Mark Litwak - Risky Business: Financing and Distributing Independent Films

Financing & Distributing IndependentFilms

2nd Edition: Expanded & Updated

by

Mark Litwak

Smashwords Edition

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Published on Smashwords by:

Hampstead Enterprises, Inc.

RISKY BUSINESS

Financing & Distributing IndependentFilms

2nd Edition: Expanded & Updated

Copyright 2004, 2009 Hampstead Enterprises,Inc.

Cover design by Michael Litwak

All rights reserved. No part of this book maybe used or reproduced in any manner whatsoever without writtenpermission from the publisher, except in the case of briefquotations embodied in critical articles and reviews.

Smashwords Edition License Notes

This ebook is licensed for your personal useonly. This ebook may not be re-sold or given away to other people.If you would like to share this book with another person, pleasepurchase an additional copy for each person you share it with. Ifyou are reading this book and did not purchase it, or it was notpurchased for your use only, then you should return toSmashwords.com and purchase your own copy. Thank you for respectingthe author's work.

Other books by Mark Litwak

Reel Power

Courtroom Crusaders

Contracts for the Film and TelevisionIndustry

Dealmaking in the Film and TelevisionIndustry

Litwaks Multimedia Producers Handbook

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For Michael, David and Tiiu

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This book is designed to help readersunderstand legal issues frequently encountered in the entertainmentindustry. It will provide you with an understanding of basic legalprinciples, enabling you to better communicate with yourattorney.

The information contained in this book isintended to provide general information and does not constitutelegal advice. This book does not create an attorney-clientrelationship between the reader and the author or any of hisassociates, and you should not act nor rely on any information inthis book without seeking the advice of an attorney and receivingcounsel based on the relevant facts and circumstances. Many of thelegal principles mentioned are subject to exceptions andqualifications, which may not be noted in the text. Furthermore,case law and statutes are subject to revision and may not apply inevery state. Because of the quick pace of technological change,some of the information in this book may be outdated by the timeyou read it. Readers should be aware that business practices,distribution methods, and legislation continue to evolve in therapidly changing entertainment industry.

THE INFORMATION IS PROVIDED AS IS, AND THEAUTHOR MAKES NO EXPRESS OR IMPLIED REPRESENTATIONS ORWARRANTIESINCLUDING WARRANTIES OF PERFORMANCE, MERCHANTABILITY,AND FITNESS FOR A PAR TICULAR PURPOSEREGARDING THIS INFORMATION.THE AUTHOR DOES NOT GUARANTEE THE COMPLETENESS, ACCURACY, ORTIMELINESS OF THIS INFORMATION. YOUR USE OF THIS INFORMATION IS ATYOUR OWN RISK. YOU ASSUME FULL RESPONSIBILITY AND RISK OF LOSSRESULTING FROM THE USE OF THIS INFORMATION. THE AUTHOR WILL NOT BELIABLE FOR ANY DIRECT, SPECIAL, INDIRECT, INCIDENTAL,CONSEQUENTIAL, OR PUNITIVE DAMAGES OR ANY OTHER DAMAGES, WHETHER INAN ACTION BASED UPON A STATUTE, CONTRACT, TORT (INCLUDING, WITHOUTLIMITATION, NEGLIGENCE), OR OTHERWISE, RELATING TO THE USE OF THISINFORMATION.

The author can be contacted by email.However, if you communicate with him in connection with a matterfor which he does not already represent you, your communication maynot be treated as privileged or confidential. An attorney-clientrelationship can only be created with the author through a writtenretainer agreement signed by both parties.

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I am grateful for the assistance of attorneysShannon Hensley and Pete Wilke for their editorial comments andreview, and to Jan Rofekamp for his review of certain portions ofthis book. I also want to thank my law clerks Cyndie Chang andJessica Dubick and my assistant Emi Koda and paralegals Chrys Wuand Elizabeth Zook for fact-checking and research. Special thanksto IFTA and its director of legal affairs, Susan Cleary, forsharing information.

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CONTRACTS AND FORMS*

*All the contracts in this book areavailable on computer disk. Seehttp://marklitwak.com/store/risky_business-CD-R.html to order.

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PREFACE

There is a venerable Latin saying: caveatemptor. It means buyer beware. This is good advice foranyone swimming in the shark-infested waters of the motion pictureindustry. Here, newcomers may not even be able to spot the sharksbecause they are charming, well-mannered, and highly educated. Thesharks know many ways to defraud, cheat, and take advantage ofnovice filmmakers, and they can be ruthless. That is not to saythat everyone in the industry is a scoundrel. Some make a point ofkeeping their word and possess great integrity. The difficulty isthat one often doesnt fully know the character of the person orcompany you are dealing with when the contract is signed.

The manner in which independent films arefinanced and distributed has become increasingly complex. Most filmschools focus on the creative aspects of filmmaking, often payingscant attention to the financial and legal issues that beginningfilmmakers face. This book was borne from the frustration ofobserving talented young writers and filmmakers being takenadvantage of, or watching them make mistakes that could easily beavoided. I have seen filmmakers borrow large sums of money and workgrueling hours to fulfill their dream of producing a film, but theyultimately fail because they do not secure their legal rights orthey neglect to arrange proper distribution for their picture. Ifthe independent filmmaker does not repay his investors, he oftendoesnt get a second chance to make a film. The industry and themoviegoing public lose a lot of talented filmmakers as a result ofunnecessary mistakes.

This book is designed to help level theplaying field by informing the reader of potential pitfalls.Additional information is available on my website: EntertainmentLaw Resources at www.marklitwak.com. Readers can subscribe atthe website to a free newsletter about entertainment lawdevelopments.

Much of the material in this book I developedfor courses I have taught at UCLA Extension for the past 20 years.This work follows my previous books. Reel Power, The Strugglefor Influence and Success in the New Hollywood (Morrow, 1986,NAL 1987) details the inner-workings of the movie business;Dealmaking in the Film & Television Industry(Silman-James Press, 2 nd ed., 2002) andContracts for the Film & Television Industry(Silman-James Press, 2 nd ed., 1998) areentertainment law guides for non-lawyers. Litwaks MultimediaProducers Handbook covers multimedia law and distribution. Ihave also created a software program entitled Automated Contractsfor the Film & Television Industry.

I welcome comments and suggestions fromreaders. You can contact me at:

Law Offices of Mark Litwak &Associates

433 N. Camden Dr., Ste. 1010

Beverly Hills, CA 90210

Phone: (310) 859-9595

Fax: (310) 859-0806

Email: law2@marklitwak.com

Website: www.marklitwak.com

I hope this guide will prove useful toyou.

Mark Litwak

September 2008

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FILMMAKER SELF- DEFENSE CHECKLIST

Here is a summary of some of the mostimportant ways filmmakers can protect their interests:

1. OBTAIN ALL PROMISES IN WRITING.Dont accept oral assurances from a producer or studio executive.If they promise to spend $50,000 to promote your film, put thatpromise in writing. If there is not enough time to draft along-form contract, insist on a letter agreement spelling out theessential terms.

2. REGISTER ALL WORKS WITH THE COPYRIGHTOFFICE.