April 1, 1999

A Filmmaker's Guide to Avoid Litigation

Everyone would like to avoid litigation and the time, expense and stress it entails. This article specifies 23 points to assist filmmakers in avoiding or minimizing lawsuits, or at least maximizing their position if litigation is unavoidable.

1. Get Contracts in Writing. Although most oral contracts are enforceable, their existence is more difficult to prove in court. Written contracts help avoid misunderstandings and force the parties to clarify potential disagreements. Some of the problems associated with alleged oral agreements were recently addressed in the Frank Duxv. Jean-Claude Van Damme trial aired on Court TV. Mr. Dux claimed that he had an oral agreement with Van Damme whereby Dux would receive 2.5% of the gross profits from the film The Quest. Van Damme denied the existence and terms of the alleged oral agreement. The jury 's verdict was in Van Damme 's favor.

2. Insurance. Make sure you understand what kind of insurance you have, the deductible, the limits of liability, exclusions, etc. Motion picture insurance will cost approximately 2-4% of the total budget. In addition, state law requires worker's compensation insurance. In a recent case that I handled, a film­maker did not obtain insurance for his negative. Four rolls of film were misplaced by a post production facility. The facility had insurance but the carrier denied coverage since loss of film was excluded by their policy (since it's usually covered by the filmmaker's policy).

3. Have an Arbitration Clause. Include an arbitration clause in most contracts, a specific way in which both parties agree to resolve disputes. Usually, if the case is arbitrated, the attorney's fees will be reduced, and you will get a quicker resolution .

4. Have a Provision for Attorney's Fees. Your contract should provide that the prevailing party in any dispute will be entitled to recover reasonable attorney's fees and costs. This type of provision can be very beneficial if a dispute arises.

5. Indemnity Clause. Make sure you have a clause which requires your reimbursement for any expenses caused by the failure of the other party to live up to their promises.

6. Venue. If you live and work in California, try to make sure the venue for arbitration is in California.

7. Choice of Law. Make sure California Jaw applies if you reside and work in California.

8. Investigate Parties. Check out the people you are dealing with. For instance, if you are considering distributors for your film, research their reputations. Some distributors have a reputation for understating income and overstating expenses. Talk with other filmmakers whose works these distributors represent.

9. Have an Attorney Review Your Contract. Use an experienced attorney to review and negotiate your contract. This nominal expense item can save you a great deal of time and money if problems arise later.

10. Make Sure You Have a Clear Chain of Title to All Intellectual Property. It is essential that you clear any and all rights, including music rights.

11. Document as Much as Possible. For instance, if you are a writer, a "nondisclosure agreement" will provide that the person you pitch your project to will keep the story or script confidential. You can also send a follow-up letter confirming what was discussed at a meeting, or you can bring a witness with you to important meetings.

12. Keep Copies. You should retain copies of all pertinent agreements, letters, notes, phone messages, etc. These will help your attorney in the event of litigation.

13. Be Aware of the Statute of Limitations. The statute of limitations for a written contract is four years in the state of California; for an oral contract, only two years; for fraud, three years; and for personal injury, one year. If you fail to file your lawsuit within the required time, you will lose the right to recover for your damages.

14. Warranties and Representations. Try to limit your own representations and promises. For instance, add the phrase "to the best of my knowledge" to any facts you state.

15. Understand the Contract. Make sure you are clear about the meaning of all terms and conditions in the contract, including such terms as "net profits," etc.

16. Copyrights. Registration with the Copyright Office is not necessary to be entitled to a copyright, but additional remedies are available if you register your copyright (such as attorney's fees and statutory damages).

17. Avoid Giving Anyone the Right to Injunctive Relief. For instance, an injunction from one of the parties could stop the production or distribution of your film.

18. Employee Problems. Employee problems may include harassment, discrimination , wrongful termination, etc. If you are an employer, have written procedures for employees and follow these to the letter. Do not tolerate discrimination or harassment of employees.

19. Compliance with Union Rules. Make sure you comply with SAG rules, etc.

20. Avoid Claims of Copyright Infringement. An idea in and of itself is not copyrightable. However, the expression of an idea is copyrightable. Recently, there has been a proliferation of story theft claims. For instance, Barbara Chase Riboud sued Dream Works, claiming that the movie Amistad was based on her novel, Echo of Lions.

21. Always Be Open to Settlement. A settlement will cut off your attorney's fees and you will have a definite resolution of the dispute.

22. Obtain a Written Contract with Your Lawyer. Have a written retainer agreement with your lawyer, with a copy provided to you.

23. Client's Expectations. Define your expectations. Are you pursuing litigation for the principle involved? Can you afford to spend money to enforce a principle? You don't want to spend $50,000 litigating a case to recover only $10,000. Also, don't rely too much on high profile cases when evaluating your own potential lawsuit: many times, cases that were front page news when big verdicts were returned get less press attention when they are reduced or overturned on post trial motions or appeal.

 

IDA member GLENN T. LITWAK has been practicing law in the Los Angeles area for more than 18 years, has handled more than 100 cases, and is active with the California Lawyers for the Arts. While the frame of reference in this piece is California-specific, the principles outlined here apply in any state of the U.S.

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