As lawyers who regularly work with independent moviemakers, we see the same legal pitfalls on a regular basis. The 10 below are easy to avoid and, simply by being able to recognize them as issues, you will be ahead of the competition.
1. My BFF and I are writing a script together. Since we’re such great friends, we don’t need to waste time putting an agreement in writing, right?
Every writing team should have an agreement in place—especially best friends. We see it all too often: A year goes by and two people who used to be BFFs, come into our office fighting over the rights to a script they wrote together. Now, we’re not saying you need a 30-page writer’s agreement; we just want to see something (even in an e-mail that’s accepted by both parties) that answers the following questions:
• If we sell the script, how are we going to split the money we earn?
• Who is credited in first position?
• Will ownership of the script be equal?
• If we have actual expenses, will they be paid back before we do the agreed upon split?
• If one writer gets a full-time job and can’t work on the script anymore, what happens? Do we still split profits? Can the remaining writer work with someone else?
• Who is going to shop the script?
• Do both writers need to approve the sale or option of the script?
It would be great to consult with a lawyer and have him or her draw up an official agreement, but short of that, coming to a basic understanding, in writing, on the above points, will put you in a far better position than most writing teams.
2. My rich friend is financing my movie. He doesn’t need any paperwork, right?
Not so fast. Rich friends are often the worst financiers. Let’s look at a real life example: Rich Friend gives Moviemaker Friend $500,000 to make a movie. Rich Friend loves being a part of Hollywood and is psyched to be an executive producer on an indie film. Everything is grand. Cut to two years later: The film is done. It’s great, but Moviemaker Friend has had no success selling it. Rich Friend isn’t so rich anymore due to the economic downturn and is fishing for money wherever he can find it.
All of a sudden, Rich Friend isn’t recalling the circumstances of his investing in the film in quite the same way anymore. The way he sees it, Moviemaker Friend spent money without his permission and wasted too much money on an editor and travel. He wants to take control of the movie and wants Moviemaker Friend out. This can be a real mess when there is no investor agreement in place.
Get the agreement in writing and include repayment terms, approvals and controls, risk disclosures and everything else you would have in a standard investor agreement.
3. My cousin is a production assistant who’s worked with James Cameron. She read my script and loves it. I’m going to pitch it to the studios now, okay?
Although this isn’t a legal pitfall, we included it because so many moviemakers start pitching their work before it is really ready to be read or seen. It may sound trite, but you only get one shot to make a first impression, so make sure that shot is all you need. Work hard on your script, workshop it, have other writers read it, hire a script editor. Make sure it’s great—you don’t want to lose that one shot.
4. My lead actor hasn’t signed his contract, but he’s been at rehearsals and is totally committed to the project. Our shoot starts tomorrow; I’m sure the agreement will get done soon, right?
Actually, the more likely scenario is that you’ll never get a signed agreement. If you do, he (or his reps) will demand additional changes. You lose all leverage once you start shooting. Some actor agreements take a notoriously long time to negotiate, so get all agreements signed before the cameras roll. If that’s an utter impossibility, make sure to withhold payments until the agreement is signed and delivered.
5. I can’t use any film clips in my movie because I was told that all film clips need to be licensed. True?
Nope. The U.S. Copyright Law has this wonderful provision called “fair use,” which is a person’s right to use a limited amount of copyrighted material for the purpose of comment, criticism or education. We like to phrase this as your right to use as much copyrighted material as is necessary to visually tell your story, and no more. If you’re a documentarian, taking advantage of the fair use doctrine may enable you to make a film you never thought you would be able to due to budget and licensing issues.
To be able to exploit a film that contains copyrighted material used pursuant to fair use, you’ll need to get a fair use endorsement on your errors and omissions policy. This will require you to consult with a clearance attorney familiar with fair use practices and obtain a legal opinion letter stating that your use of unlicensed materials falls within the parameters of fair use.
6. Oh wow, that’s great, but fair use doesn’t apply to music, does it?
Yes, it does! It is more difficult to use fair use music for myriad factors, but it can be done. We look at the same criteria outlined above, but because a song is so much briefer than a film, much less of a song may be used.
7. If we start shooting in the morning, we won’t need to pull a film permit, right?
We wish this were true. You need a permit to shoot at any time of day. The risk may be lower that you’ll get caught filming without a permit because fewer people are out, but it’s still prohibited. You don’t want to show up with cameras and crew and be subject to delays because you don’t have the proper permits. So plan ahead.
8. I can’t use the footage I shot at the airport because I didn’t get a location agreement, right?
Location agreements give a person access to a particular location. They provide assurance that you’ll be able to show up at that location, bring your equipment, shoot your scene, clean up and go. However, if you get the shots you need without a signed location agreement, show up, shoot, clean up and leave, you do not need to go back to the location to get a location agreement later. The big exception to this rule is that you may not—under any circumstances—break the law to gain access to a location. So if there are prohibitions on filming or if you have to hop a fence at 2:00 am to get your shot, you could be liable for trespass or other nasty claims.
9. I’m hiring my crew as independent contractors to save money. Smart, right?
This is being penny wise and pound foolish. The truth is that every single person who works on the set of a film is an employee, regardless of what you call him or her. When courts determine whether a person is an employee or contractor, they could care less about what the agreement says. Instead, they look at many factors including whether the person controlled the hours he or she worked, whether he or she worked on personal equipment, whether he or she had any decision-making control, whether he or she was free to work on other projects at the same time. If the answer is no to some or all of those questions, you’ve got yourself an employee.
The practical danger of hiring someone as an independent contractor is that if he or she is hurt, you will be liable for workers compensation insurance and if he or she fails to pay taxes, you are liable for his or her taxes, the employer taxes that you should have paid and any fines and penalties the IRS or state might want to charge you with. So budget for hiring folks as employees and pay them through a reputable payroll company.
10. I just signed a distribution deal with a domestic distributor. But I didn’t bother to read the delivery requirements. It should be fine… right?
Oy. Go back in time. Important elements of your contract are typically triggered upon delivery of your film. If you can’t comply with all the delivery requirements, you risk being in breach of the agreement before sales even begin.
Often these lists are full of materials that are not necessary, expensive and, truthfully, not even always needed by the distributor. Go through the list carefully and remove all items that you do not have (or can’t easily obtain). If the delivery schedule asks for a 35mm print, but there is not going to be a theatrical release, this item should be removed from the list of required items. Bottom line: Make sure that you can deliver everything listed on the schedule and if you can’t, get it omitted, or figure out how to make it work! MM
Michael C. Donaldson is an entertainment attorney who has been fighting for indie moviemakers for more than 30 years. In addition to working on films by such industry icons as Oliver Stone, Donaldson serves as General Counsel to Film Independent and the Writers Guild Foundation. Lisa Callif is an entertainment attorney whose primary focus is on representing independent moviemakers. Callif has worked on such films as This Film is Not Yet Rated and I.O.U.S.A. Donaldson and Callif are co-authors of The American Bar Association’s Legal Guide to Independent Filmmaking.