Counsel Concerns

Arbitrators' Findings Upheld in Legal Malpractice Dispute over Talent Agencies Act Controversy

The California Court of Appeal, Second District, affirmed an arbitration decision that awarded attorney fees to a law firm that represented a management company in a challenge to the reach of the California Talent Agencies Act (TAA). Marathon Entertainment Inc. v. Fox & Spillane LLP, B224686. Fox & Spillane served as counsel to Marathon in three commission disputes with the management company's talent clients. One case was settled and two were litigated. In Marathon Entertainment Inc. v. Blasi, 42 Cal.4th 974 (2008), the California Supreme Court ruled that unlicensed talent agent activity by Marathon could be severed from its management contract with actress Rosa Blasi such that the actress still owed management commissions to Marathon from acting activity obtained by Marathon through a licensed talent agent.

The law firm retainer agreement specified that any disputes Marathon may have with the attorneys would be resolved through arbitration. The parties later proceeded to arbitration on Marathon's allegation of legal malpractice by Fox & Spillane on the talent agent issues; the law firm counterclaimed for payment of legal fees. The arbitrator ruled in favor of the firm, though an appellate arbitrator reduced the legal fees award.

In its ruling, the state court of appeal in part found that Marathon failed to establish that the arbitrators hadn't properly considered “the fundamental question” of “whether Fox should have argued that the [California] Legislature's decision to repeal a criminal penalty provision in the TAA 'left adjudicators without legal authority to find violations [of the Act] and mete out penalties such as voiding contracts for unlicensed procurement of employment for artists.'” The court of appeal noted in its unpublished decision, for example, “Marathon has cited no evidence demonstrating that it presented its 'criminal penalties' argument to [initial] Arbitrator [Barbara Reeves] Neal at any point in the arbitration hearing.”

Contingency Fee Agreement Applies to Potter Guide Post-Trial Settlement

The U.S. District Court for the Southern District of New York interpreted contingency fee agreements with litigation counsel to apply to a settlement reached after a trial court issued an injunction that barred the lawyers' client from releasing a book titled The Harry Potter Lexicon. Hammer v. RDR Books, 10 Civ. 1007. RDR had been sued by Warner Bros. Entertainment and Potter novels author J.K. Rowling over a Potter Lexicon companion guide. After a bench trial, District Judge Robert P. Patterson Jr. enjoined publication of RDR's book. Warner Bros. Entertainment Inc. v. RDR Books Inc., 575 F. Supp. 2d 513 (S.D.N.Y. 2008). The Warner/Rowling and RDR parties later reached an oral settlement under which RDR could publish a Potter guide simply titled The Lexicon.

In the Hammer case, RDR's litigation lawyers, David Hammer and Lizbeth Hasse, filed breach of contract claims seeking legal fees from RDR and its principal Roger D. Rapoport. Granting summary judgment in part for Hammer and Hasse, Southern District of New York Judge Colleen McMahon found that RDR's fee agreements with the lawyers didn't limit “the applicability of the 'settlement' prong of the fee arrangement to settlements reached prior to a decision on the merits at the trial court level ' RDR took an appeal from the final judgment in the original action, so the litigation was not yet ended; only the settlement and the concomitant withdrawal of the appeal ended the litigation. Settlements pending appeal happen all the time in our business; they are no less 'settlements' for that.”

But Judge McMahon ruled the lawyers' fee suit would continue on whether Rapoport should be held personally liable to Hammer and Hasse.

Arbitrators' Findings Upheld in Legal Malpractice Dispute over Talent Agencies Act Controversy

The California Court of Appeal, Second District, affirmed an arbitration decision that awarded attorney fees to a law firm that represented a management company in a challenge to the reach of the California Talent Agencies Act (TAA). Marathon Entertainment Inc. v. Fox & Spillane LLP, B224686. Fox & Spillane served as counsel to Marathon in three commission disputes with the management company's talent clients. One case was settled and two were litigated. In Marathon Entertainment Inc. v. Blasi , 42 Cal.4th 974 (2008), the California Supreme Court ruled that unlicensed talent agent activity by Marathon could be severed from its management contract with actress Rosa Blasi such that the actress still owed management commissions to Marathon from acting activity obtained by Marathon through a licensed talent agent.

The law firm retainer agreement specified that any disputes Marathon may have with the attorneys would be resolved through arbitration. The parties later proceeded to arbitration on Marathon's allegation of legal malpractice by Fox & Spillane on the talent agent issues; the law firm counterclaimed for payment of legal fees. The arbitrator ruled in favor of the firm, though an appellate arbitrator reduced the legal fees award.

In its ruling, the state court of appeal in part found that Marathon failed to establish that the arbitrators hadn't properly considered “the fundamental question” of “whether Fox should have argued that the [California] Legislature's decision to repeal a criminal penalty provision in the TAA 'left adjudicators without legal authority to find violations [of the Act] and mete out penalties such as voiding contracts for unlicensed procurement of employment for artists.'” The court of appeal noted in its unpublished decision, for example, “Marathon has cited no evidence demonstrating that it presented its 'criminal penalties' argument to [initial] Arbitrator [Barbara Reeves] Neal at any point in the arbitration hearing.”

Contingency Fee Agreement Applies to Potter Guide Post-Trial Settlement

The U.S. District Court for the Southern District of New York interpreted contingency fee agreements with litigation counsel to apply to a settlement reached after a trial court issued an injunction that barred the lawyers' client from releasing a book titled The Harry Potter Lexicon. Hammer v. RDR Books, 10 Civ. 1007. RDR had been sued by Warner Bros. Entertainment and Potter novels author J.K. Rowling over a Potter Lexicon companion guide. After a bench trial, District Judge Robert P. Patterson Jr. enjoined publication of RDR's book. Warner Bros. Entertainment Inc. v. RDR Books Inc. , 575 F. Supp. 2d 513 (S.D.N.Y. 2008). The Warner/Rowling and RDR parties later reached an oral settlement under which RDR could publish a Potter guide simply titled The Lexicon.

In the Hammer case, RDR's litigation lawyers, David Hammer and Lizbeth Hasse, filed breach of contract claims seeking legal fees from RDR and its principal Roger D. Rapoport. Granting summary judgment in part for Hammer and Hasse, Southern District of New York Judge Colleen McMahon found that RDR's fee agreements with the lawyers didn't limit “the applicability of the 'settlement' prong of the fee arrangement to settlements reached prior to a decision on the merits at the trial court level ' RDR took an appeal from the final judgment in the original action, so the litigation was not yet ended; only the settlement and the concomitant withdrawal of the appeal ended the litigation. Settlements pending appeal happen all the time in our business; they are no less 'settlements' for that.”

But Judge McMahon ruled the lawyers' fee suit would continue on whether Rapoport should be held personally liable to Hammer and Hasse.