Bills soar for legal eagles

Europeans using lawyers due to soft money deals

LONDON — In Europe, where the legal costs on production deals used to be minimal, the role of entertainment attorneys has grown considerably, forcing producers into a serious legal habit.

“I never pay less than $250,000 in legal fees on a movie,” one independent producer with several high-profile European productions to his name says of his licit addiction.

On a recent three-country co-production, which involved a complicated patchwork of tax-benefits, subsidies and sale-leaseback monies, the combined legal fees amounted to 6% of the $9 million budget.

With belts tightened and the presales market not what it was, such intricate co-productions involving tax-based equity from different sources are becoming the norm rather than the exception.

“The increase since 1998 has been astonishing,” says Reno Antoniades of Lee & Thompson, one of the leading British entertainment law firms.

Lots of lawyers

“The requirements of these tax deals make it impossible to keep the legals down because the lawyers representing the tax investors will inevitably want all kinds of warranties. And that has a knock-on effect on the entire process,” explains Brit producer Andy Paterson, who adds that he received “between 50 and 100 emails about contracts a day” when putting together the deal on his latest European co-production “The Girl With a Pearl Earring.”

What can be a confusing legal minefield means good business for entertainment lawyers.

“It’s very difficult for producers, especially foreign producers, to penetrate these rules and regulations, which is good for people such as myself,” says Paris-based attorney Leonard Rosman, who advises many North American producers including Sony, Miramax, Andras Hamori and Robert Lantos on their business in France. “At the same time there is funding here which justifies it,” he adds.

Confirms Hamori: “I use my lawyer in L.A. for my paranoia. He’s got to make sure I won’t get screwed. But my lawyers in Europe are there to guide me.”

American influx

Even for non-Europeans, the soft money is substantial these days, triggering a flood of U.S. interest.

“The Americans have discovered the co-production convention and the bilateral treaties (which provide the legal basis for tax-funds) and they have been using them much more than they did a few years ago,” says Libby Savill of London-based law firm Olswang, which looks after Miramax, MGM and Fox.

What experienced entertainment lawyers like Savill do is “workshop various financing scenarios with their clients at a very early stage of a project.” These conversations invariably involve discussions about possible co-production partners in other countries through whom producers can access local funds.

“We don’t broker deals like lawyers in the States, but we’re certainly exposing clients to all the possibilities. It can be very useful to the producer to use us as an independent conduit with the facilitators of these deals,” says James Kay of firm SJ Berwin, which has offices across Europe.

With their knowledge of the mysteries of European tax laws and their ever-changing interpretation, these legal eagles can often assume the role of a trusted priestly figure.

“I know that people talk to me about things that they may not talk to the world at large about because they don’t want to be seen as foolish for not knowing the answer,” Savill agrees.

But even if they see themselves as guiding priests rather than small-print devils, entertainment lawyers remain unloved, particularly in continental Europe.

“I don’t call lawyers,” barks veteran French producer Philippe Carcassone (“L’Homme du train,” “Read My Lips”). “As a general rule I believe in dealing with the contracts myself. If I can understand what I sign I can take care of it myself, and if I can’t understand it, I don’t want to sign it.”

According to Carcassone, the proliferation of legal procedures is a Hollywood import for which there is no need in Europe.

“In America the stakes are sometimes 100 times higher than in Europe. Also, the American system is based on ‘Can I sue him? Will he sue me? When shall we sue each other?’ That kind of legal paranoia doesn’t relate to Europe, for budget and for cultural reasons.”

Issue of trust

Instead of having lawyers wading through legal documents, Carcassone says he prefers to use “waivers to cover himself. If I feel the need to check on a co-producer because I don’t trust him or his expertise, I probably shouldn’t be in business with him in the first place.”

Savill agrees that the influx of U.S. producers has had an effect on dealmaking in Europe, particularly in the U.K. “But life becomes ever more sophisticated and complicated and the levels of risk are growing. It’s a law of nature: What can go wrong will go wrong!”

Yet, with so many parties involved and so many contracts to sign, the great danger in European co-production is to “go on lawyering forever,” says Capitol Films’ Sharon Harel, who has pieced together many complex finance patchworks, including Robert Altman’s “Gosford Park.” “At the end of the day you have to be pragmatic and push them to concentrate on the essential.”

And while lawyers can become guides, priests, confidantes and possibly even devilish loophole-advocates, most producers — and even lawyers — would agree with Harel that ultimately, “it’s the producer who drives the deal.”