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The season’s boffo box office for the final installment of the “Lord of the Rings” trilogy likely has Hollywood investors air-kissing Gibson, Dunn & Crutcher’s Lawrence Ulman. The attorney’s work structuring international tax breaks for investors helped pull in millions in financing for the three-film, $300 million epic — an investment, by the way, that has translated into more than a billion dollars in box office receipts. Keeping Frodo more hobbit than hobo is just the latest in a series of film projects Ulman has helped shepherd. The transactional partner has built up a specialty in finding international tax shelters that give investors tax breaks for funding movie-making. Ulman isn’t as famous as, say, the PricewaterhouseCoopers guys who tabulate the Oscar ballots. But he circulates in the Armani-clad clique of Hollywood power brokers. And his practice gives a glimpse into a world every bit as complex as the Middle Earth of Tolkien’s “Rings” trilogy — that of financing a major Hollywood film. For the films Ulman works on, so-called arrangers create investment partnerships, solicit investors and then put up the money for making movies. Ulman steps in to represent the film studio or movie producers in the process. “You have to be creative and work with local laws and local structures and you have to figure out how to make it work for the U.S. studios,” Ulman said. “You need to strike a balance where everybody has to give up a little something.” Countries like the United Kingdom, Canada and Germany grant special tax incentives to investors who pump millions into producing and marketing films, even if the movie is an American production. Right now, Hollywood’s financial manna comes from Germany, where tax laws award breaks to wealthy individuals who fund filmmaking but don’t require the movies to be made in the country. Ulman has been trooping to Germany about once a month in recent years, especially in December. That’s when investors start thinking about what they’ve done with their money over the previous 12 months and start looking for tax shelters like movie production. For “Lord of the Rings,” Ulman was a player in the German partnerships that helped finance the second and third installments in the trilogy. It was such a key role that he even got to walk the red carpet at the Berlin premier of “Return of the King” earlier this month. “I talked about 15 seconds with Viggo [Mortensen, a star of the film],” Ulman said. It’s not the first time Ulman has had a chance to hobnob with the stars. He attends private movie screenings, goes to the Cannes Film Festival every year, and gets to chat up directors and film producers. He even had a speaking part in the 1992 light comedy “The Linguini Incident,” playing the “suited man” in a nightclub who hands over a check for a prospective investment, saying, “I hope this venture is successful.” The gig got him a film credit and qualifies him to join the actors’ union — though he hasn’t taken advantage of it. A movie buff and longtime Los Angeles lawyer, Ulman had dabbled in film financing transactions over the years. But he went global after he represented a group of German banks that were lending money to filmmakers. That led to more creative forms of financing and helped Ulman build up his practice specialty. “I’ve made them a priority,” Ulman said of his movie-making clients. “They’re interesting and I like working with people who say, ‘Let’s spend $100 million on a product that we have no idea if anyone will use.’” The transactions center on private partnerships that direct money to specific expenses of making, distributing or advertising movies, Ulman said. The partnerships then act as venture capital funds, paying the distribution costs, for example, of a group of films in exchange for a cut of the proceeds. The practice of shopping the globe for tax incentives to pay for movie-making has becomes standard in the film industry. Stephen Scharf, an O’Melveny & Myers partner who also does a brisk business in such transactions, said movie producers have begun to incorporate all potential sources of capital into their planning. Scharf said film producers often prepare several movie budgets, each one based on the tax incentives offered by a different country. “They budget it for different countries to see how much they can save by shooting a picture in different locations,” Scharf said. Canada got to be a popular spot for filmmaking because of tax incentives, he said. There, filmmakers can get tax credits for the costs of production labor from provincial and national government agencies, Scharf said. Not everyone favors tax breaks for filmmaking, however, and sooner or later, tax laws are revised to limit or remove the shelters. As a result, lawyers like Ulman have to stay one step ahead of the tax code writers. “We don’t create the tax laws,” he said. “But what we’ve done is find ways to work out deals utilizing local tax laws.” While tax law may not seem like a route to Hollywood fame, Ulman seems to find a way to make the best of his moments in the spotlight. At the “Return of the King” premiere, Ulman made sure he got himself some attention: “I held my hand over my face and yelled ‘no pictures, no pictures’ so everyone would think I was famous.”

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