FILMMAKERS’ LEGAL NEWSLETTER - Spring 2026

Welcome!

The topic that currently seems to be of most interest to filmmakers – other than the age-old challenge of sourcing equity investment – is the ever-increasing role that AI is playing in the industry. In this Spring newsletter, we consider both of these topics.

The uses that may be made of AI in development, production and post-production are of particular interest to independent producers working on limited budgets. One way of reducing expenditure is to substitute location filming by creating expansive exteriors, say, a mountain range or a desert using artificial intelligence. Numerous AI tools are available to facilitate such an exercise. For example, Runway offers high-level creative control and is widely used for originating realistic nature scenes; Luma Dream Machine is known for fast, cinematic results, allowing the setting of keyframes to guide camera motion - ideal for sweeping scenic pans.

The number of AI applications and the ways in which they are used in post increases continuously.

Level clients have recently praised a number of the AI tools they are currently using including: Artlist.io which is a subscription based platform that offers a vast library of royalty-free music and sound effect for use by content creators; Strada Tech which is gaining currency for use by editing teams collaborating over the internet and ElevenLabs which has become a popular choice for its realistic AI voices and voice cloning capabilities.

Filmmakers’ day-to-day use of AI tools in accordance with the terms and conditions of the providers doesn’t ordinarily tend to raise legal concerns. However, AI applied to the bigger picture of the industry as a whole is increasingly occupying lawyers ‘ consideration.

Data (Use and Access) Act 2025

In the UK, the ultimate destination of the government’s Data (Use and Access) Act 2025 continues to hang over the industry’s head like a sword of Damocles. Initially, the government proposed allowing AI companies to use copyrighted works to train their models with an opt-out option exercisable by rightsowners upon written notice. This engendered wide-ranging opposition from individual creatives and industry organizations across the board – from Paul McCartney to Tom Stoppard and from Equity, the actors’ union, to the Ivors Academy representing songwriters and composers. Significantly the House of Lords Communications and Digital Committee vigorously opposed the proposal, describing it as "misguided" and warning it would be harmful to the creative sector.

More recently, Technology Secretary, Liz Kendall, stated that the government no longer has a preferred option for what to do next and is attempting to balance the interests of the tech and creative sectors by giving rights owners "control (over) how their work is used", while recognizing AI models need to be trained on existing copyright works including literary, musical and visual. The government ‘Report on Copyright and Artificial Intelligence’ published in March concluded that “As part of our work to help rights holders control and license their work, we propose to work with a range of industry and other experts to develop best practice on input transparency to help right holders assert their rights. Our approach should be proportionate and avoid unreasonable burdens, particularly on SMEs and individual developers, and promote clarity and enforcement for right holders of all sizes, including SMEs and individuals, without disincentivising AI development or deployment in the UK. The process should include developers of AI systems developed outside the UK.”

In other words, neither the developers of AI technology nor rightsowners are any clearer on where the legislators will settle with an initiative that has its origins in the 2021 consultation paper ‘Data: A new direction’.

With so much equivocation, it’s hard to see where this might end up. Producers, writers, composers and artists in all media and those who fund, sponsor and commission them invest vast amounts of time, resource, finance and, most importantly, creativity in developing and producing films, television programmes, books, artistic works and music. No statute or statutory instrument should be introduced to justify the results of those investments being gobbled up indiscriminately on any basis other than one by which technology companies pay commercial licence fees to willing rightsowners, clearly informed in advance how their works are proposed to be used. Not only would an opt-out or similar protocol diminish the value of existing copyright works but, perhaps, also the enthusiasm of funders to invest in the development and production of new copyrights.

Permitting AI providers to wholesale pillage the fruits of the creative sector without realistic commercial and financial safeguards first being put in place, still a possibility, would likely have a negative effect on the UK’s creative sector and on its considerable contribution to the economy.

Watch this space.

AI and Disney

Disney looked to be paving the way for major rightsowners with its groundbreaking December 2025 deal with OpenAI making available 200 characters from its Disney, Pixar, Marvel, and Star Wars brands for use in Sora and ChatGPT Images. Disney’s commitment to invest $1 billion during the three-year term of the agreement would have led to curated selections of fan-inspired Sora videos being streamed on Disney+, potentially creating new content that would have been exploited on the basis of a revenue sharing arrangement between the parties. Announcing the deal, the parties contended that it brought “leaders in creativity and innovation together to unlock new possibilities in imaginative storytelling.”

In the event, OpenAI has canceled the deal and began shutting down the Sora service, apparently before any cash had changed hands. It is a matter of speculation as to where this leaves Disney’s path towards using AI to monetise its vast IP catalogue.

Undoubtedly Disney will not be sitting on its hands waiting for another opportunity to dip something more than its toe into what it presumably sees as not only a potentially valuable revenue stream but also another source for expanding its creative base. And, where Disney leads others will presumably follow.

Investment in UK film production

In 2025, expenditure on UK film production reached £2.8 billion, the highest figure on record, with overall expenditure on film and high-end TV production reaching £6.8 billion. And yet producers working in independent production, particularly at entry level where future industry leaders may develop, still find it challenging to raise equity.

Quite apart from the BFI and the likes of Film 4 and the BBC there are some significant private lenders and gap funders around including those such as Bankside, Head Gear and Ilium. The UK also offers a wide range of national and regional funding incentives including a tax credit whereby a per centage of UK qualifying expenditure is refunded to filmmakers. Most, if not all, of the UK independent productions on which Level lawyers work take advantage of these incentives equating to a tax relief of approximately 40% for UK film productions with a budget up to £15m. Loans secured against the proceeds of the tax credit are available from a number of providers. Terms offered vary as does the extent of security sought.

Regional funds are also available from around the UK.

Producers based in Yorkshire & Humber or filming in the region may apply to the Yorkshire Content Fund which may invest up to £500,000 in a project but which also requires matching third-party contributions. Similarly, the West Midlands Production Fund invests up to £500,000 in feature film or TV drama projects filming in Birmingham and the West Midlands, providing both debt and equity financing but also requiring their investments to be matched by outside contributions. Other regional funds are operated by Screen Scotland, Ffilm Cymru Wales, Northern Ireland Screen and the Liverpool City Region Production Fund.

A number of post-production houses make investments available conditionally on the filmmaker contracting with them to undertake the post. For projects fortunate enough to attach sales agents, pre-sales may generate proposed advances against which there are lenders who will make loans secured against contracts for firm sales. However, unless the sums involved are significant the amount of paperwork required by some lenders can be overwhelming.

Many Level clients, currently in production or post-production, have been fortunate enough to fund their projects with one or more of the above. Nevertheless, we are currently working with a number of able producers with original and well thought-through projects, many with notable talent attached and some already part-funded, but where the equity, in some instances the final slice, is still being sought.

Opportunities abound!

The Filmmakers’ Legal Guide (Third Edition)

Now in its fourth printing, written not as a legal text but as a handbook for filmmakers, The Filmmakers’ Legal Guide is available from Amazon or from Raindance (email denise@raindance.org)

JT provided Its most recent Amazon review on April 9, 2026 and wrote: “This is a must-read book for any independent film maker. Everything you need to know is clearly discussed, with good examples provided and tips regarding possible pitfalls. If you want to make certain that your crew, actors, script and film are legally prepared and protected, then this is the book you need to read.”