Johnny Depp (and Buckley Sandler) on Top in $30M Malpractice Suit against Hollywood Power Lawyer
The suit could have a major impact across Hollywood, where lawyers and their entertainment industry clients often agree to representation based on a handshake.
August 29, 2018 at 01:12 PM
5 minute read
The original version of this story was published on Litigation Daily
Much as I appreciate legal brawls over hip implants or marine hoses or residential mortgage-backed securities, I've got one hard-and-fast rule in my hierarchy of coverage: If a lawsuit involves Johnny Depp, I'm going to write about it.
Especially if it involves a legal malpractice claim, $30 million in disputed fees and lawyers from Buckley Sandler and Reed Smith duking it out in court. (Though who are we kidding. If the “Pirates of the Caribbean” star challenged a parking ticket, I'd figure out a way to write about that too.)
But this case is actually a big deal.
As The Hollywood Reporter put it, the litigation “could have sweeping impacts across Hollywood,” where lawyers and their entertainment industry clients often agree to representation based on a handshake.
Maybe not anymore.
“I don't think there are special rules for show business,” Los Angeles County Superior Court Judge Terry Green said from the bench on Tuesday, according to reporters Jonathan Handel and Ashley Cullins. “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.”
The case began in October when Depp sued his former lawyer, Jake Bloom of Bloom Hergott Diemer Rosenthal LaViolette Feldman Schenkman & Goodman—which as far as I can tell, might be the only law firm in the United States without a website.
I suspect it's the legal equivalent of an exclusive club with no sign on its door. According to Variety, Bloom's other clients include Jerry Bruckheimer, Ron Howard, Martin Scorsese, Nicolas Cage and Arnold Schwarzenegger. He's often described as one of Hollywood's most influential lawyers.
Depp—tapping counsel including Buckley Sandler's California litigation practice head Fredrick Levin—claimed in his suit that “instead of protecting Mr. Depp's interests, defendants engaged in misconduct for their own financial benefit and violated some of the most basic tenets of the attorney-client relationship.” (In a separate action, Depp also sued his former managers in a case that settled in June.)
Depp accused his ex-lawyer of self-dealing, failing to disclose material conflicts of interest, improper contingent fee arrangement and duping him into a predatory loan.
“Mr. Depp was presented with only the signature pages of the loan documents, and trusting that his advisors had his best interests in mind, signed the loan documents, not appreciating the devastating impact this hard money loan, the product of brazen self-dealing and conflict of interest, would have on his financial condition,” Levin wrote in the 23-page complaint.
Depp, whose films have grossed more than $7.6 billion worldwide, hired Bloom in 1999—but they never put it in writing. California's Business and Professions Code requires a written contract for contingency fee arrangements.
“[O]ver the years, defendants collected voidable contingent fees, totaling in the tens of millions of dollars, tied to Mr. Depp's variable earnings,” Levin wrote. But because the fee arrangement was unlawful, he argues that Depp is entitled to a return of all fees.
Depp's legal team also includes Buckley associate Ali Abugheida; Stein Mitchell Cipollone Beato & Missner's Pat Cipollone and Robert Gilmore; and Adam Waldman from the Endeavor Law Firm.
Bloom and his firm, represented by Reed Smith's Kurt Peterson, Peter Kennedy, Matthew Wrenshall and Raymond Cardozo, countersued in December, claiming breach of contract and seeking a declaratory ruling that the fee arrangement was legitimate.
They argued that Bloom firm lawyers spent “thousands of hours” working on Depp's behalf in exchange for a fixed percent of his gross entertainment income. As a fallback, they argued that if the court ruled the fee arrangement was unenforceable, Bloom is still entitled to the “reasonable value” of his legal services under the doctrine of quantum meruit.
In court on Tuesday morning in Los Angeles, team Depp came out on top. Per accounts from the Hollywood Reporter and Variety, Bloom's lawyers argued that the contingency fee arrangement wasn't really a contingency fee—it was a “percentage fee.”
“With a contingency fee, you are speculating on an uncertain outcome,” Cardozo from Reed Smith said, according to Variety. Johnny Depp is more like a sure thing. “You're not speculating on an outcome … Your piece of Depp's income can fluctuate.”
The judge was not persuaded. “It's a classic contingent fee agreement,” he said. “What else could it be? It rises and falls like the tides.”
“Why isn't it in writing?” Green continued. “Why not have something that memorializes the agreement so we don't end up in court fighting like this?”
The judge ruled Depp's oral contract with Bloom was invalid, though he allowed the firm to proceed with its quantum meruit claim. The case is set for trial in May.
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