Stars Get Caught in Hirschs Hornets Nest
EVEN ON OSCAR NIGHT, it’s hard to imagine talent like Owen Wilson, Jennifer Lopez, Julia Roberts, Richard Gere, Sean Penn, Michelle Pfeiffer, Antonio Banderas, Jane Fonda, Bernie Mac, Baz Luhrmann, Dick Donner, Francis Ford Coppola and Barry Levinson together in one place. But that’s happening now, at least figuratively, in nondescript Room 313 of the Stanley Mosk Courthouse, where two law firms are slugging it out before Los Angeles Superior Court Judge Robert H. O’Brien. The nonjury trial will decide how to divvy up the money from the Hollywood deals they both claim as their own.
Though only Penn, Coppola and Levinson have testified so far, some 200 stars and 500 projects are being scrutinized in the proceedings, which began on October 18 and will probably continue through Thanksgiving. So far, it hasn’t generated a single media story because none of the firms involved want publicity about it, fearing their star clientele might pitch fits. Also because if reporters did get wind of the trial, it would be fodder as much for Entertainment Tonight and US magazine as for the Hollywood trades and legal journals.
The lawsuit, first filed on August 13, 2004, by Hollywood super lawyer Barry Hirsch against his former firm, which he founded, Hirsch Jackoway Tyerman Wertheimer Austen Mandelbaum & Morris (which quickly exorcised Hirsch’s name), was bitter from the get-go. It quickly turned even sourer when his old firm turned around and filed a cross-complaint against Hirsch and his new partners (who were members of the old firm). As if that weren’t enough, Hirsch then sued the wife of his ex-partner, Jim Jackoway. She is an attorney and shareholder in the old firm but was never on its management committee. It seems Hirsch wanted to pressure her so Jackoway and his partners would settle. But she toughed it out, and when Hirsch’s side exhausted its ability to go after her, they dismissed her from their lawsuit.
Nasty, nasty, nasty.
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By setting this mess in motion, Hirsch opened up a Pandora’s box for many of his clients. Already, the financial terms of some of the most well-known movies ever made have been entered into evidence. Among the films mentioned in court documents and during the trial have been Wedding Crashers, My Best Friend’s Wedding, Pretty Woman, The Godfather and its sequels, Mystic River, The Naked Gun and its sequels, Peggy Sue Got Married, The Polar Express, On Golden Pond, Ocean’s Eleven, Ocean’s Twelve, Shopgirl, Bram Stoker’s Dracula, Chicago, Closer, Conspiracy Theory, Dangerous Minds, Disclosure, Rain Man and on and on.
Also caught in the crossfire have been Hollywood studios like Sony, New Line, Universal, Disney, Miramax, Warners and Paramount, some of which have tried to quash subpoenas compelling them to turn over deal details.
So week after week, a herd of expensive blue and gray suits — 15 at any one time, about half of them Hollywood lawyers — filled the court rather than finished their clients’ deals. The judge, described as curt but also perfect for this case because he’s meticulous and focused, keeps his sagging jowls in a permanent frown. Clearly, he must know what everyone else does: That this is a run-of-the-mill business dispute involving money and ego that should have been solved with mediation. Oh, there were many mediations, but Hirsch’s position varied little from first to last. Going into trial, Hirsch’s original complaint was near gutted, while the defendants’ cross-complaint survived nearly intact.
The case revolves around both sides’ claims about just who owns the legal fees for the work that was performed for all that Hollywood talent and during all those projects. Hirsch’s former firm contends they own the legal fees collected by Hirsch’s new firm (or what’s in the joint escrow account they set up subsequent to Hirsch’s departure) because those deals were negotiated or substantially negotiated before Hirsch’s departure. So much of the trial has been looking at the anatomy of each deal.
In some instances, the clients’ names are redacted from evidence, but then bandied about in court. However, no one seems certain whether the Hollywood talent themselves know they are being identified in this trial.
In court on Monday, Howard Fishman, a partner in Hirsch’s new firm, Hirsch Wallerstein Hayum Matlof & Fishman, took the witness stand and told how he helped with the sale and syndication of Julia Roberts’ photographs of her twin children to the press. There was also mention of Marisa Ramirez and her deal for the TV show Miracles. Other client names dropped were Jane Fonda, Robert Redford and Rachel Weisz, who needed the firm’s help negotiating a deal with Revlon.
And that was just one hour’s worth of testimony. Woo-hoo.
Hirsch’s side rested its case on Tuesday; now the defense begins. But not before his new firm was put into an awkward position with some of its current clients. For instance, on Monday, testimony from Fishman focused on one of his clients, actress Rachel McAdams, and details from the former firm’s deals on The Notebook and Mean Girls. Haggling centered on what percentage of money the new firm would get on projects negotiated by the old firm. One interesting footnote had to do with the various ancillary services that the old firm would provide some clients, like estate planning. McAdams wanted that too. But it came out in court Monday that Fishman, when he was with the old firm, had written witheringly that, while McAdams “has a very bright future, she probably has not paid us enough money to date to justify estate-planning services.”
But that was nothing compared to Hirsch’s own contention on the stand that any of his clients is free to leave without any obligation to pay him fees on deals concluded while he represented them. Suffice to say that the lawyers on the other side were amused by this notion.
So far, none of the celebs who have testified have dropped any bombs. Penn testified that he was offered a chance to change his fee arrangement from 5 percent of every deal to by the hour if he followed Hirsch to the new firm. Coppola said he hadn’t even known that Hirsch was changing firms, just his office address. And Donner admitted he had little notion about his financial arrangements with Hirsch since his business manager handled that part of his career.
IT’S NOT OFTEN THAT entertainment attorneys start jabbing their stingers at one another, much less inside the same law practice. Heck, the whole point of their chummy world is to keep the Hollywood machinery humming so everyone makes gobs of money and buys in Malibu. But that changed when Barry Hirsch, infamous for giving Hollywood many Maalox moments, created a hornet’s nest by quietly cleaning out his office on a Saturday, stealthily spiriting away his clients on a Sunday, and then publicly portraying his partners as backstabbing weasels guilty of ageism on a Monday. (See “Hirsch’s Hornet’s Nest”: www.laweekly.com/general/deadline-hollywood/hirschs-hornets-nest/9057.)
At the core of Hirsch’s original lawsuit is whether he jumped or was pushed out of his old firm by a forced LLP conversion. But Hirsch’s ex-partners accused the éminence grise of entertainment lawyers of more subterfuge than you’d find in a Bond flick — including nocturnal escapades, secret software, deleted e-mails, clients on the side, diverted fees and other purported violations of the Rules of Professional Conduct.
According to the cross-complaint filed by Hirsch’s former firm, Hirsch and his gang “installed unauthorized software on the Firm’s computer system,” then they “used the unauthorized software to download confidential documents and proprietary data of the Firm.” They then “also deleted e-mails and electronic documents from the Firm’s computer system in an attempt to cover their tracks and to deny the use of this information to the Firm.” Then “while still employed at the Firm, [they] secretly represented clients on the side, preparing to divert and squirrel away for themselves fees that properly belonged to the Firm. The Hirsch parties undertook these side representations without appropriate disclosure to the Firm of the existence of such clients or their matters and without complying with the Firm’s procedures with respect to new clients and new matters.”
That things had to get this extreme is kinda mind-boggling, especially considering Hirsch is a legal top gun who’s also a licensed marriage, family and child counselor. When he wasn’t presiding over the serial wedding ceremonies of clients Julia Roberts and J.Lo, he spent years treating celebrity and civilian patients and conducting group-therapy sessions. In fact, the old firm accused Hirsch of misusing his extensive psychotherapy training to browbeat, beg and badger clients into joining his new firm.
Now more than ever, it may be hard for Hirsch to portray himself as a victim in court. His new firm is flourishing (and so is his old firm). And he has a history of treating his partners like bugs under his shoe, going back to the start of his legal career.
The product of a Westside middle-class family, Hirsch graduated from USC Law School in 1957 and went to work for an old-line entertainment firm before a merger formed Schiff Hirsch and Schreiber. As his reputation grew, so did Hirsch’s arrogance. There was an infamous Schiff partners’ meeting where, to everyone’s horror, Hirsch went around the table and, one by one, rated each attorney’s usefulness to the firm: “You are a two, you are a six, you are a one,” he said to the lawyers, analyzing them professionally and psychologically.
When an internal dispute broke out at Schiff over partnership shares and merger attempts, Hirsch felt he deserved more money than everyone else. On Friday afternoon, April 25, 1980, the firm’s senior partner, Gunther Schiff, received a phone call from a reporter asking, “Do you have any comments about Barry Hirsch breaking off from your firm?” Schiff was caught flat-footed. Hirsch denied any trouble.
A week later, Hirsch left the firm after 15 years, and Schiff was furious.
Hirsch immediately joined Gary Hendler’s law firm, which became Armstrong Hendler & Hirsch, taking with him his entire client list and two Schiff partners. Hirsch was eager to run Hendler’s law firm by himself. After Hendler was handed a studio job, Armstrong Hendler & Hirsch became Armstrong Hirsch. Ousted from the studio after just two years, Hendler asked Hirsch to let him return to the law firm. Hirsch said no.
Now, he’s embroiled in his third dispute. Hirsch could have taken the comfortable, moneyed path into retirement. After all, he owns a place in Hawaii and has become an avid golfer. From the looks of this trial, his clients may wind up wishing he’d taken the easy way out.
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