In a decision that could have sweeping impacts across Hollywood, a Los Angeles judge ruled Tuesday that Johnny Depp’s oral contract with his former talent lawyer Jake Bloom is invalid, citing a statute that requires contingency fee agreements to be in writing.
Agreeing to a percentage fee deal on a handshake isn’t uncommon in the entertainment business, but it’s been an open question as to whether a percentage fees for transactional legal services such as contract negotiation are considered contingent fees, a concept more familiar in personal injury and other litigation contexts. Now talent lawyers may need to revisit any agreements that weren’t memorialized in writing.
“I don’t think there are special rules for show business,” said judge Terry Green from the bench. “I grew up in a show business family. I’m aware that show business people think they live in a separate universe, but they don’t. Not a separate legal universe.”
“Why is this so significant?” he asked at one point, a question that may surprise the reputedly numerous Hollywood attorneys at the highest levels who rely on what Green termed “a wink and a nod.”
Ironically, Green’s order itself is only oral at this point, but he told the parties he would be producing a written opinion.
Counsel for the Bloom Hergott firm pressed the argument that percentage fees are different from contingent fees, because the latter are speculative and involve risk of failure, while — in their view — percentage fees don’t.
But Green made clear throughout the half-hour argument that he wasn’t buying it.
“It’s a classic contingent fee agreement,” he said. “What else could it be? It rises and falls like the tides.”
And he returned again to the theme that rules are rules: “I don’t know what people were thinking in this case. Why not have a writing here? Why not?”
Sensing an opening, the law firm’s counsel argued that the answer to that question should be developed by letting the matter go to trial, rather than dismissing Bloom Hergott’s claim for breach of contract based simply on the legal filings. But Green didn’t bite, suggesting instead that if entertainment lawyers want different rules, they should lobby the state legislature for a change to the statute.
Green repeatedly returned to the subject of entertainment, noting that he was the first one of three generations of his family not to be in show business, and that his son-in-law was currently working on a big movie. In contrast, he said, “I rarely go to the movies,” adding that Depp has “had ups and downs in his career.”
The case began when Depp sued Bloom in October, asserting, among other claims, that his former attorney collected more than $30 million in contingent fees without a proper contract. Bloom countersued in December, asking the court for a declaration that their 1999 oral agreement is valid and claiming Depp breached their deal by failing to pay for legal services.
In March, Depp’s legal team asked the court to rule that his deal with Bloom is invalid because California law requires written contracts for contingency fee agreements. Bloom’s lawyers argued that Depp had ratified the contract by continuing to accept legal services after alleging in his recently-settled legal fight with his ex-business managers that The Management Group “failed to obtain and maintain written agreements with critical service providers” including Bloom.
But Green was unpersuaded, countering that this argument would negate the statute that requires written agreements, California Business and Professions Code Section 6147. “At some point, we have to comply with the law,” he said. “6147 has to mean something.”
Depp’s attorney Adam Waldman sent The Hollywood Reporter a statement after the hearing: “Johnny Depp is gratified by today’s ruling in his favor against one of the most powerful law firms in Hollywood. This ruling is a victory for Mr. Depp, but importantly it sends a clear message to the legal industry that the laws apply to them too. Industry ‘customs’ that have been used in Hollywood for decades to take advantage of artists are not legally binding. Johnny Depp stood up for all artists in Hollywood and won; this ruling should cause a change for the better.”
Attorneys for Bloom have not yet responded to a request for comment.
Trial is currently set for May, and Depp is seeking a refund of all the fees he paid to his former lawyer. Bloom and his firm may appeal the ruling, however, and they can still move forward with a quasi-contractual claim called quantum meruit, which asks the court to rule that they can retain a reasonable fee for their work.