Unless production counsel has extensive experience in the securities and tax area, a securities and tax attorney should be retained to assist in setting up whatever investment vehicle is ultimately chosen by the parties. Because the money involved in this kind of arrangement is risk capital, and is only recoupable from proceeds derived from the film, the investor will insist upon a larger participation in the project than a lender. After recoupment, the investor and producer normally split the profits on a pro rata basis, though such division of profits is oftentimes the subject of much negotiation. Production counsel should always attempt to limit the investor's participation to a predetermined return on the original investment, or to a pre-established length of time. An area where production counsel plays a significant role is in the licensing of music.
Every film contains musical elements.
These elements include title and closing themes, underscore and background music. Many films also spin off successful soundtrack albums. In each instance, contracts must be negotiated with composers, artists, conductors, musical supervisors and, in the case of a soundtrack album, the various record companies that own exclusive rights to particular recording artists who provide musical services in connection with the film. The producer must also negotiate a separate recording contract with the record company that will ultimately distribute the soundtrack album. With respect to original and previously recorded music, the producer must obtain theatrical synchronization and performance licenses to use such music in the film.