Law.com Subscribers SAVE 30%

Call 855-808-4530 or email [email protected] to receive your discount on a new subscription.

Entertainment Law & FinanceKickerFeaturesTopicsLitigationSectionsNewsLJN Newsletters

Block to Perpetual Attorney Fees

By Michael I. Rudell and Neil J. Rosini
September 27, 2007
Entertainment law firms in California commonly charge the talent they represent on a percentage basis, rather than an hourly one. The typical arrangement requires the client to pay 5% of gross income derived from contracts entered into during the course of the representation. Earlier this year, a Superior Court judge in Los Angeles addressed the enforceability of this fee structure in the context of an acrimonious dispute between two entertainment firms. The case involved a prominent attorney and allied partners who left one firm to create a new one, taking a large number of clients with them. The two firms then brought numerous claims against each other, invoking a long list of legal theories.

The principal issue in the case, and the focus of this article, is whether clients who had departed for the new firm had a continuing obligation to pay that 5% fee to the old firm as a matter of contract law. (Additional ethical questions that may be raised by such arrangements are beyond the scope of this article.) The case was subsequently settled, and the court's unpublished decision did not advance beyond the 'tentative' stage. Nevertheless, the rationale of this decision is of interest to any entertainment lawyer who has adopted, or even considered, this alternative to billing by the clock.

The Superior Court held that under the facts presented, contractual principles (and to a lesser degree, ethical rules) blocked the older firm from collecting because the arrangement was unenforceable. Hirsch Wallerstein Hayum Matlof & Fishman LLP v. Hirsch Jackoway Tyerman Wertheimer Austin Mandelbaum & Morris (L.A. Sup. Ct. BC 320128). Would the result be the same in New York? As discussed further below, a 56-year-old Court of Appeals decision seems to be the only reported appellate case with comparable facts, and a pure attorney-client relationship was not presented.

This premium content is locked for Entertainment Law & Finance subscribers only

  • Stay current on the latest information, rulings, regulations, and trends
  • Includes practical, must-have information on copyrights, royalties, AI, and more
  • Tap into expert guidance from top entertainment lawyers and experts

For enterprise-wide or corporate acess, please contact Customer Service at [email protected] or 877-256-2473

Read These Next
Why So Many Great Lawyers Stink at Business Development and What Law Firms Are Doing About It Image

Why is it that those who are best skilled at advocating for others are ill-equipped at advocating for their own skills and what to do about it?

Bankruptcy Sales: Finding a Diamond In the Rough Image

There is no efficient market for the sale of bankruptcy assets. Inefficient markets yield a transactional drag, potentially dampening the ability of debtors and trustees to maximize value for creditors. This article identifies ways in which investors may more easily discover bankruptcy asset sales.

The DOJ's Corporate Enforcement Policy: One Year Later Image

The DOJ's Criminal Division issued three declinations since the issuance of the revised CEP a year ago. Review of these cases gives insight into DOJ's implementation of the new policy in practice.

A Lawyer's System for Active Reading Image

Active reading comprises many daily tasks lawyers engage in, including highlighting, annotating, note taking, comparing and searching texts. It demands more than flipping or turning pages.

Protecting Innovation in the Cyber World from Patent Trolls Image

With trillions of dollars to keep watch over, the last thing we need is the distraction of costly litigation brought on by patent assertion entities (PAEs or "patent trolls"), companies that don't make any products but instead seek royalties by asserting their patents against those who do make products.