THR Esquire

A year of trials peeks at industry's underside

Entertainment lawsuits are usually a big tease. They start with a sexy complaint dressed up with titillating allegations. Then the lawyers throw on the equivalent of a full trench coat, quietly settling or taking the case to private arbitration away from the public's excited eyes.

But 2007 will be remembered as the year several high-profile entertainment disputes went all the way — to trial. In the process, they provided rare open-air peeks at some of the industry's most private parts.

The year began with the resolution of the nasty breakup of two of the town's top talent attorneys, Barry Hirsch and Jim Jackoway. The case is important because the judge found that a law firm can't require former clients to continue to pay commissions without a written fee agreement (it's still common for talent firms to sign clients on a handshake). But the trial also exposed some closely protected secrets of top players: Hirsch's billings were estimated by his firm at $6 million per year. Nicole Kidman was said to pay an annual retainer of $350,000 instead of the traditional 5% of earnings. Owen Wilson's fee was apparently reduced to 3% to keep him happy.

On the studio side, a confidential film budget came to light in the trial of author Clive Cussler's dispute with billionaire financierPhilip Anschutz over the Paramount flop "Sahara." The budget included such eye-popping items as $237,386 in "courtesy payments," "gratuities" and "local bribes" distributed on location in Morocco, as well as $179,262 in travel expenses for star Matthew McConaughey's entourage.

The dramatic trial between NBC and "Will & Grace" creators David Kohan and Max Mutchnick shed some light on license fee negotiations between vertically integrated television networks and studios. Kohan and Mutchnick's lawyers argued that license fees for the show averaged $4.6 million per episode but NBC Studios should have obtained $6 million on the open market. In May, a jury rendered a $49 million verdict against NBC. Before that verdict could be read, NBC's attorneys got the jury foreman removed for writing negative comments about the network on his blog. The case settled the next day.

NBC Universal isn't the only studio that opened its books in a trial this year. In August, a jury ruled unanimously that Warner Bros. breached its duties to producer Alan Ladd Jr. by failing to allocate about $97 million in studio package license fees to films like "Blade Runner," "Chariots of Fire" and the "Police Academy" movies, costing Ladd about $3.2 million. (Disclosure: I worked on the case for Ladd a few years back.) Warners' attorneys say they are preparing an appeal.

MGM also chose to fully litigate a profits case with indie film company Privileged Communications (it settled two days into trial). And Sony is currently in trial with the estate of the Three Stooges over a failed television show based on shorts the studio owns.

This spike in high-profile trials begs the question of whether 2007 is a fluke or the start of a trend. I don't have a prediction, but it's worth noting that these cases all had a personal element to them, something emotional that caused both sides to spend the money to get their day in court regardless of whether it required them to make sensitive information public.

"Artists view their work as their babies that are worth standing up and fighting for," says Joe Taylor, a talent-side litigator. "When people feel the deal's been breached, it feels like betrayal."
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