The cost for the lawyer to get the forms together won't be too much, it can be handled by any competent business lawyer. It will likely cost $150-$500 depending on what city you are in and their local laywer cost, as well as how much homework you've done and how much you can do on your own.

As your profile says you are in California, unfortunately for you they've got one of the more expensive states to establish a business, LLC, or DBA entity.

All told you'll be spending about $1000. It may seem large if you haven't put any money into your project so far, but considering the costs of things going bad it is tiny amount of money. Think of it much like insurance, a small investment up front to avoid a potential disaster at a later date.

We meet again, General.

DISCLAIMER: I am not a legal adviser. This not to be considered legal advice. The opinions expressed by me do not necessarily represent the opinions of GameDev.net

Terms & Conditions always apply to everything in life - up to a point.

When you hire a contractor/freelancer, you are the customer (entering an agreement based on "good faith" i.e. that they abide by their advertisement/offer and in return, of satisfactory completion, the customer renumerates the other party upon the agreed price {price usually determining the level of quality to be expected}), and as a customer you are protected by the relevant state/national/international laws that apply (depending on the location of other the party/parties involved).

When it comes to intellectual-property/copyright etc., permission is needed to use an author's product of intellectual work (audio, music, artwork, characters, video {that includes computer-game-animation}, code etc.). An employer owns their employee's product of intellectual work. However, all non-employees (contractors, freelancers and volunteers) own their own work and give various consent/permissions of use. To completely own other people's product of intellectual work, requires their agreement.

So, when you release your game as a producer/publisher, your 'legal' concern should be that you've got the permission for every part of the game, to do so. (Nobody could have said that better themself - in my humble opinion.)

If you are the employer and all the work is entirely done by your employees only, then no worries, you own it all - it's yours to do as you wish. If not, if it's work done by other companies or non-employees (contractors/freelancers/volunteers) then you need to have had their permission. Permission with conditions is known as a license. Unreal Engine 4, for example, has a license https://www.unrealengine.com/eula, therefore, if you use their intellectual property, then they expect you to honor the terms & conditions that you agreed to in the license. If a person does not honor it (within the legal laws), and they find about it, and they think it's worth their time and money, they may take the matter to court and argue for example "The defendant agreed to pay 5% of every cent over $3,000 per quarter." And if you read carefully, that means even if a distributor took a cut, it wouldn't matter, that amount would still be considered as part of that $3,000 minimum, and you'd still have to pay 5% of any amount above $3,000 per quarter as if the distributer hadn't taken its cut at all. Ironically, there is an example in the actual license agreement that explained that better than I just did.

So, when you want original work done by a freelancer, you also want license (permission) from them to use it (or even better; ownership). That's the "legally covered" part. It's not that you couldn't write one up [a license agreement], it's that doing so is tediously boring. Then again, a simple email from the author stating in plain English that you have permission to use the work as you wish for free, for example, is technically, evidence of obtaining that permission. If you don't feel confident about writing T&Cs that covers all bases, then I'd consider having the correct lawyer, experienced in this sort of thing, help with the wording.

Just to reiterate: I am NOT a legal counsellor. This is NOT to be mistaken as legal advice. It is ONLY my layman opinion.

You probably already know about these freelance websites below (the list seems to never end). It might help you find the right animators for the right price.

https://www.fiverr.com/categories/video-animation/animated-characters-modeling/#layout=auto&page=1&ref=service_type%3Aanimated_3d_modelling

https://www.freelancer.com/info/how-it-works.php

http://www.guru.com/d/freelancers/c/design-art-multimedia/skill/3d-950/

https://www.freelanced.com/freelancers/3d-animation

https://www.ifreelance.com/find/providers/browse.aspx?c=4&sc=57

https://www.linkedin.com/title/3d-animation-freelance

https://www.upwork.com/hire/3d-animators/

Check each potential freelancer/contractor's reputation by checking their reviews whenever possible (as well as the reviewer), check their portfolio/work/list of clients (if they keep such a list and the dates if possible), and finally, interview them (actually talk with them).

In my layman opinion, "Entity" is a technical term. You're an entity with rights. Other people are entities with rights. A company can be registered to become recognized as an entity with its own rights (things get a little weird at that point - but there were reasons why this became law which I won't go into).

Again, in my layman opinion, the team as it stands, appears to me as a group of individuals (entities), a group that has 'agreed' to be part of 'your' team, one way (email) or another (vocally), for the purpose of releasing a mod in the future, with the spoils of war to be divided amongst the group later (the percentages of which to be decided by yourself at a later date.) Is that correct? That would be an example of a Gentlemen's Agreement. It's still an agreement. Just because there is no paper trail, doesn't mean there was no agreement or expectation. If everybody's "cool", then no problems. But if people decide to start being a douche and make claims, THAT's when records of an agreement (between parties or entities) come in handy because it keeps a person to their word, so they can't run around saying "I was promised a 50% share, blah, blah." etc. And even if that is what they claim, they still have to prove it.

And now, for a word on "When it comes down to money..."

So what's the important difference between a 'contractor', a 'employer' and an 'employee'? TAXES! The whole 'business' of registration is so Governments can keep track of who is responsible to pay what amount of tax.

Limited Liability businesses register 'themselves' as such so that liability (such as debt) is limited to the business itself, therefore protecting its shareholders. Are you planning to incur a lot of debt in the future?

I'm also looking at the EULAs of the game we're modding, and it's somewhat inconsistent with it's terms.

You can contact the company and request a 'custom' License Agreement, or if they're not willing to do that, request for clarification on the current agreement. Since EULAs are written for the purpose of protecting their work from copyright & lawsuits, it tends to leave very little freedom for the 'End User'. That's why it's better to make contact with the company to get a custom agreement. WHO KNOWS - someone at EA (Electronic Arts) might be so impressed by your team's work, that they decide to fully support the project.

EA has headquarters in California (same state as you, if I read correctly)

From what I've read from frob, EA have a good culture.

PM him to see what he thinks.

I don't know if EA can claim ownership of original work without permission, even if the EULA said they could (License Agreements do not give companies an excuse to break the law. That South Park episode wasn't real, ya know. :) )

A company would have to have no soul, if they were to try and seize all of a modder's work and sell it completely as their own -or- issue a cease and desist while it still exists as a hobby.

The only alternative I can think of is switching engines and changing details to avoid any copyright issues.