It was announced earlier this week the troubled actress is to appear opposite a male porn star in the film - about five twentysomethings' quest for power, love, sex and success in modern Hollywood - but she is cautious about appearing naked.
A source told Radaronline.com: "Lindsay and her team are concerned about the nudity that is involved. Lindsay would be required to do full frontal nudity, and the sex scenes are very, very graphic."
The 25-year-old star has already posed naked for Playboy magazine, but her team says when it comes to being nude on film, it is a different matter.
The source continued: "Yes, Lindsay has posed nude for Playboy, but she needs to make sure she is comfortable with it, and this is something she can handle as an artist. It's expected that Lindsay will sign the contract in the next two weeks, as filming begins at the beginning of July."
The 'Mean Girls' actress was said to be attracted to the project because it will mean she gets to work with director Paul Schrader, who wrote 'Raging Bull' and 'Taxi Driver' and author Bret Easton Ellis, who wrote the script.
The friend added: "Lindsay has admired Bret's work for a very long time, and one of her favorite movies is 'Less Than Zero.'"
Lindsay is currently filming TV movie 'Liz & Dick' in which she plays Elizabeth Taylor.