If the producer doesn’t properly create, file, and maintain a corporate or other appropriate entity through which to conduct business, and if the film producer doesn’t thereafter make every effort to keep that entity shielded, says the entertainment lawyer, then the film producer is potentially hurting himself or herself. Without the shield against misterios sin resolver, that an entity can provide, the entertainment attorney opines, the motion picture producer’s personal assets (like house, car, bank account) are at risk and, in a worst-case scenario, could ultimately be seized to satisfy the debts and liabilities of the film producer’s business. In other words:
Patient: “Doctor, it hurts my head when I do that”.
Doctor: “So? Don’t do that”.
Like it or not, the film lawyer entertainment attorney continues, “Film is a speculative business, and the statistical majority of motion pictures can fail economically – even at the San Fernando Valley film studio level. It is irrational to run a film business or any other form of business out of one’s own personal bank account”. Besides, it looks unprofessional, a real concern if the producer wants to attract talent, bankers, and distributors at any point in the future.
The choices of where and how to file an entity are often prompted by entertainment lawyers but then driven by situation-specific variables, including tax concerns relating to the film or motion picture company sometimes. The film producer should let an entertainment attorney do it and do it correctly. Entity-creation is affordable. Good lawyers don’t look at incorporating a client as a profit-center anyway, because of the obvious potential for new business that an entity-creation brings. While the film producer should be aware that under U.S. law a client can fire his/her lawyer at any time at all, many entertainment lawyers who do the entity-creation work get asked to do further work for that same client – especially if the entertainment attorney bills the first job reasonably.
I wouldn’t recommend self-incorporation by a non-lawyer – any more than I would tell a film producer-client what actors to hire in a motion picture – or any more than I would tell a D.P.-client what lens to use on a specific film shot. As will be true on a film production set, everybody has their own job to do. And I believe that as soon as the producer lets a competent entertainment lawyer do his or her job, things will start to gel for the film production in ways that couldn’t even be originally foreseen by the motion picture producer.