Speaker 1: 0:34

All right, welcome to the podcast, pete Salsik III. Did I get it right?

Speaker 2: 0:39

You did.

Speaker 1: 0:40

Yeah, very good. Really happy to have you here. We met well. I met Pete at our film's premiere at the St Louis Film Festival. He was doing you were moderating right A panel discussion.

Speaker 2: 0:53

Right, we were, yes, we. For a number of years now, I've hosted a masterclass during the week of the film festival here in St Louis, typically talking about legal or business issues related to film and filmmaking, and so that was what was going on when you were there, um, and I remember that was it was a pleasure to meet you, so I'm glad to be able to reconnect.

Speaker 1: 1:13

It's fun to see you again too. So Pete is a attorney who specializes in intellectual property and especially for people in film and the entertainment business. You're also a professor, I believe, at St Louis University.

Speaker 2: 1:39

Adjunct yes, so I'm an adjunct. Yes, at St Louis U law school I teach a class on a couple of upper division classes. They rotate on semesters, but typically it's intellectual property licensing and drafting and it's really a contracts drafting class with intellectual property licensing structures built in to kind of get used to how you, how you draft these things and why you, how to think about these things, so these things.

Speaker 1: 1:56

So yeah, but yes well, and this is great because I think, for example and I don't want to throw any specific person or company under the bus but we subscribed to a subscription that was supposed to be legal help for whatever your needs are and I found that it was very difficult for them to understand how to navigate film because it was not specific to that.

Speaker 1: 2:21

So I love that you are specifically focused on and working in our industry. You understand how that business works and I thought it'd be really great to bring you on and share, first of all, just some of the pitfalls that people run into if they aren't aware of, maybe common problems you see people running into on the back end that they wish they'd known before they started making their movie, especially people with super low budget first time filmmakers. And then I'd also love to get into your specialty in intellectual property in film. You know IP is like having a name actor. It can be really beneficial to getting financing and getting your film made. But it's also this area that I don't necessarily know how to navigate, and there's questions I have about that specifically.

Speaker 2: 3:13

So, yeah, no, I'm happy to have this conversation with you, really genuinely. Not just happy because I'm you said, you asked and I said yes, but I really do like to share this information with you. Know, I'll say aspiring filmmakers, but also sometimes seasoned filmmakers. I mean, look you, you know I run into people that have been making films for a dozen years because they started when they were nine with their phone and they're really good craftspeople. They can tell a story, they can frame issues, they can put all that stuff together Right. So you may be new to the filmmaking or newer to the filmmaking business, but you may have a lot of talent and I run into people like that all the time and it's that wanting to take that and turn it into a business, a life, a profession, a career which is where typically, before too long, you run into somebody like me, if you want to do that and would like to have people to come into that without fear. And the biggest way I think to do that, and what I try to do when I put information out, is to let you know that, while there are some key things to watch out for and some key things to take heart, it's not that complicated to do it right and there's a couple of basic principles that apply, basic principles that apply, and then all the nuances on a deal-by-deal situation fit within a category you can kind of already understand. Right, you may still have to deal with unique situations, but there aren't completely out of the blue, never even thought that would come up kind of stuff. And the biggest sort of where I often start on this is trying to get people to understand.

Speaker 2: 4:56

Filmmakers understand a couple of basic points. The first is copyright law governs all aspects of your film and the filmmaking process. Period, end of sentence. It never does not cover, it's literally always the key, because the entire business of the filmmaking process, that whole structure, is based on there being one copyright owner at the end of a finished project. Right, so you've got a five-minute short or a five-hour limited series or anything in between. That thing that's going to end up on a screen and go out into the world for others to see is protected by copyright law and there's got to be one owner of that copyright, because if there's more than one owner or that ownership is not clear, you're almost never going to get the distribution or funding, because in every one of those contracts you're going to be saying and representing to the other party we own all of the rights, no one has any potential infringement claims. Well, the only way that can be true is if you do the work ahead of time correctly.

Speaker 2: 6:03

But working back from that basic principle I think sometimes helps people get grounded. You simply cannot put a film out into the world without having gone through the legal process period. I mean, you can try. It may come down quickly and you'll get a bunch of people yelling at you and you won't make any money. It doesn't mean you're not physically able to do it. You can right click, copy and paste all day long, but it might be copyright infringement all day right. So just because you can do something doesn't mean that you should. And in this industry, working back from the copyright one copyright owner, making sure that's true is necessary.

Speaker 2: 6:38

If you are the, so typically what happens is for a new film project. A lot of times you, particularly if you're going to take other people's money, and this is another thing we'll talk about. But if you are putting together a new film project, typically we recommend that you start a new company, typically an LLC. Very simple process. But you form a company and that company is going to be the copyright owner. And a lot of times it's title of film LLC or something like that, right and that.

Speaker 2: 7:12

But if it starts, if, say, the two of you are working on the concept, you've worked up some treatments, maybe you've shot some spec footage, or you started to put together a deck or a trailer or a wish list of act whatever the stuff you start to put together as this thing comes together, maybe you have a screenplay that's reasonably well-developed or something like that. But if you haven't formed that entity yet, the you individual humans, are the owners of the copyright. If you both did it, you might be joint authors, but you might disagree about what to do with it. And yet copyright law says you each have all of the rights you can't infringe each other. One of you could go left, one of you can go right and the other party couldn't do anything about it. But you never want joint authorship or joint ownership in these situations, because it's really messy.

Speaker 2: 7:59

So what you do is you would form the new film LLC and then each of you if the idea is that the two of you are gonna be co-owners of that start with, you're gonna be on the producer side, we would have you do a contribution agreement, which is a written contract between you, individual person, and new llc, in which you contribute into the new llc all of your intellectual property rights that have developed so far in the concept that's, you know, being contemplated, um, and you would agree that all future efforts that you make in furtherance of this project are going to be as works made for hire for the LLC. So in one written document you've transferred ownership of anything that already exists and you've transferred ownership of anything that you create, going forward that way. And then in return, the LLC grants you individual human return. The LLC grants you individual human 50% ownership in the form of LLC membership units or whatever, and so now we have an LLC that actually owns all the intellectual property that has happened so far. That's the first step.

Speaker 2: 9:08

Then, at any point now now if you've assembled, if in putting that material together you've already worked with other people you got a friend who's a great DP and somebody else whipped up some music for you, conceptual or whatever get the same document from everybody else If those people are not going to be owners in the LLC but you still want to comp them or give them some right to participate in the future. It might look like a slightly different agreement, but the point is you got to get it in writing from every human being who touches the film to be certain that, at the end of the day, you've got one owner of the copyright. So, working back from that one owner, you start with yourselves, start with the immediate people and then, as you look out, ok, we're going to need more crew. Well, you're going to have a standard crew agreement. It's going to vary because the first page may say some person is going to be there for 20 days and get paid this much, somebody else is going to be there for three days and get paid this much. Right, you feel those things are variable, but the terms and conditions are going to be the same and everybody who steps foot on a set or into a post-production bay or anything else has signed something that says all of the results and proceeds of their work will be works made for hire owned by New Film LLC.

Speaker 2: 10:27

Unequivocal right If somehow you don't pay them, they can sue you for money, but they can't go into court and take that copyright back. That also has to be in the written agreement. It's a little nuance. It's very, very important. In the entertainment industry People need to say I will not and cannot give up my right to walk into court and try to get a temporary restraining order or some kind of injunction to get the film shut down because I wasn't paid. I agree that I, if I get, if you, if you breached or something, I can sue you for money. But I can't impact the the rights that I've granted you in terms of copyright ownership. And that's necessary too, because you could have five or 500 people on a film and you can't take the chance that any one of them would get upset, walk into a state court judge who doesn't know anything about the film industry and grants a three-week injunction and everything has to dead stop.

Speaker 1: 11:25

Yeah.

Speaker 2: 11:25

Right. So these are all little things that you work towards to get your good contracts in place, and there's kind of there's more detail as it goes along. But the basic principle is every single human that touches the project in any way, shape or form has to have a written agreement that says work for hire. Those words need to be in it, one of those rare cases in the law where you really do have magic words. So you know, if that's in place now you can start looking out and say, well, what next? Right, but that first thing is necessary and one of the reasons. You know, sometimes I don't know how much do lawyers cost and you know I got it. Well, maybe I'll wait or whatever.

Speaker 3: 12:10

And so what I?

Speaker 2: 12:11

always tell people is you know we. If you get comfortable with the idea and it does it, you got to have an attorney that understands the space. That's critical. But if you get comfortable with the idea that having production production legal Is a line item in my budget just like you know camera rental, you know camera rental, any other insurance, any other aspect, all of your crew, various people, talent, you know everything catering literally everything in the budget Production legal is just a line item in there and it's typically done at some percentage of the budget. So if a budget is and this is again, take somebody that understands how to work in this industry, because that's industry standard in terms of our billing. So if the budget is above $1 million, $2 million, something like that, the legal fees might be in the 1.5% to 2.5% range. If the budget's $100,000, the legal fees might be closer to 10% or more, because the work isn't really that radically different depending on the size of the budget. Right and so. But whatever it is, figure that out upfront, get a quote about that from when you're putting your budget together and just count on it. Put it in there and it's not something that you think of. I always have to write a check for my lawyer. No, my lawyer is like my light bill and my camera payments and everything else. It's just one of my regular ongoing expenses on a project by project basis. And if you're going out and raising independent financing for a particular project, it's just in your budget. The people investing in you are going to expect that you have a lawyer. In fact, they're going to count on it, right, they're going to count on you being able to say you can protect the copyright. You've done all this stuff correctly.

Speaker 2: 14:03

So, and then you know what we do in that for that percentage of budget, we do those crew agreements, talent agreements, location agreements, a variety of other things that might come up on a one-off basis. But then you know, are you going to have music, Are you going to license third-party music? Well, if so, that's a separate budget. And so we we we do sometimes do music clearance work, depending on the nature of the project, or composition agreements, things like composer agreements, things like that, but typically that doesn't fit under production legal. That's just part of the music budget. You may not really need us. You may have a buddy who's going to compose all new works and we give you a simple composer agreement, it's done. Or maybe you've got. You know, you just have to have these five, you know, Taylor Swift songs. Well, what's your budget? Right, but we're going to be in there somewhere. But these are little things that filmmakers can start to realize. Ok, here's how I figure out.

Speaker 2: 15:00

The lawyer part of this, Production legal, is all of this stuff that has to happen once there is a budget, Once we have that budget, that funding in place to pay the crew and all these things. Now, all of those contracts need to happen. That's the production league, Music licensing. If the lawyers need to get involved, they may, but that goes under the music budget and they will work with you and tell you here's what I think it will cost and all of that stuff. So, if you haven't, if you really believe in some key song that's necessary, talk to your lawyer early, early, early, early and find out what it's going to cost. And can you even do that? Right, Don't fall in love with a bunch of footage based around this one song that you can never license.

Speaker 2: 15:47

And then the last piece is the front piece. The last piece is we need to form the new LLC, we need the contribution agreements, we need the investor agreements. We need to put together the pitch deck to go out for private financing, all of which involves legal documents. But you don't have a budget yet. That is an out-of-pocket spend. But we typically do that work for a flat fee that we'll tell you about ahead of time. Try to keep it as modest as can be so that we're going to do this work for this amount of money. And so that's still a way of, early on, the filmmaker saying what's it going to cost, what do I need for my lawyer and what's it going to cost. So you're not surprised, You're not in that fear of God.

Speaker 2: 16:30

I hear these horror stories about hourly billing rates or how do they spend so much time on this?

Speaker 2: 16:39

And literally every time I pick up the phone call, it costs me a hundred dollars. We don't want to do that, Right. It does not make sense for us to do the work in your industry If that's how we bill. You just won't call Right, Right, You'll fire something, you'll fire us and go hire somebody that knows what they're doing. So we have to understand how to fit within your economic structure the life flow, the money flow of a film project, and we will talk to you ahead of time for no charge, to say, okay, here's what you need to get started. This is what that would cost. Call me when you're ready. If you get that, and then that turns into this budget, here's what our production legal fee will be, because I want you to be able to put my number in your budget when you go talk to an investor, because you want to need to show that investor this is my real budget. This is truly everything. I need to get this onto a screen.

Speaker 1: 17:34

Yeah.

Speaker 3: 17:35

And so so yeah, I'd like to, like you know just what you're saying is super valuable, because I think what some people look at this as like oh, this is a cost, which means it's like it's an obstacle in the way of me making my film, when, in reverse, I actually think, having made one or two films without much legal help at all, it's that's extremely valuable and helpful for me to think like I have someone I could call to ask a question every now and then I have someone who's going to help me stay on top of all my paperwork, because I'm personally, when I get into the throes of make, make, make, shoot, shoot, shoot edit right right it is almost impossible, whether I'm making a fiction film or documentary film, to stay on top of all of the paperwork and usually we're self-producing, right and so having someone there to keep all that stuff covered.

Speaker 3: 18:20

And then, even further down the road, when distributor relationships start to happen, I can also see where this becomes hyper-valuable, because if you've got all your ducks in a row, that working experience is way smoother and faster, whereas if you don't, then you're just trying to dig everything up in retrospect, and that's hard, if not impossible sometimes to to do properly. So it really is actually a movie making mechanism rather than a a wrench in the gears.

Speaker 2: 18:52

No, I and I'm glad that you, I'm glad that you're getting that point, you've come to that realization, because that's my point to make today and as often as I can, is we are a necessary part of your team. So when you start from blank slate to end up on a screen, all of the steps that are necessary and the people that do the different things are the team and the producer role. You know largely is assembling that team right and the right team with the right project and everything else, and then what's going to cost? How are we going to fund it? Sometimes the producer role is more time on the phone calling for money or whatever, right, but it's still part of that teamwork and we are a member of the team. That's why we're in the budget. Our fee doesn't go up or down depending on how much time we talk. Why? Because we signed on to the team. Some teams are busy this time and slow another time. I'm not telling you you've got to pay me more this month and less this month. It's just here's the fee, and once you have the budget, you're going to pay a certain amount of that fee when we start. You're going to be some of it at a certain milestone, just like everybody else. Right, it's just. We literally are just part of your team. We're necessary part of the team, just as every one of those other roles on set is.

Speaker 2: 20:13

And for you guys who are doing, you know, multi hyphenate writer, director, producer, actor, star you know, janitor, if you had to hire someone else to do any one of those roles someone of your like, experience, quality, you know geographic, location, all these factors for some reason you break your ankle and you can't go on set or you can't do that, especially if you've got other people's money involved. You need to be able to. Well, I'm going to grab so-and-so and see if they're available. They could drop into the directing role or the whatever role, right? Well, if your budget doesn't include market rate for each task that you are doing in addition to this global producer role, then your budget isn't real. It may be what you spent to make the movie, but it's not a real budget. It's not the kind of budget that will withstand scrutiny from investors or from somebody else.

Speaker 2: 21:17

And if I'm going to tell you that I'll work at some percentage of your budget, I need that to be the real budget, not an artificial one, and a lot of times, you know emerging filmmakers will say, well, I, I don't need to pay myself right away, I don't need to pay myself right away, I'm going to, you know, hopefully get something back on the back. Well, I hope you do too. But my strong recommendation is do not count on the only money you get coming from the back end, because it's actually pretty rare that back end happens right. So pay yourself out of the only money that you know will exist. That's the money in your budget.

Speaker 2: 22:01

If you haven't accounted for paying yourself your market rate unless you have lottery winnings and you don't need to ever write a check for anything how are you really going to know if you're making a life in this business and what is your market rate? If someone hired, hired you this isn't not your film, but you get known in your community Somebody says, hey, will you come direct or will you come produce this with me, or whatever? What would your fee be? Right, you know you have a market and it'll gradually grow up and you have precedents and you have.

Speaker 2: 22:33

I always get at least this credit. I mean, that's how this world works. Your IMDP page grows, so pay yourself the same way and if you decide to defer payment, that's okay. That's a deferral decision, but your budget is still real and then when you get proceeds, you pay yourself, then that's okay. If that enables you to actually get the thing done with a little bit less money right now, maybe while you're still raising, or whatever but don't pretend that you don't have to pay yourself. This is something that I see a lot of young filmmakers do and it's something to get over, sort of like learning to treat your lawyer as part of your line item. Treat yourself as part of the line item.

Speaker 3: 23:18

You know, critically important, yeah, yeah, that's definitely something I think we experienced on our first film, where we're like we're just going to do everything and we'll pay ourselves, you know, lunch money. And then on the second film, we were a little more conscious of these are our actual rates Now the amount of money that we ended up raising, because that was more of an ongoing budget, because it was a documentary Sure, if it didn't get fully financed, it just meant we were eating our own income to a degree which was fine for us.

Speaker 3: 23:46

But, like you, said it was a real budget and so that that reframing is kind of what happened from film one to film two, ongoing from there it's. That's why sometimes you see a lot of director names, actor names and sometimes dp names and other people in the executive producer lines on movie credits, because that's essentially what they're doing. They're like this is my rate and this is how much I'm actually paid, and right, no question yeah, and and if it's properly accounted for, as it should be, it should should count.

Speaker 2: 24:16

As say, if my rate's $100,000 and I'm going to take 50 in cash and have 50 in the deferral, then if I want to treat it, there's a couple of different ways you could do it. One is I'm going to treat that as if I put $50,000 in cash into the budget, right, and therefore I'm sitting here over on the side of the investors to the extent of my $50,000. Because typically the proceeds, when they first come in, will pay your investors back first, often plus 15% or 20% premium, and then, after that's been done, they share in 50% of the profits and you share in 50% of the profits. So it depends on where you put that deferral payback. If you put that deferral payback as comp, it gets paid out of first proceeds before the investors get anything, because it's a cost, right, there's no thing to give to the investors until all the costs have been paid. But then it's fixed at that $50,000 amount. You get the other 50, you're done.

Speaker 2: 25:19

Or you say I'm going to treat this as an investment, which means I may never get it but I'm going to get if I put $50,000 and the other investors put in $500,000, well then I'm going to get 10% or 9%, whatever, of each bit of proceeds that goes back to the investors and I hope I'll get what I would have otherwise gotten. But I also might get more, because then I'm sitting in the profit side. If it becomes profitable, yes, and that's worth an executive producer credit. That's typically that structure, but, you're right, the starting point included the full appropriate rate for that person and that's, I think that's, I think, the key thing to try to remember as you're putting this together.

Speaker 3: 26:04

Well, and what you're explaining is so valuable because understanding that from the side of like this is what I should be charging and it's protecting myself as the filmmaker so that I can know how to negotiate, you know. But it's also helpful when you're negotiating with production houses, other key crew, like you're saying you can. You can say, would you be willing to adjust even name actors, you know, adjust the rates so that we're good on whatever your contract and agreements are. But you understand, we're working here with resources that we may or may not have. Yeah, that might help them be able to negotiate into a situation where the movie gets made, as opposed to where they say, well, this is how much I cost, and you say, well, I can't afford that, goodbye. You might actually be able to work something out if they think of it that way.

Speaker 2: 26:49

Yeah, and having an understanding of those little nuances and how they fit into the finance structure and putting some skin in the game yourself, so to speak, if you're at a certain level, becomes relevant and that can become a valuable thing. But again, all of that has to be done in writing, has to be properly documented, has to be something that all of your investors can see and agree with. It's not like you're going to ask your investors each time hey, I think I might want to do something, are you guys OK with this? No, you do what you do, but by saying this is how we're putting this together, this is what I'm doing, it gives them more confidence that you do know, in fact, what you're doing and you've thought about it in order to attract whatever it is necessary to get a larger audience, all of those factors Right, so they all kind of play in together. But you're right, it starts with having a reasonably comfortable understanding of of what it really takes to budget and finance a film. Um, you know, and that, I think, is that's one of the other things that I try to stress to new filmmakers is um, because you're right, the way you describe, you know, shoot, shoot, shoot. Or the way I sometimes say you know, get some money, shoot some footage, go get some more money. Or the way I sometimes say you know, get some money, shoot some footage, go get some more money, shoot some more footage. It's very common and it's not necessarily wrong given what you do, but it does put you in a continually limited You're never going to get past here level if that's how you're always doing a little. You know, a lot of great documentaries get made that way because it's kind of this guerrilla process over a long period of time.

Speaker 2: 28:31

But these days so in Missouri we have a new film tax credit. There are 30, some odd states that have some form of a tax incentive to attract a film financing. Here in Missouri and this is pretty common elsewhere you get a percentage of the amount of money you spend in the state back in the form of a tax credit that you use or can sell to investors or whatever to help finance the film or return money to the investors. So what counts in your state-specific spend becomes very relevant. Right In Missouri, any money you spend before you get your tax credit approval letter doesn't count. So if you get some money, shoot some footage, get some money, shoot some footage. Oh, let's get a tax. It's never going to work for you. You can still make the movie, but that fairly powerful piece of financing structure is not going to be available to you. So instead it elevates the role of the producer to the front instead of just alongside, along the way, the producer job, assembling the team.

Speaker 2: 29:34

What's it going to cost to get everybody lined up? What agreements are ready to go in place? Okay, we've got these agreements locked up. We've got a commitment from this lead actor, this director. Within a window of time we can announce they've agreed to be attached for some level of structure and I need their names to go out to investors.

Speaker 2: 29:52

Whatever is going on, however, you need to do that getting all that in place without having to pay for it yet, or keep the cost that you pay to a minimum. Sometimes you have development costs that you're just never going to get back. But get it all lined up. Then get the commitments for the financing. Then take that paperwork, go to the state film office, get your approval letter that says based on what you submitted, we'll approve a tax credit in the amount of $412,000, whatever. It is OK. Now you can start spending that money. Now you go to the. You know so, but you have to put that together first, um, which does change the sort of standard default go, go, go mentality that you've always been. If you want to elevate up and put together projects that have the potential for larger budgets, more significant financing, tax credits in play, things like that, you do have to do that. Producer hustle pretty far down the road, really, before you start rolling cameras or anything else. Yeah.

Speaker 1: 31:00

So okay. So I think that a lot of times a first-time filmmaker making a no-budget first film just to get their name on something and get it out there, there's going to be some obvious things that they're aware of. Like let's put a sticker over this Apple logo so we don't get in trouble and let's make sure we have rights to a song that we want or a composer.

Speaker 3: 31:21

Or just avoid that entirely.

Speaker 1: 31:24

I think they're often using templates or, um sure, platforms for their paperwork. Uh, yeah, and then on the back end might be getting more legal help for the yeah, yeah, because they just all they need is really like eno insurance or whatever, to get it distributed.

Speaker 3: 31:43

It's like I've got my my diy contracts and I got my eno at the end, and then I got my movie out and then they grow into.

Speaker 1: 31:50

You know more. You know this becomes bigger money on the line, bigger investors and stuff like that. I'm curious about how you approach because you know we have a way that we do it. But I don't know, maybe it's not good when you're doing the contract for your investors. They're not owners in the LLC, correct? Well, often they are.

Speaker 2: 32:15

I mean you don't have to do it that way, but that's the most common and it's often the simplest. But by being owners in the LLC that doesn't mean they get editorial control or management decision making, like that. All of that's very clearly set out. So you set up, you have an operating agreement that governs the operations of the LLC, not the day-to-day business management, not the product, but the operational relationship among the owners and how they interact with decision-making Manager. One of you would be the manager. Manager makes all the decisions right.

Speaker 2: 32:50

There's like three or four things the members get to vote on and that's like major corporate changes that almost never come up in this type of an environment. So you're not giving up control in that way. Now you might have to negotiate. If you've got a pretty significant investor, or maybe one investor for the whole thing, and they want to have some level of input, you just have to decide am I willing to give that for this person's money?

Speaker 1: 33:17

So are you waiting to form the LLC until you have all the financiers?

Speaker 2: 33:22

No, no, no, no. You do that. First, the form the LLC is, you know, 50 some odd dollars in Missouri, a couple hundred dollars somewhere else. It's an online. It happens right away, but that's only creating it into its existence. You still need the operating agreement. You need to figure out your subscription agreement structure. I would always recommend, if you have the opportunity to have some kind of organic introduction or whatever to potential investors and they want to hear about your project, go ahead and have those conversations. However you feel that, if you put together a deck or a short or something to tease it up, or a proof of concept or treatment, or if you've got a screenplay, whatever, you might have to attract somebody. Nothing wrong with beginning conversations like that.

Speaker 2: 34:14

But, before they, before they agree to give you any money, unless it's a unique person in relationship, they're going to want to see the documents and most of the time they're going to hand their documents to a lawyer and an accountant who don't play in the entertainment world. Maybe they have some a little bit, because this investor does this regularly, but generally speaking, they're going to be looking at it. Just how does the legal document read? Is the operating agreement in the company structured correctly? Is this properly done from accounting and tax purposes? So my view is always my job is to minimize the reason someone can say no, right, so you want to go talk to a potential investor to put $100,000 into your film or whatever you want. You know they, they first and foremost have to think it's a good film. You know, yeah, I can, I can visualize that. I can see that, uh, in my head. Yeah, I think that's, I believe you know. Second, do I believe you can make it? Have you assembled the team or given me confidence and whatever factors I'm going to measure that you're actually the filmmaker that can carry off this vision and get it in the can and up on a screen. So those two questions are first, if the answer to either of those is, I'm not sure, full stop, you're never going to need me. But if the answer to those is yes, then the third question for them is is there an audience here? Have you convinced me that there's a potential audience here? That's at least as big as the budget, or one and a half times the budget, so I might actually get my money, and that's comps, that's other factors. That's minimum. Gary D deals from a distributor ahead of time if you've got right names or whatever it is. But somehow the third question and remember the third question doesn't care about your audience if he doesn't like your film.

Speaker 2: 36:12

So these questions get answered in order. Yes, I want to see this film made. Yes, I believe you could do it. Yes, I believe there's an audience.

Speaker 2: 36:21

Okay, here's the documents. I can't have anything in those documents that's going to make their accountant or their lawyer go. What is this? This is a little off. So we craft things that are very common, understood both in the industry, but also in almost any industry, because the relationship in this structure is a very standard structure, right, right. So the risk or the exotic part of it is your story and you, not the legal structure. So I think any time you can present to anybody out there that you understand and have your legal structure buttoned up. We have good counsel, we have solid agreements. Here's how they fit in the budget. This is our investment document package. Here's who our lawyers are. All this stuff that says we're grown-ups. You know, we're legit, we're a business and all I have to do is sell you on my product, not my company or not my understanding of how even to wander through the world.

Speaker 2: 37:29

Right, you could be a brilliant filmmaker and have no idea how to put this together. That's okay. Partner up with somebody that's a very good producer and can do these things because, like you said, you know when you're going, going, going, you got a little of everything. It's almost impossible to keep track of everything. Yeah, right, and that's where teams with people with different right brain, left brain superpowers make a great combination. You know, lion producer, and these days, now with the tax credits, you've got to be really meticulous in your record keeping and your invoicing and payment structure as you're paying through production, because you've got to hand all that to the CPAs, they're going to audit it and they're going to send it out to the state and that's going to determine what you get back Right. So again, that role. If that's not you, then you need someone who that, who can do that and will do that.

Speaker 2: 38:20

Well, you know it just becomes part of your team.

Speaker 3: 38:22

So and I'll mention this, on our first film we got a lot of people asking like oh so I shot that film. I'm a mediocre DP. I'll just say that I'm awkward. I totally get it.

Speaker 2: 38:38

I'm a below average guitar player. Yes, all good.

Speaker 3: 38:41

Yep, and so I work really hard. But I work with you know, we had a really good art person on that film, claire, and we had a really, really good colorist. And so people ask, like, what'd you do? We said, well, we did some creative stuff with some cool vintage lensing. We worked with a really good production designer and we had a great colorist. And when I work, especially with my colorist, I'll usually sit with him and he's a great post supervisor. He's a really talented editor, really good post guy all around, but super good at anything post, especially color. Every time I sit with him I feel like I'm getting like huge masterclass crash courses and everything he knows. And no matter how many years I've worked with him, it's the same story.

Speaker 3: 39:24

I I never will know as much as he does about posts, because I don't live and breathe it and yet, like I'm just so grateful to have that that person in my corner, you know, and so that's kind of the sense I'm getting, even just from this conversation. It's like when you have someone like that in your post corner, in your color corner, in your art corner, in your cinematography, you get someone like that in your legal corner Because, like you said, I can make, I could could make. I could make $25,000 pictures or even $150,000 pictures almost all day long, and I could probably DIY some of the paperwork.

Speaker 3: 39:57

But I really want to crack the million dollar picture stuff and start to get into the one and the 10 and the multiple tens, you know, of millions, and that's just going to be a necessary relationship. And as I make films with people who know way more than me on that stuff, I'm going to learn too, you know, and so I start to know. This is the step. We're going to take those steps faster the second time around because we get it.

Speaker 1: 40:19

I'm not getting up to speed and, like you, said it can cost you, for example, if you start shooting and you don't know, you have to have your tax papers in in advance for your tax credit from your state and you're counting on that to come through and then you can't get it for what you've already spent.

Speaker 3: 40:33

You're going to miss out.

Speaker 1: 40:34

You're going to waste money. Or we actually like had someone who was interested in investing because we believed we could, that they could write it off tax deductible.

Speaker 3: 40:46

Through section 181. 181, was it Yep, yep.

Speaker 1: 40:50

And then their CPA and our CPA were like oh, I don't think you can unless they're in the LLC and they're actively working on it every day.

Speaker 3: 40:59

And we hadn't set it up beforehand, early enough as well. There was a timeline thing that we'd yeah, anyway, because we didn't really know how to make that happen.

Speaker 1: 41:08

We lost out on that opportunity. So I do think that there are costs to not having the legal help in advance, and sometimes we just think about like oh, what does it cost me to get it?

Speaker 3: 41:22

Yeah, but what does? It is on me to price myself in a way that works for your structure, right?

Speaker 2: 41:35

The dollar amount may vary a little bit, as everything does on certain projects, but the structure remains the same and we're lined up and pointing in the same direction as you guys, and that is. Hopefully people recognize that. That simple fact, which is the relationship between you and your lawyer as one of oh, I only call when I need to, and it's always expensive. And my lawyer's talking to me and it's calls going on now for I don't know how long. But quit telling me about your kid's vacation because you're charging me for it. Right, there's some part of the brain that's dealt with lawyers that has that going on all the time and many types of legal practice. That's still sort of the best way to capture the relationship, but not here, right? For two reasons. One, it doesn't fit for you. You need to be able to call when you need to be able to call period, end of sentence, full stop, without wondering whether you should.

Speaker 2: 42:34

If your brain has said I wonder if I should call the lawyer, you know the answer is yes. You've already spotted the issue. If there's any reason you don't and it's because of my billing practices. That's a problem with my business model, not your thinking. So we want to remove that right. The second is think of it from my perspective. I can do things quickly and well for you because I've spent years educating myself and learning how to do it and putting time and effort to build the practice, to build the relationships, to deeply understand how this all works. To build the practice, to build the relationships, to deeply understand how this all works, if I only chart. But because of that, I can do something in an hour that would take someone else 10 hours. If all I do is charge you for my time, I'm getting zero reward or value from why I'm actually able to do it that well, quickly and have it be correct.

Speaker 1: 43:25

Yeah, there's no incentivize to yeah, it doesn't make any sense more efficient.

Speaker 2: 43:30

I'm stealing from myself and you're still going to distrust my bill right?

Speaker 3: 43:36

well, we got to we got to discard that and think differently about how to do it and you know and I and I think that diying it in the past has served me at least a little bit to kind of, you know, learn some things, but it certainly has a ceiling, because I simply can't get movies made if I'm spending, you know, like you said, 10 hours. I could easily spend a whole day trying to draft up documents that I'm only going to set one department and I've got to do that for all the departments. And I know this firsthand, like I've drafted a lot of stuff myself based on templates and things like that. And it also leads to some anxiety in today's litigious culture when you think I'm doing okay, but I definitely didn't go to law school.

Speaker 2: 44:21

Well, and I think you just hit on one of the most important reasons. One yes, you might actually not get it all right, that's possible. But more importantly, even if you did assemble it and there's nothing wrong if you're a person that likes to learn before you get into something I really kind of want to understand what you're getting into. I'm going to hire a lawyer. I want to know enough to know whether the lawyer's telling me the truth or whether I can tell if this lawyer knows what they're doing. So whatever effort you've put into DIYing it yourself over the years has been valuable. Taught you good things, but really you get so many hours to be awake a day and if you're doing things that someone else can do better, faster and appropriately and already considered in the budget, then get away from them, let them do their stuff and go do the things you need to do, and that frees you up to do your craft, to know that you've got somebody on the team that knows that part, and now you've educated yourself by doing the DIY to have enough knowledge to recognize that they are doing their job, and that, I think, is so. I'm thrilled if I talk to people that have already made an attempt to put the contracts together. You've done some educating yourself. Yes, I know I gotta have people sign work for you know you may know a lot more than you think you know. If you had to make a list of all the things you know about film contracts, you probably know a lot. But noticing being able to tell when a particular document appears to have you know, and particularly wanting to get up and punch up above their weight, as you just said, go up, you know, add a couple digits to your budgets. Well, one of the ways that you can hurt yourself is when those bigger players ask you to send your contracts and they take one, look at it and they can go. That's LegalZoom. Asked you to send your contracts and they take one, look at it and they can go. That's LegalZoom. That's from somewhere else. That's from somewhere else, even if they're right. But if instead they all look the same, they've got your low, your new little LLC logo on it, or name. They're clearly drafted from one.

Speaker 2: 46:44

Yes, they have all the stuff they're supposed to have, but they're all. I mean even as simple as they're on the same font. There are no typos. Reference each other properly. You can send a package. They can verify them. Yes, yes, yes, yes, yes, that is a statement that you are pros, you're going to be pros in the filmmaking, but you're also pros in assembling the necessary parts of the team for the business of making films, and that sometimes it's little stuff like that that just sends a different message. Your contracts are part of your brand. You know that may or may not be relevant in that many circumstances, but to some extent it's always true. If you have to send somebody the contract that you want them to sign, that is an expression of you and your brand and your professionalism. Not just the terms but the contract itself and is it the right contract for this situation, lined up correctly or not?

Speaker 3: 47:42

those are again part of your brand you know, that makes me think of the fact that. So I came at this, like you know, just making short films and stuff. But then when we started, we need to make money. Um, you know what? How do I make money doing this? You know, at least for me, and I know a lot of people are in my same boat I'm not gonna make money doing this, making movies. So I'm gonna go make wedding videos, I'm gonna make commercials, I'm gonna work local businesses and whatever.

Speaker 3: 48:05

And what do you do? You end up starting to make diy contracts for yourself and you are adjusting those contracts after 50 to 100 wedding films or like a few dozen commercials, because you're realizing I ran into a pitfall here with a client, or this thing hurt me, and and you, but, like, how many of us have made, you know, 14 to 50 films? You know what I mean? Like to have that experience, to be like, okay, I'm avoiding all these pitfalls. So when you go into feature filmmaking, which isn't a weeks or months long endeavor, it's a years long endeavor for each film, it is nice to have someone who's gone through this 50 times or a hundred times. Sure, we, this thing is solid, like we get this as we know how to navigate this with a, with a cleanliness and a and a nice efficiency, that that is really effective, and and and that makes a difference, because I can tell you I'm working in any industry, in any field, especially from, like a video background. Uh, you do, you adjust your contract almost all the time because you're like, oh, like they got mad at me for eating.

Speaker 2: 49:08

Okay, now my contract says I must be allowed to eat, you know it's like you know like stuff like that and like believe me, that is how contracts get drafted and get improved because of things. Sometimes you're like like how is this? Why is that paragraph there? Because sometime, at one point, it wasn't there and something bad happened. Right, that's true, that's very true. And listen, I do the same thing too. I don't.

Speaker 2: 49:29

I don't want to give anybody the impression that I've finished learning. I know everything there is about it, not even remotely close, but I have these basic principles that aren't going to change close. But I have these basic principles that aren't going to change. And we come at it from an approach that recognizes we fit into a budget that's appropriate. And if we're too expensive for your budget right now, then fine. If and when you're ready, you'll be ready and we'll be here and you'll be a better client and I'll be a better lawyer for you at that time. Yeah Right, I'm not really doing you any good to give you sort of half of something, right, and so you know, sometimes it's a it's there is sort of a delayed response, if you will. But I'm always learning. Things come up, I add. Sometimes I'll see other contracts. I'm like, wow, that is such a much better way to deal with this thing that I always have in this clunky over here, easier to read, easier to understand for non-lawyers. I'm going to just borrow that and put that into my structure going forward. So I do the same thing. Right, it's a very common structure. But over time you start to see, okay, this category of things can come up, so we're going to draft this way to capture all of those things, so we don't have to list each one, right, and little by little you shape your contracts. But the other thing is you know sometimes you all is is in your industry. You might be working on other people's projects because you're that's another way. You know filmmakers are always working on each other's projects while they're putting together their next one themselves. Owns your craft, builds your network, all those things. But you might be asked to sign somebody else's paper. It's a really good thing to look at if you're also creating your own contracts. What am I being handed? What do I think about that? Oh, that's crap. I know much better. Or, wow, that's actually more comprehensive than I'm doing. The point is that it's a constant learning process.

Speaker 2: 51:24

In any good endeavor, I think and this is no different we are changing things that we wrote, even a year ago to deal with AI. You know because how AI impacts copyright ownership and so what do you need to make sure didn't actually sneak in something that undermines your copyright? You know, just so. It's always new. Distribution models are changing rapidly, radically.

Speaker 2: 51:51

You know how do you get the thing on a screen? You know used to be well, studios and festival and maybe you get this or that. Now there's a million ways to get on streaming. But how do you figure out what makes sense? How do you figure? How do you know if you're getting treated fairly? Are you getting the money you're supposed to get? You know this new thing popped up and it's shiny and it's oh, something new dot com. I'll just go there. What's their history? Who are they? Those sorts of things we're always there's always uncertainty, right so, and probably never be able to eliminate it entirely.

Speaker 2: 52:27

But the more comfort you get with not being afraid of the legal side of things, educate yourself and then find somebody that makes that, works well with you and fits into your structure and then know that that's going to be covered. But continue learning. If you get in a conversation with somebody or you're at a festival or whatever, you're talking to other filmmakers and they told you about something that they had just done for the first time. It seemed to really work. And you're not familiar with it, right, why not? And if you were working with me and you came back and said, hey, I was at this conference and I saw this. Have you ever heard of this? Maybe I'm like, oh yeah, I just saw something, or no, let me go look.

Speaker 2: 53:05

But the point is it's a you are working. If you think of your lawyer as someone on the filmmaking team, well then that everybody on the team can learn from everybody else, including the lawyer can learn from you. And if you start thinking like that there's a budget, okay, everybody on the team's getting paid, right. Well, now we just go do our stuff, right, and it doesn't become this thing that you fight against, or this fear that you have, or this cost that you just wish you didn't have to have. You know you need lawyers. You have. You know you need lawyers.

Speaker 3: 53:41

You need insurance, you need a handful of things that have nothing to do with the quality of the content yeah, but they're necessary and don't fight them, just find good partners you know you say they have nothing to do with the quality of the content, but if they come back and bite you, it will affect, or it could affect, the quality of the content. Yes, significantly, or even the quality of, uh, the content's reach. You know, because, like well, you can have the most.

Speaker 2: 54:06

You can literally have the most fabulous content, but if you can't get it on the screen because you didn't do the legal right, who cares?

Speaker 2: 54:11

exactly, exactly you know, somebody told me years ago and I've always used this phrase it's not mine, but I I've embraced it Please don't fall in love with footage you can't use and there's different ways that that can happen. So figure out, okay, if I want to use this footage, what rights are involved? Are those humans inside? Do I need to get releases from them? Are the logos here? Where am I standing? What am I saying? When I'm done here, can I get it out in the public or will there be barriers? And if you're not sure, then ask Talk it through ahead of time.

Speaker 2: 54:50

My early days working with production company and really creative guys and they would fall in love with some footage, and I would be thinking in my head God, if you just move the camera over here, all that stuff that we're stressing over wouldn't be in frame. It's not necessary, but it looked kind of cool at the time because of the way the sun was hitting, but because we didn't block and tackle a little bit ahead of time to figure out those things you don't want. These things are okay in the environment which you're shooting, right. So you don't want to blur a bunch of stuff if you don't have to or cut off your you know why? Because you didn't think about and that's a super simplified example, but some variation of it is true, right, and so um it, just so. I always think it's a.

Speaker 2: 55:38

It's a revisited start of each new project. Yeah, a quick call. Hey, this is a new thing about we're stretching this. Here's some things that come up. Is there anything we should watch out for legally or anything else we need to know? No, no, sounds good. You're going to use this? Here's that? Okay, when you're ready to go, standard, we'll do this fixed fee, but it doesn't cost anything if you want to call and talk through your next project or it shouldn't, right, right, this is just a conversation about hey, we might be working together in the future, but here's a little bit where we're at. Can you tell me what I should prepare for? What would your budget numbers be to put you in the line item when we go pitch? We either need this or we don't, but if we do, what would it cost? Have those conversations with your lawyer up front and you might find out you're ready to go, you might find out you've got more work to do. But either way, that's not a wasted conversation, right, and you'll get better at them each time.

Speaker 3: 56:29

Well, pete, I super appreciate the time you've taken to talk with us. I can tell right now first of all, we're probably going to want to do another episode with you down the line.

Speaker 3: 56:38

At least a personal call I already have subjects, and that was the second thing I was going to say. We might just be calling you just for projects, because we have one or two right on the horizon. So, thank you, I feel like I've learned a ton. I feel like I feel actually more empowered and a little more focused, and a little more focused.

Speaker 3: 57:00

And I think this came at a good time for us because of the stage that our next project or two is at. It's like, okay, this is the right time for us to have met you and had this conversation. So we hope that everyone listening feels the same Like okay, I know a little more about this thing. It's demystified, it's not scary anymore and because I can tell you right now it was scary for me before this call like there's things that people I didn't want to talk to, because I said that phone call is going to cost me 200 bucks and it's exactly what you said, exactly so thank you so much for coming on.

Speaker 2: 57:28

Yeah, no, you're well. First of all, you're welcome. Thanks for inviting me. It's my pleasure, um, and I enjoyed meeting you at the festival. Hope I'll get to see both of you guys in the future. But, yeah, truly happy to have the conversation. And I really do, genuinely. I love doing this stuff right. Because I do it, because I love it. It's my passion. I didn't do it right out of law school. It took me a long time to work my way back around it in a bit, in a way that I could really be a professional at right. So I care about it. I love the industry. I want people to be successful. I'm excited about new opportunities in different regions. So if I can be useful, I'm happy to do it and, like I said, I really do learn from filmmakers and other lawyers and everybody in the process. It's always evolving, so happy to do it. Yeah, reach out and if anybody is, you know, catching the podcast and is curious for more information, how do we connect with you?

Speaker 1: 58:25

You know where should we send people.

Speaker 2: 58:27

So the easiest way is just to go to the screen lawyercom all one word, and that's takes you to a landing page. It's got it'll connect you with my law firm bio, all my contact info. It's got a link to my podcast and social media. We've got a YouTube channel all of it under the screen. Lawyer, and we, you know, we talk, we interview guests. We also talk. I did. I did an episode this morning on um uh for our podcast on the Kendrick Lamar and Drake defamation lawsuit and battle and some of the weird nuances behind the legal side of that very famous feud. So sometimes the episodes are more like that, like geeking out a little bit on legal stuff. But a lot of times I've got guests who are filmmakers or just I want to hear what they're doing. How'd you get here? What's your story, what are you, what's next, what do you? You know all of that, so I'll reach out to you guys as well. Count on that.

Speaker 1: 59:21

Yeah, we'd love to return the favor, so thank you so much for your time and we'll put your link to your website in the show notes as well.

Speaker 2: 59:29

Great yeah, thank you, and then just send me whenever you've got it. But I really appreciate it. This has been fun.

Speaker 1: 59:34

Yeah, thanks, so much Thanks.

Speaker 2: 59:35

Pete, all right guys Take care.

Speaker 1: 59:37

You too.