October 24, 2019

Legalities of Production

Andrew Hewitt shares his experience and insight as a legal consultant to the film and television production industry.

Why is it so important to have the legal side of filmmaking in place?

Without sounding dramatic, it’s absolutely crucial. What runs through and underpins the entire project from beginning to end is the legal concept of copyright and, more importantly, the ownership of that copyright. This has to be safeguarded. It starts with the development of a concept and ends with the ability to distribute and exploit a completed film or television series through multiple territories for the duration of copyright, often in perpetuity. As any provider of E&O Insurance will tell you the rights need to be in place, with clear chain of title, without which distribution will stall. We are often asked to retro fit legal to a project, and to undertake a rights and clearance due diligence at distribution stage. This often comes as a bit of a shock to the inexperienced producer so it makes sense to have the legal aspects in place from the outset.

Practically though, thinking through how a project should be set up and structured can make the difference between a project moving into production or not. A project can be structured in many different ways, such as for tax reasons, for the securing of incentives, or for accessing treaty co-productions, or certain territory grants. All of this requires an understanding of the law and legal processes, often at an international level as this is a global business; but we also look at this in conjunction with other advisors, accountants and specialist tax advisors that we work closely with. Collectively we are able to provide considered advice and assurances as to the best way forward for a particular project.

What kinds of legal advice and assistance do you offer filmmakers?

Our clients range from the emerging filmmaker to the seasoned professional, so the type of assistance we offer does differ. Fundamentally though we are able to assist the filmmaker through the various stages of a project, from rights acquisition and development to distribution.

By far the most pressing need is for assistance with financing and investor agreements, project structuring and rights acquisition. Recently we have been asked to provide a lot of advice on various distribution and licensing deals.

As we are involved in multiple projects at any given time we are able to bring perspective and a sense of what is standard and usual in the industry. This in turn brings a level of comfort and assurance to our clients who may often operate independently and don’t have that reference point.  It’s a competitive business after all. I personally make sure I attend at least one international festival a year such as Cannes, EFM or the AFM, as well a local festival such as DIFF. This exposure brings added perspective and nuance to the advice we bring to a project and to the filmmaker. Occasionally we are requested to take projects to the market which we are happy to do.

One of the major barriers to accessing legal services is the perceived cost involved. To assist the filmmaker we offer two fee arrangements: the first is an ad hoc hourly fee rate, which is useful for specific pieces of advice, occasional work or contract drafting or review. The second is a legal retainer that applies to a specific project. This is a set fee for a comprehensive scope of legal services across the duration of the project, meaning that you have the benefit of a legal advisor throughout the project. To make the fee workable we charge a relatively small percentage at the outset usually about 15% of the total, with the balance structured to match the production’s cash flow. This arrangement has proved very popular with producers. Then for specific projects that meet particular criteria, we are able to come in slightly differently by taking a deferred fee.

In which areas do you find film producers lacking in most, and how can they boost their knowledge?

Most producers tend to be quite resourceful and knowledgeable, so there is seldom an aspect of their project that they haven’t given some level of thought to, and that’s certainly true of the seasoned producers. What we bring to the project is that additional level of perspective and then legal know-how and skill in how we might solve a particular problem or provide for a particular situation. We see this often with our ability to draft considered high level legal agreements ensuring the interests of the filmmaker are adequately taken care of. Filmmakers shouldn’t be expected to be lawyers and I think it helps if this is recognised. Certainly if one looks to the UK, Europe or the States, every Producer and filmmaker will utilise the services of a legal expert, and they are a crucial part of the producer’s team, it goes without saying. Here in South Africa there is still some apprehension about the use of lawyers and that’s probably because this a highly specialised area of the law, which it is and then also the fact that there is often inadequate provision for this expense in any budget. The law is constantly evolving and we are able to bring our knowledge of the law on an issue or in the drafting of a contract or in the determination of a copyright issue, which filmmakers might not otherwise be aware of. We are regularly asked to review distribution agreements, license agreements and sales agency agreements, as well as financing agreements, and all these areas are quite complex, so it’s understandable that professional advice is sought for this type of work. With some of the more complex productions the number of legal contracts involved can run to more than 40 agreements.

What is involved in licensing content to different territories?

Distribution is the primary mechanism by which a film or television property is monetised, so it’s a very important part of the value chain.  Under these arrangements, the rights to the property are being licensed for consideration. The particulars of any license deal varies depending on territory, duration, medium, and scope of rights being granted. Most local deals we see involve a distribution component for distribution within Africa and if a Sales Agent is involved usually rest of world is covered under that arrangement. There are different strategies for documentaries, dramatic feature films, television and VOD. While it’s true that there are more opportunities opening up thanks to online streaming services, there are accompanying challenges around firstly accessing and securing those deals and secondly with the major players, the granting of all rights worldwide that may effectively limit the returns a producer may hope to achieve.

What else are you involved in currently?

As a service provider to the industry, we are always looking for opportunities to provide value to our clients and the industry generally. We are presently involved in two exciting endeavours with industry players, which will help further grow and establish the local industry. The one I can mention now, which we have just announced, is SAMCAM – a film collection account agency business which is such a vital part of the film value chain. This is in conjunction with Galbraith Rushby Accountants. To us, it just made sense to provide this service locally, and we are quite excited about the possibilities presented with this business offering.

 Top 5 Legalities You Should Be Thinking Of

  1. Every production involves many different types of contracts.
  2. A good structural plan developed at the outset will help you stay on track.
  3. You are in the business of making films, not lawyering.
  4. A good legal advisor will work to help you further the project, not put barriers in the way.
  5. Ensure you are legally compliant from the start, because you will need to be at the end.

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