Legal Issues During Film Development

Legal Issues During Film Development

The development of a film from a simple idea into a full-fledged script. That includes detailed character outlines and unique dialogue within a controlled and pre-defined setting is a complex process. When developing a film project, you’re likely to face a number of potential legal issues during film development regardless of how prepared you are as a filmmaker and how committed you are to making the production go without a hitch. Before you get started, make sure that you’re aware of the complex legal issues during film development. Which are most likely to arise, and that you’ve prepared a plan to combat them.

Creation of Separate Business Entity – the LLC

The first major legal issues during film development will almost certainly be the development of a separate business entity, the LLC.

Forming an LLC for your film project is an important step that has several benefits. First, filmmakers or film producers rarely take on the task of producing a feature film. Without first forming a Limited Liability Corporation to control the project. But why?


This takes many of the liabilities away from the producer or the production company. And places the liability under the newly formed entity. The reason?

If the film fails, and investment funds are lost. The LLC can go bankrupt without bankrupting the production company or the producer.

This is also done so that the various projects that a producer is involved in can be kept separate from one another. Allowing for a clear picture on profits, expenses, liabilities, and investments. 

The Option & Purchase Agreement

The next major legal issues during film development surround the acquisition of story rights to produce a screenplay or script. The filmmaker rarely writes the script from their own creative bank.

Without some kind of original work forming the basis upon which the rest of the script can develop from. Acquiring the right to produce a script based on the story or written work of another individual requires very specific contracts to ensure the rights follow the production.

Optioning a screenplay or executing a purchase agreement represents the next major step in the game. The producer thus agrees to pay a specified amount.

For the option to develop the script or screenplay into a film. The purchase agreement provides the production rights so that the story can be produced and later distributed. 

Film Financing

As the process of forming the LLC for the film production progresses and the filmmaker begins seeking financing for the production. Additional legal issues during film development may continue to arise.

At this stage, the filmmaker must abide by strict regulations as they pertain to the investment into their project. Working with investors to secure film financing is a big deal that the Securities and Exchange Commission (SEC) will want to know all about.

Especially if the production will sell shares to investors. At this point, the filmmaker must disclose risks, usually through a PPM. And will be required to execute investor financing agreements before any equity or debt-based securities are exchanged.

Mistakes at this stage can lead to serious legal troubles. So it’s best to work with an entertainment attorney throughout the process.

In Summary

As you can see, legal issues during film development surround a variety of different topics. Many of the complex hurdles that come with the process of executing a film project can be mitigated with proper planning and preparation.

It’s all about familiarizing yourself with the rules and the regulations that come along with producing a feature film. 

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