Like all other market sectors, companies in the entertainment industry depends on comprehensive legal services to help them run their businesses and continue to generate revenue. At The Hollywood Lawyer, one of the corporate law firms Los Angeles trusts, we provide a broad range of cost-effective corporate legal services to entertainment industry clients at every stage of business development and growth.
Our clients include emerging and established companies, entrepreneurs, buyers, sellers, investors, and creative talent.
Our seasoned lawyers have extensive professional experience, finely honed skills, and broad industry and legal knowledge, which uniquely positions them to meet entertainment sector clients’ evolving business needs, from a company’s start-up phase through exit.
Below are some of the most common services that The Hollywood Lawyer provides with respect to corporate law services for clients within the entertainment industry.
The very first step toward creating a legally recognized business is determining which form of business entity you wish to establish. The decision you make at this phase will have both legal and tax implications for your business. Some of the most common business entities that our Los Angeles business lawyers frequently establish on entertainment industry clients’ behalf include:
Partnerships. In a partnership, two or more individuals enter into a relationship to create a business, financial operation, trade, or venture as partners. Each of the partners is responsible for contributing money, labor, property, knowledge, or skills to the business, based on the agreement among the partners. Additionally, the partners share in the business’s profits and losses depending on how the business performs. One of the most important benefits that a seasoned corporate attorney can provide is in drafting a partnership agreement. Some of the elements an effective partnership agreement should spell out include:
Corporations: Corporations are a popular business structure that protect the individuals who create them by forming a new legal entity under state law. It shields investors from any liability that would extend beyond their financial contributions. A corporation remains obligated to pay taxes and may do business under its own name. Los Angeles business lawyers may recommend that an entertainment industry client incorporate rather than forming a partnership for a number of reasons, including personal protection against the business entity’s liabilities and debts and that a corporation can continue to exist even when key personnel die or leave for other reasons. Some of the other benefits of choosing a corporation as a business entity include easy transfer of assets, the ability to issue shares of ownership through stocks, and tax advantages that are only available to corporations.
Limited liability companies: A limited liability company, or LLC, is a business entity that can be formed under the auspices of state law by filing a copy of its articles of organization. In their most basic form, an LLC has similarities to both corporations and partnerships. The benefit of forming an LLC is that none of its members would be personally liable for any of the debts that the LLC entity incurs, similar to the members of a corporation. Additionally, you only need one person to form an LLC under state law across the United States. But like a partnership, the LLC retains flexibility with regard to operations, and any profits the LLC generates are passed through to the LLC’s members, who are responsible for paying taxes on them. An experienced corporate attorney can assist with drawing up the documentation that the members file with the state. It is especially important to seek a competent lawyer’s advice if your LLC wishes to offer a stake of the business to a foreign investor, if you plan to eventually go public and issue publicly traded stock, or if you think you may seek funding from a venture capitalist.
Joint ventures: Joint ventures are contractual agreements involving two or more businesses that wish to engage in a common business enterprise, for which they will share in the venture’s expenses, profits, personnel, intellectual property, facilities, and management. Especially in the entertainment industry, these types of contracts can have many moving parts. The business attorney Los Angeles relies on can advise clients on how to protect their interests within the required memorandum of understanding and letter of intent, which all parties to the joint venture must sign.
Once a business entity is up and running, an experienced lawyer can assist with drafting and negotiating the contracts the company needs to continue its operations. Below are some of the most common business agreements that The Hollywood Lawyer drafts and negotiates on behalf of entertainment industry clients.
Term sheets and investment agreements. A term sheet is an outline of the terms and conditions that will apply to a potential business agreement, especially in the context of an agreement for venture capital financing for a new company. In most cases, the term sheet is the initial communication that summarizes the company’s valuation, who will retain what percentage of control, when the founders’ rights will vest, voting rights, and preferences for company liquidation. Once agreed upon, these terms are finalized in a binding investment agreement.
Operating agreements, bylaws, and shareholder agreements. In an LLC, an operating agreement is a binding contract that governs the business’s internal operations, including how the company will make financial and functional decisions. Operating agreements are required by law in a number of states, and it is recommended to create one even where not explicitly necessary. In a corporation, bylaws are usually established by its board of directors after the articles of incorporation are filed. Similar to an operating agreement, the bylaws dictate how a corporation will run and includes board duties and responsibilities, procedures for modifying existing bylaws, and decision-making procedures. Corporations also create shareholder agreements, which ensure that shareholders’ rights are protected with regard to decision-making and share pricing, among other important terms. A business entity may additionally create similar terms for agreements relating to a company’s founders, members, and owners.
Employment, officer, and independent contractor agreements. Employment, officer, and independent contractor agreements are designed to specify the terms relating to that individual’s title and duties, how they will be compensated, how the company will handle expenses, the benefits to which the individual is entitled, and contingencies for termination of the arrangement between the individual and the company.
In addition to the business needs relating to entity formation listed above, our experienced legal team also regularly provides assistance to entertainment industry clients with respect to advising on fundraising and corporate structure, negotiating purchase and sale agreements, and negotiating and reviewing leases.