Crowdfunding platforms like Kickstarter and Indiegogo can be useful in bringing ideas to life. Whether it’s video games or clothing, inventions or events, crowdfunding can help make dreams a reality. However, when looking at what some campaigns have budgeted for legal, the answers can range from “Not nearly enough” to “Budget for what, now?”
So, this raises the question: what *is* the proper amount to budget for legal on a crowdfunding campaign? And while we hate to give the “It depends” answer…well, it depends. It depends on a number of things.
There will be a small number of fairly standard costs, such as trademark clearance for the name of the product or service. However, even standard costs may vary depending on the circumstances. For example, is there a company set up yet? What agreements, if any, exist among the core members of the project team? What sort of things can the core team do (coding, music, marketing, etc.) and what will have to be contracted out? Setting these things up takes time and money.
And it’s not always just a matter of getting something, anything in place. Sometimes, a bad agreement (especially one pulled from the Internet without attorney review) is worse than having no agreement at all. Depending on how big the mess is, it can be far more intensive and expensive to fix a messy, half-baked contract than to start from scratch.
Costs will also vary depending on the type of project. Manufacturing technological gadgets may require patent protections that aren’t warranted when selling T-shirts. Anything with computer code can be covered by copyright, as can music and books. Planning to hold a convention for cat lovers? Not only will there be negotiations with the venue, but liability waivers and codes of conduct for the attendees.
Also important: what kinds of rewards are being offered? “A copy of the movie and maybe a digital download of the soundtrack” will require far less legal attention than “design a boss monster and a secret dungeon in our video game.” Not to mention things like “VIP access to the opening night gala in Honolulu.” The more exotic the reward tier, the more essential the fine print.
The point is, these things need to be figured out beforehand. An ounce of prevention is worth a pound of litigation. Having these crucial discussions beforehand will give everyone an idea of what things will cost, and might even bring unexpected issues to light. Sitting down and creating a proper legal budget not only sets realistic expectations, but helps to show potential backers and investors that you have thoughtfulness and foresight to see things through to the end.