Law firm works to sever Dreier ties
Santa Monica-based outfit meeting with potential partnersA top Hollywood law firm is quietly but doggedly trying to sever ties with its New York owner in the wake of his arrest on financial fraud charges.
Santa Monica-based Dreier Stein, the 40-attorney outpost of Dreier Llp. and home to well-known entertainment litigator Stanton "Larry" Stein, spent the holidays in expedited meetings with potential new merger partners on both coasts.
The goal, Stein said, is to split from firm principal and accused swindler Marc Dreier before the end of January.
"We're listening to offers," said Stein, who reps such industry clients as Lionsgate, Jennifer Love Hewitt and David Duchovny. "We've done nothing wrong, and we need to get out from under the burden of Dreier."
Dreier, who opened the West Coast outpost of his 250-lawyer firm in January 2007 via a pricey deal with Stein's entertainment litigation and corporate boutique, has been held in a Manhattan jail since early December on charges of bilking some of New York's top investors to the tune of $380 million.
Among other colorful and bizarre tactics, Dreier is accused of impersonating lawyers and hawking fake promissory notes to hedge funds.
The arrest has plunged the once high-flying Dreier firm into bankruptcy and put some of Hollywood's most prolific lawyers in play.
Stein's group of 20 talent-side litigators, which includes Michael Plonsker, Yakub Hazzard and Mark Passin, has handled recent cases for Marvel Entertainment and Eva Longoria and repped Rob Lowe in his battle against a former nanny.
In December, the firm, whose full name is Dreier Stein Kahan Browne Woods George, went to trial against AMPAS on behalf of the estate of Mary Pickford over the effort by Pickford's heirs to auction off her Oscar for 1929's "Coquette."
Stein said he and his partners are cooperating with the court-ordered receiver that is collecting the firm's income and approving its expenses while he scrambles to find another home. He would not confirm the names of suitors, but top contenders include Los Angeles' Liner Yankelevitz Sunshine & Regenstreif, which itself boasts a strong entertainment practice, as well as New York-based Mintz Levin Cohn Ferris Glovsky & Popeo, Washington-based Buchanan Ingersoll & Rooney and international firms Troutman Sanders and Kramer Levin Naftalis & Frankel.
Liner Yankelevitz topper Stuart Liner confirmed that he has been in discussions with Stein but said that no deal was in place.
"We are interested, but this type of transaction takes time and I would certainly expect Larry and Bob (Kahan) to explore all options after what they experienced with Dreier," Liner said.
Stein said he plans to fly to the East Coast this week to meet with more firms. It is unclear how many of Stein's lawyers would be invited to participate in any deal, though it is unlikely that his firm will remain completely intact.
Already, the Century City-based litigation boutique Browne Woods George, which joined the Dreier firm last year, has said it is going its own way. But Stein said that group has indicated that it might join him in a new home.
"My goal is to bring as many people with me as want to come," Stein said. "And at least so far, every single person has said they want to come."
In the meantime, signs at Stein's offices in Santa Monica's tony Water Garden have been changed to remove references to Dreier, and calls to the firm are now greeted with "law offices" instead of the firm's name.
Because Dreier is still the firm's legal owner, however, court filings -- including a lawsuit filed Dec. 24 against Time Warner on behalf of "Gilmore Girls" producer Gavin Polone -- still include Dreier.
Stein said he has been in touch with nearly all his clients and referral sources, and none has said they were dropping the firm.
"Larry Stein has an incredible reputation, and no one is going to question him," said Wayne Levin, general counsel and executive vp corporate operations at Lionsgate. "I'm convinced that Larry was unaware of anything."
Still, finding a merger partner willing to match Dreier's favorable terms could prove challenging. Unlike most law firms, in which partners split both costs and revenue, Marc Dreier was the sole owner of Dreier Llp. and paid rainmakers like Stein massive salaries and covered all of the firm's expenses.
The Wall Street Journal has reported that several lawyers in the West Coast offices received guaranteed salaries upward of $1 million, with Stein receiving more than $2 million annually.
Plus, to avoid conflicts of interest, entertainment litigation firms typically must choose whether to represent major studios or focus on talent. Most large L.A. firms that do entertainment work try to develop the repeat business of studio clients.
Stein, on the other hand, made his name pioneering so-called "vertical integration" cases challenging studio self-dealing on behalf of profit participants such as Duchovny on Fox's "The X-Files" and the creators of "Home Improvement" against Disney. So he likely would need to find a firm willing to forgo studio work -- which means either a national firm looking to open an L.A. office or a local firm whose clients do not include studio conglomerates.
The Liner Yankelevitz firm has represented such nonmajors as Summit Entertainment but, like Stein, mostly steers clear of the majors.
A combination with the 80-lawyer Liner firm would be similar in size to Alschuler Grossman Stein & Kahan, Stein's previous partnership with litigator Marshall Grossman. Stein's group split from Grossman's firm to join Dreier at the end of 2006.