original work? We work through the whole network of chain of title contracts, service agreements, releases and licenses and assignments that the filmmakers are then going to need to deliver to a distributor. Along with all of the masters and soundtracks and publicity materials that they send off in a distribution deal, distributors also want to see things like registrations. Things like proof of chain of title. Errors and omissions insurance.
"What we're doing is both contract drafting and advice and risk management so that the film can be distributed without any serious risk of running into rights issues that can't be resolved."
NFS: To what extent do you anticipate legal challenges when you're preparing filmmakers with documents?
Morrison: We want to be able to provide comprehensive production legal services. A lot of documentary filmmakers are making use of archival materials. We have worked with them to draft legal opinion letters on fair use issues or other defenses under the law that they can then send along to insurance companies who are considering providing coverage. What we're doing is both contract drafting and some level of advice and risk management so that the film itself can be distributed without any real serious risk of running into rights issues that can't be resolved. We also want filmmakers to be able to organize the work that they're doing in a way that's going to benefit them. So that they can really take advantage of any momentum coming out of the film and devote that to what they plan to do next.
But it's really project-specific, which is why I think legal advice is pretty crucial at different stages of a production. If we're working on a narrative film, for example, one of the first things that we want to do before someone goes into photography is read the script and review the script as if it's a finished film. We try and identify any issues that might come up on screen. If there are references to things like artwork, we'll have notes—a screenplay clearance report—that we can give to the filmmaker. If there are any defamation issues, if there's anything that jumps out just from the text, we can give them pre-production legal advice. That's different for every script.
The actual network of agreements differs somewhat from one project to the next, but there's a relatively predictable structure to it.
NFS: What does this network of agreements usually consist of?
Morrison: You're identifying both who's contributing to the rights that go into the film, and the film being a copyrighted work in itself. Who is contributing creatively to the production? Who are the people or who are the entities that may have contributed sort of pre-existing works that are being referenced in the film? Things like music, things like artwork. What sorts of license agreements might the filmmaker need in order to make use of them?
Documentaries don't come in typically with scripts, so we're trying to talk with the filmmakers about what they're doing. What their footage is really going to be. Are there any issues with archival materials?
Fair use is context-specific. We usually do a post-production review/pre-distribution clearance on a fine cut of the film to see how things are being used in context so that we can develop arguments about why particular uses are transformative. Why particular uses are consistent with the idea that fair use provides some protection for commentary and criticism. Is it a biographical work? Is there a strand of case law that we can identify in US fair use jurisprudence that allows us to make reasonable and strong arguments that it isn't necessary for the filmmaker to license rights? Those are things that we can kind of talk through with them. There are a lot of common misconceptions about fair use that the people are surprised by.
"Investments can be very, very complicated. If you're asking people to contribute money to the production of the film with some expectation that they're going to participate in the equity of the film, then you need to have a lawyer to go through that with you."
If you're raising money for the film, you want to distinguish between crowdfunding money and investments. Investments can be very, very complicated. If you're asking people to contribute money to the production of the film with some expectation that they're going to participate in the equity of the film, then you need to have a lawyer to go through that with you. There are securities laws that are implicated and not everyone is familiar with that.
NFS: If a filmmaker uses your services, do they not need to hire a lawyer down the road?
Morrison: In most cases, that's the way it works. I wouldn't say that we're opposed to coming on board to do a more clearly defined scope of services. We may be doing production contracts, and there's an attorney that's managing sales agreements. I think that a lot of contracts, when you start to talk about chain of title, acquisition of rights and transfer of rights, are interconnected in ways that makes it difficult for them to be drafted by different parties.
It doesn't mean that it's necessarily impossible, in some ways it's easiest for one attorney or group of attorneys. In some cases, we've worked with projects that are just looking for someone to provide an opinion letter on a fair use issue or other issues. They may have had a production attorney who was working on releases and licenses and other production contracts, and they needed just this one thing that we're able to do for them.
NFS: If you were to provide the full scope of your services to a project, what would be the monetary value in legal fees that the filmmaker would otherwise have had to pay?
Morrison: It really depends. Yes, lawyers say that all the time. If you spend enough time talking to lawyers, it's just something that you hear, but it does depend. It can be upwards of ten thousand dollars for a range of production services.
"You can get into situations where the film is really questionable in terms of whether it can be released commercially. That's the nightmare scenario."
Attorneys will occasionally bill on an hourly rate, and attorneys will occasionally bill a flat fee for a very defined set of services. It's project-specific, but it's a significant amount of money. The problem is—and I think the thing that's important to keep in mind—is that there's only so much you can do under certain circumstances if the work hasn't been done up front.
If you get into a situation with an agreement that should have been done early in the process that can't be walked back, it's more complicated and time-consuming. There are occasions where it just can't be done. Parties can't agree. You can get into situations where the film is really questionable in terms of whether it can be released commercially. That's the nightmare scenario for anyone who's investing that much time and energy, that much creativity, into a project...to end up at the end of the process with this hurdle or pitfall that they really didn't foresee that's now become an obstacle to getting the film out to audiences. We try and help.
NFS: A lot of filmmakers I've talked to have been very disproportionately, it would seem to me, concerned about music licensing fees. How much of the puzzle does licensing actually comprise?
Morrison: My experience has been that it depends on the permissions of the person or the company that owns the rights. Artists are free to say that we don't license our music for use in the soundtrack of films. There are some artists who do that, or they may say that we do on occasion but we're just not interested in this particular film or we do but only if we're being paid full licensing fees up front.
For lower budget films, it's impossible to pay customary fees up front. It does run a pretty wide range, but I think the licensing fee for the use of a Beatles song on television a couple of years ago was $200,000. That's not totally unheard of, but you're talking about the use of really, really popular music in really well-funded films.
Your argument or plea as an independent filmmaker is that you don't have the upfront money, but you'd like to get a license that will include the payment of additional fees either as the film goes from the festival to some form of commercial distribution, or that the fees will be determined on the basis of how much money the film makes. If the film is really successful, the fees are going to approximate what you would have paid if it had been produced by a studio.
"Music is very, very complicated, both as an area of law and as a practical issue for film. This is one of the things we would want to look out for when we're reading a script."
My experience has been that in some cases record companies and publishers are more than willing to do that and can be really helpful. Music supervisors can be really helpful in dealing with music as well. Music is very, very complicated, both as an area of law and as a practical issue for film. This is one of the things we would want to look out for when we're reading a script. If there are people performing pre-existing songs in your film, you have to get that cleared before you actually shoot those scenes, because someone may say, "You can't use it," and then you've got to re-shoot with different music that you have cleared, or you have to cut the scene. Which in some cases just can't work for the edit of the film.
Is it really realistic to have 10 Top 40 songs in your independent film? There are lots of independent artists who can be easy to work with. You want to have some help, either from a music supervisor or from an attorney, in planning that stuff out well before you start shooting the film.
NFS: Going back to something you mentioned earlier about dealing with investors: what are the main documents associated with funding from investors?
Morrison: If you're taking on that level of risk, you have an obligation and a responsibility to investors to help them try to recoup the money. It could be entirely different for a short film or for something that's really modestly budgeted, but if you've raised the profile of the project, you want to form a legal entity that's going to be the party that enters into contracts with investors. We help them organize the structure of that entity.
NFS: Like an LLC or a C-Corp?
Morrison: Yeah, LLCs most typically. Who are the members of the company? How do they make decisions? How do they vote? How do they manage the business of the company? What happens to money when you start to make money? Where does it go first; where does it go after that? How do you get to a point where you've structured the allocations of revenue very clearly? Investors, crew members who have deferred some of their compensation, or people who are getting back-end points on the film, like talent and producers—where are they at in the revenue waterfall?
The operating agreement of the LLC sets that out. It also includes a lot of definitions and information about how revenue is defined. Making a film is incredibly complex both in terms of the number of people who are contributing to the film, but also as an accounting issue. We're not accountants and we're not tax advisors, but the work we do in helping to structure the revenue is sort of to those points. That's where lawyers can be helpful in trying to organize the business in the way that gives the production company the best opportunity to make their own money off of the rights that they've developed in the film.
If you're bringing in investors, then you have additional contracts, and those get to be very complicated. There are lots of securities laws. You need to consult with an attorney who's experienced in those kinds of financing agreements anytime you're really considering bringing in significant investments. You want to have someone who has experience guiding you through that.