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  • The blog posts and information on this site is/are for general informational purposes only. The information contained herein is not intended to be complete or exhaustive, and may have been superseded by changes in the law. The information on this site does not constitute legal advice, nor does it form any attorney/client relationship between this Firm and the reader. Please seek legal counsel regarding your specific issues, projects and needs.

Archive for the ‘Corporate Formalities’ Category

Branding and Trademarks and Logos – Oh My!
Wednesday, June 18th, 2014

Logo sheet

Logo sheet (Photo credit: kaioshin)

Clients and would-be clients often inquire about protecting their brand and filing or protecting their trademarks and logos, with the questions usually focusing on when they should register their trademarks and logos.

The short answer is “day one,” but the longer answer is a discussion of a comprehensive strategy for protecting a business’s brand, trademarks, and logos as part of an early, intentional, and comprehensive plan.

First let’s discuss the terms a little.

Branding is the general concept of the image of your business overall – the look and feel of your packaging and product, the images and logos used in or on your product, product packaging, and website, and including – but not limited to – the formally filed trademarks the company may have.

A logo or image may often be available for trademark registration, but simply using such logo or image in commerce does not convey the same legal rights and protections as actual registration of such logos or images with the U.S. Trademark Office.

Many start-ups and early stage business focus very carefully on their general branding, look, feel, image and message, but often leave formal filing of trademarks until later – usually because they don’t want the early expense of filing the trademarks or the legal expense of a filing.

That is likely “penny wise and pound foolish.” Here’s why.

Begin at the ending

Often the key element of a business’s brand is – eventually and after the business has had some success and history in the marketplace – it logo. It’s (hopefully) trademarked name or image or stylized name, an amalgam of name and pictorial image. Such as…The Coca-Cola logo is an example of a widely-r...

The combined image and words of the Coca-Cola brand is the perfect example of a logo that is synonymous with the brand itself, and all the brand stands for – the drink, the merchandise, the world-wide presence, the company’s good will and image – the whole package of what Coca-Cola is as both a product, a company, and indeed, as a “lifestyle” as Coca-Cola would like the customer to think of it.

But in today’s marketplace, because of prior trademark filings of other companies, or simply of the use by other companies of a name, words, or an image – or part of an image, there is a great danger that what you intend to use for your name or logo is already in use.

Therefore, if you start business with a non-trademark registered name, image or logo – and without having researched prior or other uses of same or similar names, images or logos, you run the very real risk of having that prior user demand that you cease and desist your use – and very possibly AFTER your business has become associated with your use of the name, image, words, logo, etc.

Very bad news considering that – perhaps one, or two, or three years into your business – just as you are forming brand recognition with the name and logo you WERE using, you THEN learn that someone else has the legal right to stop you from using that name and logo.

And you have to restart the hard work and time consuming process of re-building brand recognition and identity.

What is a Start-Up or New Company to Do?

Begin at the beginning!

At the very outset of your business idea, research your INTENDED name, logo and branding, to determine whether there is anyone out there using the same or similar words, images, logos, etc. Good places to include in that search are: the interwebs, the U.S. Copyright Office, the U.S. Trademark and Patent Office, the Secretary of State of the state you will be primarily doing business in – or several states if applicable, relevant magazines or trade journals.

After you have made a preliminary assessment of one or several names, logos, etc. that you believe are available, it is strongly advisable to consult with an attorney.

Yes, it will cost a bit of your start-up funding. But the attorney may deliver good news. For example, just because there is a trademark using the same words or a similar logo, that doesn’t necessarily mean that you can’t use those words or a similar logo in your branding. But because of the operation of copyright and/or trademark law, that answer may not be obvious. So consult a lawyer qualified in such matters.

Even if the attorney delivers bad news – advising that, indeed, the prior or other use likely prohibits your use, that is still good and useful news! You will then know – at the very beginning of your business – before wasting any time, effort, money, brand development that then needs to be changed, that you need to select another name, logo, image, etc.

Therefore – hopefully – the branding, image, name and logo you begin with will develop – uninterrupted – into the brand that becomes recognized worldwide.

And you will then have the ability to keep others from using YOUR name, logo, image, etc.

Filmmaker & Creatives Business Practices – 4 Must Do’s
Tuesday, June 4th, 2013

The unglamorous side of wildlife filmmaking!

The unglamorous side of wildlife filmmaking! (Photo credit: Paul Williams (Iron Ammonite))

Aspiring filmmakers and creatives often let the contract and business details be an afterthought, thinking “that’s not fun. Or creative. And I don’t have the budget for that un-fun, un-creative stuff.  I’m working with my friends… it’ll all be fine.”

But they’re unlikely to do so again after the many problems that arise (which they always do) and perhaps render their hard work practically and commercially unusable. Neglecting contracts and business formalities may prevent getting investors for your project, or may cause a host of other problems that mean a film or creative project cannot get interest or distribution.

What follows is a brief list of critical “what and why” business details that filmmakers must do, from the outset, to minimize obstacles to a film or project’s success.

1.  Form a Production Company through which the film must be made. Why?

First, that will be the legal entity into which development/investment money is deposited. Why not take money/investments personally? Because of the second primary reason – liability. Liability in film development and production can come from multiple angles – from the U.S. Securities and Exchange Commission for taking investments without the proper paperwork (a “prospectus” or “private placement memorandum” – VERY different from a “business plan”), or from an accident involving the cast or crew on set, or to a bystander not part of the cast or crew (think a lighting element falling onto a passerby), or to the production “losing” funds needed to pay cast and crew.

This “parade of horribles” isn’t fiction – it happens all the time. And if it happens without the legal protection of an LLC or similar legally separate production company, the legal liability will likely fall personally on the producers and those heading up the project, and potentially onto the investors – meaning that personal assets will be responsible for whatever harm or legal claims.

The third reason is that the legal entity will be the “person” (a legal “person” under the law) that contracts with all those involved in the film – from the producer(s), directors, cast and crew, transportation, catering, etc. If anything goes sideways with these contracts, it is the legal person that is held accountable instead of the actual persons heading up and investing in the project.

2. Get a contract with the writer(s) for the legal acquisition of the script or story –a literary acquisition agreement (a/k/a an “option/purchase” agreement). Failure to do this means that the production does not have formal rights to the intellectual property it is making – meaning the writer/creator may have the ability to withdraw his material and prevent the production from doing anything commercial with footage already shot. So it is critical that this be accomplished before any production – or even development – takes place.

Think that you are “friends with the writer” and you’re therefore “in this together?” Are you willing to bet the entire project and all your hard work on that assumption? What is it that they say when you “ass-u-me” something?

Creative partnerships crumble all the time. Without a written agreement in place from the VERY beginning, the entire project is at risk.

3. Investments – get lawyer drafted investment documents. Or risk having to refund all investments, fines, jail time, and lawsuits by the investors themselves.

Under the SEC and state securities rules, if you have taken someone’s money and have given them an expectation of a “return” on that money, you’ve probably sold a “security.”

Yes, even selling shares of your little film may well constitute a “security” in the eyes of the federal and state governments. That doesn’t mean you can’t take such investments. But it does mean that if you do so without following the proper legal requirements, you may have to give back ALL of the money taken for the project (yes, all investments – not just the one that the gov’ment found out about), and it may mean fines or even jail time.

And independent of those terrible consequences, failing to have the right legal language in investment documents leaves the production open to lawsuits by the investors if they become dissatisfied with… all sorts of things – how you’ve spent the money, how long it has taken to get a return on the money, the size of the return (or lack thereof).

Proper investment documents are as much for the protection of the film and filmmakers as they are for the protection of the investors.

4.  Production contracts – use them – ALWAYS. Without exception!   Like it or not, a film is a business.  Even the “auteur,” if he hopes to continue making filmic masterpieces, cannot ignore the business realities that filmmaking is expensive (even in this digital age), it takes money, and money rarely comes to one who does not handle it in a businesslike manner.

So even first effort indie films are a business – a proving ground to show that you can handle the business, artistic and technical demands of being a filmmaker.  And as such there are contracts that MUST be used in the work of this business; contracts that clearly state who owns what, who has rights to what, profit/interest divisions, etc. The who, what, when, where, why (perhaps) and how much regarding the business transactions involved: the script/story option purchase agreement, cast and crew agreements, talent/interviewee release agreements, name and likeness releases, licensing agreements for use of the intellectual property of others (music, photographs, products, film or video clips (no – YouTube does not mean it’s in the public domain)), location agreements, craft services contracts, transportation agreements, insurance (workers comp, liability, errors and omissions, defamation protection), sponsorship and product placement agreements, distribution (foreign and domestic) agreements, appropriate trademark registrations, and the list goes on and on and on.

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You can’t afford NOT to hire an entertainment lawyer.
Tuesday, February 26th, 2013

Fashion Care Laundromat, Albany, N.Y. - sprock...

Fashion Care Laundromat, Albany, N.Y. - sprocket hole and layered film (Photo credit: chuckthewriter)

I often receive calls from creatives with business and legal questions about their project. Many thinly funded project leaders balk when they find out that an attorney (including yours truly) charges from $375 per hour and up  – to negotiate deals or assist with disputes, draft entertainment or business contracts or settlements, do copyright or life rights clearance work, assist in obtaining life rights and rights of publicity, file Trademark applications, work on some other intellectual property issue or problem or handle the myriad other needs that are necessary to: develop and produce a film, TV project, pilot, or reality program; develop a smartphone app or game; protect music and publishing rights; protect, option or sell a script; sell photographs, etc., etc., etc.

While I sympathize with the thinly funded creative project, the fact is the creative can’t afford NOT to hire an attorney to do what is needed. A few examples:

- a group of friends decide to write a script and develop a film, and shoot a sizzle reel to help raise money to produce the project. Problems presented? Without a legal structure such as an LLC or corporation, they may all be subject to personal liability if anyone sues… for anything; without proper contracts, the rights to the script, dialog, characters, plot, art direction, costumes, special effects, footage, sound recordings, talent’s performances are not vested in – that is, “owned” by – any single person or entity — meaning the rights to the various content are so split and fractured the project likely can NEVER be used by anyone for a commercial purpose. Or perhaps ANY purpose, commercial or not.

- a writer bases a script on a real person for whom the writer does not have the “life rights.” Problem? After toiling away for months or years on the script, the writer can’t do ANYTHING with the script until that little “life rights” issue is taken care of.

- adaptation of a preexisting work – a book, comic, film, or riff on someone else’s intellectual property. Same problem – without getting the rights to adapt the prior work, he who is doing the adapting can’t do ANYTHING with the work product until working out that little “adaptation rights” issue.

There are thousands of variations to these and similar scenarios.

In the attempt to save perhaps as little as a few hundred dollars on legal advice or properly drafted contracts, the creative has wasted months or years of their own time, and potentially the time and effort of all those working on the project as well.

And pulling random contracts off the internet is equally effective. The non-entertainment attorney has little concept of what they are NOT getting via the “free” internet contract. Omissions from the “free” contract may be TERMINAL to a project – but that may not be realized until far down the line, after hours and weeks and months – or years, of blood, sweat and tears.

Don’t skimp on legal advice and properly drafted agreements.

Get the needed advice and legal work at the outset of the project.

I will happily accept credit card payment for the help you need. Many other entertainment attorneys will as well.

So what do entertainment attorneys cost? A small price, considering their involvement may mean the difference between being able to utilize and prosper from your project, versus having wasted a wealth of time, effort, and creativity.

***

If I may be of assistance in the development of your entertainment, media, video game or app project, or in the development and growth of your business, please call or email at your convenience.

Gano Lemoine

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Company Maintenance for the New Year.
Friday, January 25th, 2013

With the New Year comes this reminder – it’s time for some Company maintenance. A few simple, but critically important things need to be done for those with businesses. Here is a partial list of critical requirements:

1. All CorporationsCompaniesPartnerships or other legal entities registered with a state’s Secretary of State need to file their “Annual Report” for the new year.  These “Annual Reports” update company/entity information with the Secretary of State’s office, including any changes in ownership or membership, any changes of address or status (active to inactive, etc.), changes of business type, or other relevant changes.A bond issued by the Dutch East India Company,...

More than anything, the Annual Report is a mandatory requirement that keeps a company’s legal status “current” and in compliance with state law, therefore preserving the liability limitations that corporate/company registration bestowed.

And it’s the states’ opportunity to get a small fee every year.

Failure to file the Annual Report will result in the Company being “Not In Good Standing,” or some similar term, and could mean the loss of the limited liability protection, loss of the company’s ability to sue in the state of registration, or other unpleasant consequences.

2. Schedule and give notice of your “Annual Meeting.”  This is a requirement of most “organization” documents for most corporate entities, and therefore failure to do so jeopardizes the existence and protections of the entity.

3. Renew local and/or state business licenses, authorizations, etc.

4. Consider upcoming leases or other business decisions approaching in the year. What do you need to do now to prepare for that event?

• Give specific notice of cancellation of any contracts or arrangements (many of which may require 30 days or other notice?

• Consider other space and rents in anticipation for a lease negotiation, renewal or cancellation?

• Consider expansion to new or larger space?

• Service contract renewals, renegotiations or finding new (and possibly better) providers?

• Etc.

5. Pay city, state, federal or other taxes?

6. Franchise fees or other subscriptions due for renewal?

7. Adjustments to insurance coverages?

These are just some of the many considerations that should be visited in January, in anticipation of decisions and requirements throughout the year.

Small steps now can make the rest of the year smoother, more productive and more profitable, and will allow the corporate entity to maintain the important legal protections that shield owners from liability or other business perils.

Please contact me for a more comprehensive list of annual corporate “to do’s.”

I would be pleased to assist in any of your company or other legal or business needs.

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Are you treating it like a business?
Friday, November 16th, 2012

My legal practice is a mix of business clients and entertainment clients, so I come across many people that are growing their endeavor from an early stage. That early stage is frequently a natural progression from a unique combination of passion, interest and skill toward (hopefully) a profession – a going concern – whether that is a business of some sort, or a successful film, writing or music career, or the like.

That transition into a “going concern” is incredibly difficult for many reasons, not the least of which is the difficulty many entrepreneurs find in demanding value for their skill, service or idea. Too often entrepreneurs treat their “it”, whatever it may be, not as a business, but as the uncompensated passion from which the “it” evolved.

In doing so, they hold themselves back – they stifle their own growth into a going concern.

Here are a few common pitfalls to avoid.

After reading these suggestions you can push back from these difficulties with a simple phrase – “I wish I could do that, but my lawyer says I can’t.” (Feel free to substitute “business manager”, “accountant” or “soothsayer” if it helps get the message across).  Somehow blaming the bad news on a trusted advisor makes the refusal more palatable to them that’s hearing it.

1. Do not give “it” away – whatever “it” is.        Whether you are producing a widget, selling a thing-a-ma-jig, or building a client base,  it always seems that the intended customer wants it, initially, for free. Beware – and resist this as much as possible.  Admittedly this may be the most difficult of these pitfalls to avoid. Every entrepreneur has to “give away” some of their time, advice, know how, product, samples, skills, etc., to prove to the world that they have something of value that should be paid for. Granted.

But as the old country wisdom goes, “why buy the cow if the milk’s for free?”

Resist the give-away. If what you are offering has value, require that its value be recognized. If a “free sample” has to be given, fine. Just keep it to a minimum, and be clear in your communication that very quickly the value must be recognized – and paid.

Anyone that expects otherwise is unreasonable – and should be passed by quickly and without regret.

2. Confirm that value in a clear writing – always.     Early entrepreneurs often find it difficult insisting that an agreement be put in writing. They often feel that insisting on a writing shows distrust of the opposite party, and therefore may sour the new relationship.

That is looking at a written agreement from the wrong end.  First and foremost, forming a written agreement is a process that makes the parties focus on the details of their intended arrangement – clarifies the deal and the details of the deal – so as to avoid misunderstandings later.  Simply going through the process of discussing and committing to writing what each party intends will help avoid future misunderstandings and mistakes.

Focus on the who, what, when, where, why (sometimes), and how of the transaction.  How will the performance unfold – multiple stages, milestones and approvals leading to the next stage? How will payment unfold – 1, 2, 3 or more installments as performance goes forward?

If you’re finding it difficult to put your understanding in writing, it may be that the transaction is unclear. But it must be. Otherwise the situation is an invitation to problems, disagreement and miscommunication – i.e. disappointment and mistrust by one or all.

3. Beware “friend” pricing .     Much of an entrepreneur’s early success may come from friends, family or acquaintances  - and that’s great and necessary.  But with that comes the danger of giving a price or terms that are, frankly, unfair and unsustainable.

For example, quoting a price for a service that – without the friend even having requested a discount – is steeply discounted from the standard price. The person giving the quote just negotiated against himself because of the “guilt” of giving the friend a “standard” (and presumably fair) price – for example, quoting a $25,000 job for say, $18,000 – a $7,000 discount off the top – as a sort of favor. Albeit one that wasn’t even requested.

Try to think of that “friend discount” this way. What is the value of what you have to offer? And therefore, what is the discount off of the “standard” rate? (here $7,000).

Independent of this transaction, if you were to go to that friend and say, “Friend, would you do me the favor ofgiving me $7,000? Please? As a gift?” What would the answer most likely be?

But in underpricing the actual value of what you have to offer, you have volunteered to do exactly that.

I’m not suggesting you do not provide “friend” pricing – just be well aware of what you are doing when you do it. Make the decision consciously, and without the cloud of guilt merely because the potential new customer is a friend.

When they come to you as a customer or client, their role has shifted, and your judgment must shift to treating yourself and your business fairly.

4.  Where is the business plan?     Many new business owners dismiss the need for a business plan until someone demands one – a bank or potential investor.

That is certainly understandable. Business plans are tedious and time consuming to put together. No fun. And many people do not have a clear understanding of what a business plan is.

But more dauntingly, business plans require the fledgling business to focus on many scary and nebulous concepts: is there a demand for what I’m offering, is it enough of a demand on which to base a business (in other words, “what is my market”), what are my costs, my expenses, overhead, and therefore profits, and over a one, two, three or longer timeline (in other words, “projected profits/losses”), who are my competitors and can they respond to my presence, how much capital do I need, and how long before I am profitable, and therefore, can I last that long, etc.

But much like the process of forming a written agreement, one of the most beneficial functions of a business plan is in forcing the business to focus on all of the relevant factors. On what must be done, and known, to continue in business – and hopefully move to profitability.

These pitfalls are applicable to businesses and entertainment professionals alike.

The simple fact is that one must treat “it” like a business to become a professional.

Top 4 Filmmaker “Must Do” Practices and Why !
Wednesday, April 11th, 2012

Aspiring filmmakers often let the contract and business details of film production be an afterthought, thinking “that’s not fun. Or creative. And I don’t have the budget for that un-fun, un-creative stuff.  I’m working with my friends… it’ll all be fine.”

But they’re unlikely to do so again after the many problems arise (which they always do) and perhaps render their hard work practically and commercially unusable. Neglecting contracts and business formalities may prevent getting investors for your film, or may cause a host of other problems that mean a film cannot get interest or distribution.

What follows is a brief list of a few critical “what and why” business details that filmmakers must do, from the outset, to minimize obstacles to a film or project’s success.

1.  Form a Production Company through which the film must be made. Why?

First, that will be the legal entity into which development/investment money is deposited. Why not take money/investments personally? Because of the second primary reason – liability. Liability in film development and production can come from multiple angles – from the U.S. Securities and Exchange Commission for taking investments without the proper paperwork (a “prospectus” or “private placement memorandum” – VERY different from a “business plan”), or from an accident involving the cast or crew on set, or to a bystander not part of the cast or crew (think a lighting element falling onto a passerby), or to the production “losing” funds needed to pay cast and crew.

This “parade of horribles” isn’t fiction – it happens all the time. And if it happens without the legal protection of an LLC or similar legally separate production company, the legal liability will likely fall personally on the producers and those heading up the project, and potentially onto the investors – meaning that personal assets will be responsible for whatever harm or legal claims.

The third reason is that the legal entity will be the “person” (a legal “person” under the law) that contracts with all those involved in the film – from the producer(s), directors, cast and crew, transportation, catering, etc. If anything goes sideways with these contracts, it is the legal person that is held accountable instead of the actual persons heading up and investing in the project.

2. Get a contract with the writer(s) for the legal acquisition of the script or story –a literary acquisition agreement (a/k/a an “option/purchase” agreement). Failure to do this means that the production does not have formal rights to the intellectual property it is making – meaning the writer/creator may have the ability to withdraw his material and prevent the production from doing anything commercial with footage already shot. So it is critical that this be accomplished before any production – or even development – takes place.

Think that you are “friends with the writer” and you’re therefore “in this together?” Are you willing to bet the entire project and all your hard work on that assumption? What is it that they say when you “ass-u-me” something?

Creative partnerships crumble all the time. Without a written agreement in place from the VERY beginning, the entire project is at risk.

3. Investments – get lawyer drafted investment documents. Or risk having to refund all investments, fines, jail time, and lawsuits by the investors themselves.

Under the SEC and state securities rules, if you have taken someone’s money and have given them an expectation of a “return” on that money, you’ve probably sold a “security.”

Yes, even selling shares of your little film may well constitute a “security” in the eyes of the federal and state governments. That doesn’t mean you can’t take such investments. But it does mean that if you do so without following the proper legal requirements, you may have to give back ALL of the money taken for the project (yes, all investments – not just the one that the gov’ment found out about), and it may mean fines or even jail time.

And independent of those terrible consequences, failing to have the right legal language in investment documents leaves the production open to lawsuits by the investors if they become dissatisfied with… all sorts of things – how you’ve spent the money, how long it has taken to get a return on the money, the size of the return (or lack thereof).

Proper investment documents are as much for the protection of the film and filmmakers as they are for the protection of the investors.

4.  Production contracts – use them – ALWAYS. Without exception!   Like it or not, a film is a business.  Even the “auteur,” if he hopes to continue making filmic masterpieces, cannot ignore the business realities that filmmaking is expensive (even in this digital age), it takes money, and money rarely comes to one who does not handle it in a businesslike manner.

So even first effort indie films are a business – a proving ground to show that you can handle the business, artistic and technical demands of being a filmmaker.  And as such there are contracts that MUST be used in the work of this business; contracts that clearly state who owns what, who has rights to what, profit/interest divisions, etc. The who, what, when, where, why (perhaps) and how much regarding the business transactions involved: the script/story option purchase agreement, cast and crew agreements, talent/interviewee release agreements, name and likeness releases, licensing agreements for use of the intellectual property of others (music, photographs, products, film or video clips (no – YouTube does not mean it’s in the public domain)), location agreements, craft services contracts, transportation agreements, insurance (workers comp, liability, errors and omissions, defamation protection), sponsorship and product placement agreements, distribution (foreign and domestic) agreements, appropriate trademark registrations, and the list goes on and on and on.

With New Year brings New Year Company Maintenance.
Monday, January 9th, 2012

With the New Year comes this reminder – it’s time for some Company maintenance. A few simple, but critically important things need to be done for those with businesses. Here is a partial list of critical requirements:

1. All CorporationsCompaniesPartnerships or other legal entities registered with a state’s Secretary of State need to file their “Annual Report” for the new year.  These “Annual Reports” update company/entity information with the Secretary of State’s office, including any changes in ownership or membership, any changes of address or status (active to inactive, etc.), changes of business type, or other relevant changes.A bond issued by the Dutch East India Company,...

More than anything, the Annual Report is a mandatory requirement that keeps a company’s legal status “current” and in compliance with state law, therefore preserving the liability limitations that corporate/company registration bestowed.

And it’s the states’ opportunity to get a small fee every year.

Failure to file the Annual Report will result in the Company being “Not In Good Standing,” or some similar term, and could mean the loss of the limited liability protection, loss of the company’s ability to sue in the state of registration, or other unpleasant consequences.

2. Schedule and give notice of your “Annual Meeting.”  This is a requirement of most “organization” documents for most corporate entities, and therefore failure to do so jeopardizes the existence and protections of the entity.

3. Renew local and/or state business licenses, authorizations, etc.

4. Consider upcoming leases or other business decisions approaching in the year. What do you need to do now to prepare for that event?

• Give specific notice of cancellation of any contracts or arrangements (many of which may require 30 days or other notice?

• Consider other space and rents in anticipation for a lease negotiation, renewal or cancellation?

• Consider expansion to new or larger space?

• Service contract renewals, renegotiations or finding new (and possibly better) providers?

• Etc.

5. Pay city, state, federal or other taxes?

6. Franchise fees or other subscriptions due for renewal?

7. Adjustments to insurance coverages?

These are just some of the many considerations that should be visited in January, in anticipation of decisions and requirements throughout the year.

Small steps now can make the rest of the year smoother, more productive and more profitable, and will allow the corporate entity to maintain the important legal protections that shield owners from liability or other business perils.

Please contact me for a more comprehensive list of annual corporate “to do’s.”

I would be pleased to assist in any of your company or other legal or business needs.

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Join me at the Screenwriters Network Attorney Panel
Wednesday, July 6th, 2011

I’m looking forward to being a panelist at the Scriptwriters Network Entertainment Attorney Panel – about the law and business of screenwriting – August 13, 2011, 1PM.

Come on out and join us on the Universal Studios Backlot.

http://www.scriptwritersnetwork.org/event20110813.html

Universal Studios Backlot
Rehearsal Hall 3269
Universal City, CA 91608
Any questions, email the Scriptwriters Network at universal@scriptwritersnetwork.org.

Are You Treating It Like a Business?
Wednesday, June 8th, 2011

My legal practice is a mix of business clients and entertainment clients, so I come across many people that are growing their endeavor from an early stage. That early stage is frequently a natural progression from a unique combination of passion, interest and skill toward (hopefully) a profession – a going concern – whether that is a business of some sort, or a successful film, writing or music career, or the like.

That transition into a “going concern” is incredibly difficult for many reasons, not the least of which is the difficulty many entrepreneurs find in demanding value for their skill, service or idea. Too often entrepreneurs treat their “it”, whatever it may be, not as a business, but as the uncompensated passion from which the “it” evolved.

In doing so, they hold themselves back – they stifle their own growth into a going concern.

Here are a few common pitfalls to avoid.

After reading these suggestions you can push back from these difficulties with a simple phrase – “I wish I could do that, but my lawyer says I can’t.” (Feel free to substitute “business manager”, “accountant” or “soothsayer” if it helps get the message across).  Somehow blaming the bad news on a trusted advisor makes the refusal more palatable to them that’s hearing it.

1. Do not give “it” away – whatever “it” is.        Whether you are producing a widget, selling a thing-a-ma-jig, or building a client base,  it always seems that the intended customer wants it, initially, for free. Beware – and resist this as much as possible.  Admittedly this may be the most difficult of these pitfalls to avoid. Every entrepreneur has to “give away” some of their time, advice, know how, product, samples, skills, etc., to prove to the world that they have something of value that should be paid for. Granted.

But as the old country wisdom goes, “why buy the cow if the milk’s for free?”

Resist the give-away. If what you are offering has value, require that its value be recognized. If a “free sample” has to be given, fine. Just keep it to a minimum, and be clear in your communication that very quickly the value must be recognized – and paid.

Anyone that expects otherwise is unreasonable – and should be passed by quickly and without regret.

2. Confirm that value in a clear writing – always.     Early entrepreneurs often find it difficult insisting that an agreement be put in writing. They often feel that insisting on a writing shows distrust of the opposite party, and therefore may sour the new relationship.

That is looking at a written agreement from the wrong end.  First and foremost, forming a written agreement is a process that makes the parties focus on the details of their intended arrangement – clarifies the deal and the details of the deal – so as to avoid misunderstandings later.  Simply going through the process of discussing and committing to writing what each party intends will help avoid future misunderstandings and mistakes.

Focus on the who, what, when, where, why (sometimes), and how of the transaction.  How will the performance unfold – multiple stages, milestones and approvals leading to the next stage? How will payment unfold – 1, 2, 3 or more installments as performance goes forward?

If you’re finding it difficult to put your understanding in writing, it may be that the transaction is unclear. But it must be. Otherwise the situation is an invitation to problems, disagreement and miscommunication – i.e. disappointment and mistrust by one or all.

3. Beware “friend” pricing .     Much of an entrepreneur’s early success may come from friends, family or acquaintances  - and that’s great and necessary.  But with that comes the danger of giving a price or terms that are, frankly, unfair and unsustainable.

For example, quoting a price for a service that – without the friend even having requested a discount – is steeply discounted from the standard price. The person giving the quote just negotiated against himself because of the “guilt” of giving the friend a “standard” (and presumably fair) price – for example, quoting a $25,000 job for say, $18,000 – a $7,000 discount off the top – as a sort of favor. Albeit one that wasn’t even requested.

Try to think of that “friend discount” this way. What is the value of what you have to offer? And therefore, what is the discount off of the “standard” rate? (here $7,000).

Independent of this transaction, if you were to go to that friend and say, “Friend, would you do me the favor of giving me $7,000? Please? As a gift?” What would the answer most likely be?

But in underpricing the actual value of what you have to offer, you have volunteered to do exactly that.

I’m not suggesting you do not provide “friend” pricing – just be well aware of what you are doing when you do it. Make the decision consciously, and without the cloud of guilt merely because the potential new customer is a friend.

When they come to you as a customer or client, their role has shifted, and your judgment must shift to treating yourself and your business fairly.

4.  Where is the business plan?     Many new business owners dismiss the need for a business plan until someone demands one – a bank or potential investor.

That is certainly understandable. Business plans are tedious and time consuming to put together. No fun. And many people do not have a clear understanding of what a business plan is.

But more dauntingly, business plans require the fledgling business to focus on many scary and nebulous concepts: is there a demand for what I’m offering, is it enough of a demand on which to base a business (in other words, “what is my market”), what are my costs, my expenses, overhead, and therefore profits, and over a one, two, three or longer timeline (in other words, “projected profits/losses”), who are my competitors and can they respond to my presence, how much capital do I need, and how long before I am profitable, and therefore, can I last that long, etc.

But much like the process of forming a written agreement, one of the most beneficial functions of a business plan is in forcing the business to focus on all of the relevant factors. On what must be done, and known, to continue in business – and hopefully move to profitability.

These pitfalls are applicable to businesses and entertainment professionals alike.

The simple fact is that one must treat “it” like a business to become a professional.

Contracts & Business Needs of Film Production – and why.
Friday, March 11th, 2011

AktNotarjalny-1923

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Filmmakers and writers often let the contract and business details be a second – or third or forth priority, which is unfortunate. Neglecting contracts and business formalities may prevent getting investors into a movie, or may cause a host of other problems that mean a film cannot get interest or distribution.

What follows is a brief list of  “what and why” film and writing business details that must be done, from the outset, to minimize obstacles to a film or project’s success.

- Form a Production Company through which the film must be made. Why? A host of reasons. First, that will be the legal entity into which development/investment money is deposited. Why not take money/investments personally? Because of the second primary reason – liability. Liability in film development and production can come from multiple angles – from the U.S. Securities and Exchange Commission for taking investments without the proper paperwork (a “prospectus” or “private placement memorandum” – VERY different from a “business plan”), from an accident to the cast or crew on set, or to a bystander not part of the cast or crew (think a lighting element falling onto a passerby), or to the production “losing” funds needed to pay cast and crew.

This “parade of horribles” isn’t fiction – it happens all the time. And if it happens without the legal protection of an LLC or similar legally separate production company, the legal liability will likely fall personally onto the producers and those heading up the project, and potentially onto the investors personally – meaning that personal assets will be responsible for whatever harm or legal claims.

The third reason is that the legal entity will be the “person” (a legal “person” under the law) that contracts with all those involved in the film – from the producer(s), directors, cast and crew, transportation, catering, etc. If anything goes sideways with these contracts, it is the legal person that is held accountable instead of the actual persons heading up and investing in the project.

- Contract with the writer(s) and/or legal acquisition of the script or story through a literary acquisition agreement (a/k/a an “option/purchase” agreement). Failure to do this means that the production does not have formal rights to the intellectual property it is making – meaning the writer/creator may have the ability to withdraw his material and prevent the production from doing anything commercial with footage already shot. So it is critical that this be accomplished before any production – or even development – takes place.

- Production contracts. Like it or not, a film – or a script written on spec – is a business. A writer makes a product (the script or story), or many people come together to make a product (the film), which hopefully will be sold in one form or another, resulting in a financial return that will make everyone involved happy. Perhaps that happiness will be manifest in the ability to eat higher quality raman noodles; or perhaps the ability to make another film – or obtain a return on investment – or result in children being fed and college funds being strengthened.

But a script or film is a business, and as such there are contracts that must be used in the making of the product. What contracts depend on the activity (writing versus filmmaking), budget and the type of production (feature versus documentary, for example). But the principal is the same – contracts that clearly state who owns what, who has rights to what, profit/interest divisions, etc.

Essentially the who, what, when, where, why (perhaps) and how much regarding the business transactions involved.  These may include: the script/story option purchase agreement, cast and crew agreements, talent/interviewee release agreements, name and likeness releases, licensing agreements for use of the intellectual property of others (music, photographs, products, film or video clips (no – YouTube does not mean it’s in the public domain)), location agreements, craft services contracts, transportation agreements, insurance (workers comp, liability, errors and omissions, defamation protection), sponsorship and product placement agreements, distribution (foreign and domestic) agreements, appropriate trademark registrations, and the list goes on and on and on.

Failure to use appropriate contracts and follow reasonable business procedures will put the whole project in danger.

Kafee: “Mortal danger?” Col. Jessep: “Is there another kind?”

Keep your project out of danger – focus on the appropriate contracts and business formalities from the outset. Thereby clearing the way for your project to get sold and/or distributed.

The higher quality raman is truly worth it.

***

If I may be of assistance in advancing your business or entertainment project, please contact me at your convenience.

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