Hollywood's top law firms should find reason to believe in signed paperwork

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Back in the 1970s, when the concept of an entertainment law firm was as new as the summer blockbuster, Hollywood lawyers routinely represented actors and filmmakers without insisting on written retainer agreements. Instead, like many of the agents who referred them clients, industry attorneys often were paid based on a handshake and a smile.

Today, given the CYA mentality that permeates the business, you'd think the free-love era of casual representation would be long gone.

But industry lawyers, including those at talent boutiques and big-ticket litigation firms, know it still happens on occasion, especially with higher earners or legacy clients who might be offended if presented a formal fee agreement. This goes on despite rules for lawyers in California that a fee contract must be in writing if it binds an individual for more than $1,000 or if the lawyer wants to take a percentage of a client's earnings, a typical pay arrangement for talent dealmakers.

The hesitation makes sense: Would you want to tell Will Smith or Johnny Depp you trust them, but you just need to get the relationship in writing?

Still, reps who tend to avoid that conversation should consider a nasty dispute between a top Hollywood firm and an A-list client that spilled into Superior Court this week.

Century City's Glaser, Weil, Fink, Jacobs, Howard & Shapiro, home to well-known litigator Patty Glaser, sued rocker Rod Stewart on Tuesday, claiming he owes more than $3.3 million in unpaid fees from three cases the firm handled during the past eight years. Stewart had been represented by longtime firm partner Skip Miller for more than two decades and at least 19 cases, but the singer never signed a contract, or no one can find it. Stewart is alleged to have shelled out nearly $2 million in fees related to matters including litigation stemming from him pulling out of a show at the Rio hotel in  Las Vegas in 2000, but he stopped paying sometime after Miller left the firm in 2006. Glaser Weil wants the balance of its fees. Stewart's reps declined comment.

It's not unheard of for lawyers to sue former clients, even famous ones. Last month, attorneys for rapper Ludacris sued him to recover fees, and this week the Arnold & Porter firm stepped into a seemingly endless line of attorneys hoping to collect from the Michael Jackson estate. And even if there was no written contract, the Glaser firm billed by the hour, not by percentage, so it still could collect a "reasonable" fee for services. In fact, argues Jonathan Cole, the firm's collection lawyer, "This client had been with the firm for 20 years and had always paid his bills, so the retainer agreement is not necessary."

But without a written deal, Glaser Weil finds itself in a position no Hollywood law firm wants to be in: defending its fees as "reasonable" in a public lawsuit against a big-name client who already has shelled out millions.

If the case goes further, the firm also will be forced to revisit the prickly details of its representation. In 2006, it was no secret that Miller left the firm -- then called Christensen Miller, et al. -- in the wake of a $3 million judgment against Stewart in the Las Vegas case (the award later was reversed and the case settled). Worse, the firm was sanctioned $150,000 by the Vegas judge for failing to hand over documents, and the judge took the rare step of informing the jury about the misconduct. A top lawyer in Miller's situation probably would have cut a long-term client like Stewart a break on fees. But because he left and is still battling his former firm in arbitration over what he's owed from the partnership, he wasn't exactly incentivized to collect from the client. In other words, Stewart is the defendant, but the real target might be Miller.

This isn't the first time a messy divorce among showbiz lawyers has affected clients. Ironically, Stewart's deal lawyer is Barry Tyerman, whose own firm dealt with the awkward ramifications of a partner's departure when Barry Hirsch split in 2004. Years later, Hirsch's failure to obtain signed fee agreements from many of his clients ended up costing his former partners because a judge ruled he wouldn't enforce oral percentage-fee agreements.

That's a somewhat different situation, and even a written fee agreement likely wouldn't have prevented the Stewart dispute from happening. But in this era of tenuous ties between talent and reps, it's worth noting that failing to get signed paperwork can add a layer of risk to the relationship.
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