Entertainment

Does the film producer really 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”. A number of 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, 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 personal 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 own personal 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 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 own 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 actually start collecting some monies as a result. Sometimes this occurs prior to the entertainment lawyer hearing 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 film, and then collects money on the basis of 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.

As both entertainment lawyers and securities lawyers will opine, botching a solicitation for film (or any other) investment can have severe and federally-mandated consequences. No matter how great the film script is, it’s never worth monetary fines and jail time – not to mention the veritable unspooling of the unfinished motion picture if and when the producer gets nailed. All the while, it is shocking to see how many ersatz film producers in the real world try to float their own “investment prospectus”, complete with boastful anticipated multipliers of the box office figures of the famed motion pictures “E.T.” and “Jurassic Park” combined. They draft these monstrosities with their own sheer creativity and imagination, but usually with no entertainment or film lawyer or other legal counsel. I’m sure that some of these producers think of themselves as “visionaries” while writing the prospectus. Entertainment attorneys and the rest of the bar, and bench, may tend to think of them, instead, as prospective ‘Defendants’.

Enough said.

3. DEALING WITH THE GUILDS: Let’s assume that the film producer has decided, even without entertainment attorney guidance yet, that the production entity will need to be a signatory to collective bargaining agreements of unions such as Screen Actors Guild (SAG), the Directors Guild (DGA), and/or the Writers Guild (WGA). This is a subject matter area that some film producers can handle themselves, particularly producers with experience. But if the film producer can afford it, the producer should consult with a film lawyer or entertainment lawyer prior to making even any initial contact with the guilds. The producer should certainly consult with an entertainment attorney or film lawyer prior to issuing any writings to the guilds, or signing any of their documents. Failure to plan out these guild issues with film or entertainment attorney counsel ahead of time, could lead to problems and expenses that sometimes make it cost-prohibitive to thereafter continue with the picture’s further production.

4. CONTRACTUAL AFFAIRS GENERALLY: A film production’s agreements should all be in writing, and not saved until the last minute, as any entertainment attorney will observe. It will be more expensive to bring film counsel in, late in the day – sort of like booking an airline flight a few days before the planned travel. A film producer should remember that a plaintiff suing for breach of a bungled contract might not only seek money for damages, but could also seek the equitable relief of an injunction (translation: “Judge, stop this production… stop this motion picture… stop this film… Cut!”).

A film producer does not want to suffer a back claim for talent compensation, or a disgruntled location-landlord, or state child labor authorities – threatening to enjoin or shut the motion picture production down for reasons that could have been easily avoided by careful planning, drafting, research, and communication with one’s film lawyer or entertainment lawyer. The movie production’s agreements should be drafted with care by the entertainment attorney, and should be customized to encompass the special characteristics of the production.

As an entertainment lawyer, I have seen non-lawyer film producers try to do their own legal drafting for their own pictures. As mentioned above, some few are lucky, and remain under the proverbial radar. But consider this: if the film producer sells or options the project, one of the first things that the film distributor or film buyer (or its own film and entertainment attorney counsel) will want to see, is the “chain of title” and development and production file, complete with all signed agreements. The production’s insurance carrier may also want to see these same documents. So might the guilds, too. And their entertainment lawyers. The documents must be written so as to survive the audience.

Therefore, for a film producer to try to improvise law, is simply to put many problems off for another day, as well as create an air of non-attorney amateurism to the production file. It will be less expensive for the film producer to attack all of these issues earlier as opposed to later, through use of a film lawyer or entertainment attorney. And the likelihood is that any self-respecting film attorney and entertainment lawyer is going to have to re-draft substantial parts (if not all) of the producer’s self-drafted production file, once he or she sees what the non-lawyer film producer has done to it on his or her own – and that translates into unfortunate and wasted expense. I would no sooner want my chiropractor to draft and negotiate his own filmed motion picture contracts, than I would put myself on his table and try to crunch through my own adjustments. Furthermore, I wouldn’t do half of the chiropractic adjustment myself, and then call the chiropractor into the examining room to finish what I had started. (I use the chiropractic motif only to spare you the cliché of “performing surgery on oneself”).

Producing and editing a masterwork of recorded music is obviously a specialized art form. But so is the entertainment lawyer’s act of drafting clauses, contracts, and contractual language generally. How might the art of the entertainment attorney’s legal drafting a clause or contract affect the musician, composer, songwriter, producer or other artist as a practical matter? Many artists think they will be “home free”, just as soon as they are furnished a draft proposed record contract to sign from the label’s entertainment attorney, and then toss the proposed contract over to their own entertainment lawyer for what they hope will be a rubber-stamp review on all clauses. They are wrong. And those of you who have ever received a label’s “first form” proposed contract are chuckling, right about now.

Just because a U.S. record label forwards an artist its “standard form” proposed contract, does not mean that one should sign the draft contract blindly, or ask one’s entertainment lawyer to rubber-stamp the proposed agreement before signing it blindly. A number of label forms still used today are quite hackneyed, and have been adopted as full text or individual clauses in whole or in part from contract form-books or the contract “boilerplate” of other or prior labels. From the entertainment attorney’s perspective, a number of label recording clauses and contracts actually read as if they were written in haste – just like Nigel Tufnel scrawled an 18-inch Stonehenge monument on a napkin in Rob Reiner’s “This Is Spinal Tap”. And if you are a musician, motion picture fan, or other entertainment lawyer, I bet you know what happened to Tap as a result of that scrawl.

It stands to reason that an artist and his or her entertainment lawyer should carefully review all draft clauses, contracts, and other forms forwarded to the artist for signature, prior to ever signing on to them. Through negotiation, through the entertainment attorney, the artist may be able to interpose more precise and even-handed language in the contract ultimately signed, where appropriate. Inequities and unfair clauses aren’t the only things that need to be removed by one’s entertainment lawyer from a first draft proposed contract. Ambiguities must also be removed, before the contract can be signed as one.

For the artist or the artist’s entertainment attorney to leave an ambiguity or inequitable clause in a signed contract, would be merely to leave a potential bad problem for a later day – particularly in the context of a signed recording contract which could tie up an artist’s exclusive services for many years. And remember, as an entertainment lawyer with any longitudinal data on this item will tell you, the artistic “life-span” of most artists is quite short – meaning that an artist could tie up his or her whole career with one bad contract, one bad signing, or even just one bad clause. Usually these bad contract signings occur before the artist seeks the advice and counsel of an entertainment attorney.

One seemingly-inexhaustible type of ambiguity that arises in clauses in entertainment contracts, is in the specific context of what I and other entertainment lawyers refer to as a contract “performance clause”. A non-specific commitment in a contract to perform, usually turns out to be unenforceable. Consider the following:

Contract Clause #1: “Label shall use best efforts to market and publicize the Album in the Territory”.

Contract Clause #2: “The Album, as

delivered to Label by Artist, shall be produced and edited using only first-class facilities and equipment for sound recording and all other activities relating to the Album”.

One shouldn’t use either clause in a contract. One shouldn’t agree to either clause as written. One should negotiate contractual edits to these clauses through one’s entertainment lawyer, prior to signature. Both clauses set forth proposed contractual performance obligations which are, at best, ambiguous. Why? Well, with regard to Contract Clause #1, reasonable minds, including those of the entertainment attorneys on each side of the transaction, can differ as to what “best efforts” really means, what the clause really means if different, or what the two parties to the contract intended “best efforts” to mean at the time (if anything). Reasonable minds, including those of the entertainment lawyers on each side of the negotiation, can also differ as to what constitutes a “first-class” facility as it is “described” in Contract Clause #2. If these contractual clauses were ever scrutinized by judge or jury under the hot lights of a U.S. litigation, the clauses might well be stricken as void for vagueness and unenforceable, and judicially read right out of the corresponding contract itself. In the view of this particular New York entertainment attorney, yes, the clauses really are that bad.

Consider Contract Clause #1, the “best efforts” clause, from the entertainment lawyer’s perspective. How would the artist really go about enforcing that contractual clause as against a U.S. label, as a practical matter? The answer is, the artist probably wouldn’t, at end of day. If there ever were a contract dispute between the artist and label over money or the marketing expenditure, for example, this “best efforts” clause would turn into the artist’s veritable Achilles Heel in the contract, and the artist’s entertainment attorney might not be able to help the artist out of it as a practical matter:

Artist: “You breached the ‘best efforts’ clause in the contract!”

Label: “No! I tried! I tried! I really did!”

You get the idea.

Why should an artist leave a label with that kind of contractual “escape-hatch” in a clause? The entertainment lawyer’s answer is, “no reason at all”. There is absolutely no reason for the artist to put his or her career at risk by agreeing to a vague or lukewarm contractual marketing commitment clause, if the marketing of the Album is
perceived to be an essential part of the deal by and for the artist. It often is. It would be the artist’s career at stake. If the marketing spend throughout the contract’s Term diminishes over time, so too could the artist’s public recognition and career as a result. And the equities should be on the artist’s side, in a contractual negotiation conducted between entertainment attorneys over this item.

Assuming that the label is willing to commit to a contractual marketing spend clause at all, then, the artist-side entertainment lawyer argues, the artist should be entitled to know in advance how his or her career would be protected by the label’s expenditure of marketing dollars. Indeed, asks the entertainment attorney, “Why else is the artist signing this deal other than an advance, marketing spend, and tour support?”. The questions may be phrased a bit differently nowadays, in the current age of the contract now known as the “360 deal”. The clauses may evolve, or devolve, but the equitable arguments remain principally the same.

The point is, it is not just performers that should be held to performance clauses in contracts. Companies can be asked by entertainment lawyers to subscribe to performance clauses in contracts, too. In the context of a performance clause – such as a record label’s contractual obligation to market and publicize an album – it is incumbent upon the artist, and the artist’s entertainment attorney if any, to be very specific in the clause itself about what is contractually required of the record company. It should never be left to a subsequent verbal side conversation. In other words, working with his or her entertainment lawyer, the artist should write out a “laundry-list” clause setting forth each of the discrete things that the artist wants the label to do. As but a partial example:

Contract Clause #3: “To market and publicize the Album in the Territory, you, Label, will spend no less than ‘x’ U.S. dollars on advertising for the Album during the following time period: ____________”; or even,

Contract Clause #4: “To market and publicize the Album in the Territory, you, Label, will hire the ___________ P.R. firm in New York, New York, and you will cause no less than ‘y’ U.S. dollars to be expended for publicity for and directly relating to the Album (and no other property or material) during the following time period: _____________”.

Compare Clauses #3 and #4, to Contract Clause #1 earlier above, and then ask yourself or your own entertainment attorney: Which are more hortatory? Which are more precise?

As for Contract Clause #2 and its vague unexplained definition of “first-class facilities and equipment” – why not have one’s entertainment lawyer instead just include in the contract a laundry-list clause of the names of five professional recording studios in the relevant city, that both parties, label and artist, prospectively agree constitute “first-class” for definitional purposes? This is supposed to be a contract, after all, the entertainment attorney opines. “Don’t leave your definitions, and therefore definitional problems, for a later document or a later day, unless you truly want to make a personal financial commitment to keeping more litigators awash in business debating bad clauses and bad contracts before the courts”.

If you don’t ask, you don’t get. Through the entertainment lawyer, the artist should make the label expressly sign on to a very specific contractual list of tasks in an appropriate clause, monitor the label’s progress thereafter, and hold the label to the specific contractual standard that the artist was smart enough to “carve in” in the clause through the entertainment attorney in the first instance.

Again, consider Contract Clause #2, the “first class facilities and equipment” clause, from the entertainment lawyer’s perspective. Note that, unlike Contract Clause #1, this is a promise made by the artist to the label – and not a promise made by the label to the artist.

So, an artist might now ask his or her entertainment attorney:

“The shoe’s on the other foot, isn’t it?”

“‘First class’ in that clause is as vague and undefined a contractual standard as ‘best efforts’, isn’t it, entertainment lawyer?”

Entertainment attorney answer: “Right”.

“So, entertainment lawyer, there won’t be any harm in me, the artist, signing onto that contractual clause, will there, because I will be able to wiggle out of it if I ever had to, right?”

Entertainment attorney answer: “Wrong”.

The fact is, a contractual ambiguity in a performance clause is a bad thing – in either case – whether in the context of a label obligation to artist; or even in the context of an artist obligation to a label. The entertainment lawyer should advise that any contractual ambiguity in any clause could hurt the artist, even in the context of one of the artist’s own obligations to the other contracting party. Don’t rest on the linchpin of ambiguities in clauses when conducting business and relying on contracts – even if, in your musical art form itself, as Cameron Crowe once suggested of my first guitar hero Peter Frampton, you may happen to write “obscurantist” song lyrics while taking your own artistic license. Contracts need to be handled differently.

Here’s how ambiguity in your own contractual commitment to a label hurts you, from the entertainment lawyer’s perspective. The old-saw contractual principle of music “delivery” often finds the artist required to hand over documents to the label, as well as physical materials such as the album itself in the form of masters, digital masters, or “glass masters”, in order to get paid. By virtue of a contractually-delineated procedure vetted by and between entertainment attorneys, the label may be entitled to hold some (or even all) monies back, and not pay those monies to the artist until “delivery is complete” under the delivery clauses and delivery schedule in a contract. As one might therefore guess, “delivery” is a definite event whose occurrence or non-occurrence under the contract is oft-contested and sometimes even arbitrated or otherwise litigated by and between artists, labels, and the entertainment lawyers and litigators that represent them.

It is incumbent upon the artist and the artist’s entertainment attorney to prevent the label from drumming-up a pretextual “failed delivery” under any clause in the contract as an excuse for non-payment. In the context of Contract Clause #2 above, “first-class facilities and equipment” could easily become that pretext – the artist’s Achilles Heel in the litigation-tested contract contested between entertainment lawyer litigators. The label could simply take the position through counsel or otherwise that the delivered materials were not created at a “first-class” facility as contractually required in the relevant clause, no matter what facility was used. Why? Because “first-class” was never defined in any clause in the contractual document by either entertainment attorney on either side, as any particular facility.

And if no clause in the contract explicitly defined “first class” as an entertainment lawyer would have advised that it should do, then the artist could well be out the money, at least for the entire duration of an eminently avoidable multi-year litigation over what 2 dumb words mean. Worse yet, meanwhile, the label might be holding the money and laughing at the artist behind the artist’s back for his or her lack of contractual prescience. From the artist-side entertainment lawyer’s perspective, both of those horror-show possible eventualities and scenarios, are intolerable. They could have been avoided by a single, better clause – often the narrow reed upon which an artist’s success ultimately rests. (Ask Billy Joel. Ask Neil Young. Ask Bruce Springsteen. Ask George Michael. Ask John Fogerty).

What about prescience? How can this foreseeable contractual delivery dispute in the context of Contract Clause #2, be avoided by the entertainment lawyer? The simple solution in this case, again, is for the artist’s entertainment attorney to take a few extra minutes during the negotiations, and textually list-out, in a reply draft counter-proposed contract sent to the label, even if a single succinct clause, the actual facilities intended to be used. The artist-side entertainment lawyer can seek to make the label explicitly contractually pre-agree to the list of facilities, by name and address, in the body of the contract’s text. That is what a contract is for, anyway, as an entertainment attorney will tell you. When used correctly, a contract and its clauses really just comprise a dispute-avoidance tool. An entertainment contract should be a dispute-avoidance tool exchanged between entertainment lawyers. Also note that a contractual ambiguity in a clause could hurt an artist, regardless of whether it is embedded in one of the artist’s performance obligations, or even in one of the label’s performance obligations! The moral?: List all performance obligations. Break them down into discrete and understandable tasks, clause by clause. Approach it the same way an entertainment attorney would. Better yet – enlist the assistance of one before forming an opinion about the clauses or signing the contract.

Leave a Comment