ENTERTAINMENT LITIGATION: WHEN THE CLIENT AND LAWYER TURN ON EACH OTHER

THE IMPORTANCE OF A STRONG LAWYER-CLIENT RELATIONSHIP

The lawyer-client relationship can — and should — be among the most intimate relationships — grounded in mutual trust and respect, with open and honest communication. A client comes to the lawyer with a problem — the lawyer learns all of the facts and charts the course to a solution — and both are on the same page as they work together towards the resolution of the problem. However, as with any other personal relationships, it’s no surprise that lawyers and clients can hit rough patches in their journey — even when the relationship is a “good” one. This post is about examples of what can happen when the lawyer-client relationship deteriorates into an adversarial one.

There are many factors to consider when deciding whether to file litigation. I’ve previously touched on certain “downsides” to such litigation — the potential that the litigation will spiral out of control or that the litigation will result in unintended consequences and embarrassing disclosures. This post is about the downside to strategic litigation choices — including the decision to file a lawsuit in the first instance — and how those choices can affect, positively or negatively, the strength of any lawyer-client relationship.

After the jump, two recent lawsuits between lawyers and clients — including one case involving one of my mentors — illustrate the importance of full and open communication between lawyers and clients during any litigation.

THE DOWNSIDE TO “SCORCHED EARTH” TACTICS

Unfortunately, disputes between lawyers and clients are not unusual — many result in litigation over clients failing to pay bills or lawyers’ performance. Two cases between lawyers and clients have recently received national attention. Last month, the prominent Los Angeles firm, O’Melveny & Myers filed a lawsuit against MGA Entertainment, makers of the Bratz line of dolls, for unpaid bills in their case against Mattel. In that case, OMM sued MGA for over $10 million in unpaid legal bills after they withdrew from the case. (MGA recently won a reversal of the onerous trial court judgment against them in their battles with Mattel, as I recently wrote.) It doesn’t seem like OMM and MGA relationship was ideal — reflected by the huge $10 million fee dispute and MGA’s apparent rejection of OMM’s staffing decisions.

A more interesting example of a breakdown in the lawyer client relationship is the case involving my mentor, Patty Glaser and her firm, Glaser, Weil, Fink, Jacobs, Howard & Shapiro, against their former client, video game entrepreneur, Bobby Kotick — in a litigation involving over a million dollars in unpaid fees. (I worked at Glaser’s firm, then known as Christensen, White, Miller, Fink, Jacobs & Shapiro, before leaving with “White” to form our own firm. Glaser was one of my mentors at the firm. I consider her, and a number of others at her current firm, to be friends — although that hasn’t prevented us from being fierce adversaries in representing our respective clients against each other a few times since my departure.) Last month, the Court of Appeal upheld an arbitration award which sided with Glaser’s firm and awarded them over $1.5 million. You can
download the Court of Appeal’s opinion here.

In this case, Glaser defended Kotick and others in litigation against a flight attendant of Kotick’s private jet who alleged that she was sexually harassed on the jet. What makes this otherwise ordinary fee dispute interesting is that it concerns the client’s strategic directions in the underlying sexual harassment suit. Kotick directed Glaser to “destroy” his opponent and her counsel — i.e. to employ “scorched earth” tactics. Glaser and her firm advised Kotick what that kind of strategy would cost. After the bills reached almost a million dollars, Glaser and her firm withdrew, and filed an arbitration demand for their unpaid fees.

Glaser’s firm secured an arbitration award for their fees of just over $1.5 million. The Superior Court confirmed that award. And last month, the Court of Appeal affirmed that judgment. The specifics of the appeal — concerning procedural errors which Kotick’s new lawyers made both at the trial court and appellate court level — are not important to this post.

What is important is that a client who directed his lawyer to “destroy” the other side and was advised of the cost in advance still would not pay his bills. As reported in the LA Times last week, it turns out that Kotick changed law firms in that litigation — after Glaser’s firm withdrew — on more than one occasion and that “the principle was more important [to Kotick] than the economics.” The O’Melveny/MGA Entertainment case also involved an underlying lawsuit — the battle of the dolls — driven by strong principles and a client who changed law firms multiple times. (Ironically, Glaser’s firm was MGA Entertainment’s first law firm in the Mattel litigation.)

LESSONS TO BE LEARNED

I see a number of takeaways from these cases. First, litigation — even litigation involving sophisticated, wealthy clients — is going to involve strong emotions. These emotions can be and often are presented as “principles.” Lawyers must remember to act as counselors as well as advocates — even more so when there are emotions involved. So we must be able to speak “truth to power” — deliver the downsides to the client in advance in the hopes that decisions are not made entirely on emotion.

Our counsel must include a frank discussion concerning the decision whether or not to file the lawsuit in the first place. I have had many discussions with clients and potential clients about whether a lawsuit is in the client’s best interest. Filing a lawsuit demanded by a client — with me as the trial lawyer — might be in my firm’s best interests. Naturally, that’s not and should not be a consideration. A weak lawsuit driven by the client’s emotions is going to be trouble down the line. Counselors must take the long term view — and in so doing will be acting in the best interests of the client or potential client. In my view, these pre-lawsuit discussions are vital to a strong lawyer-client relationship.

Finally, a good counselor should try to advise clients of all anticipated problems and issues in any given litigation, including costs. By doing so, we’re not making “guarantees” with such predictions — we’re using our experience and judgment in the hopes that the client/potential client is not surprised. Such counseling should take place at the outset of a case — as well as any strategic decisions to “destroy” the other side by using “scorched earth” tactics.

Glaser’s dispute with Kotick shows that advanced counseling does not always ensure a good lawyer-client relationship or prevent fee litigation down the road. However, I believe that counseling clients about potential results and costs — which can sometimes be a difficult task — strengthens most lawyer-client relationships in the long run. Regardless, in my opinion, this kind of open discussion separates the “gun-for-hire” type of lawyer with the counselor/trial lawyer which I strive to be. (I had good teachers and mentors.)