Why Music Executives Seek Lawyers With Conflicts Of Interest: ‘It’s a Very Incestuous Business’

 

Why Music Executives Seek Lawyers With Conflicts Of Interest: ‘It’s a Very Incestuous Business’

10/19/2018 by Steve Knopper

Every time hard-rock manager David “Beno” Benveniste signs a band, he recommends that the group hire a veteran attorney he knows personally: Jeffrey Light.

Two bands, Korn and Deftones, have taken his advice, and so far they haven’t objected to a key detail: Light also represents Benveniste. “There are some lawyers that are scumbags. They play both sides. They will exacerbate the situation,” says Benveniste, who also works with Smashing Pumpkins, System of a Down and Alice in Chains. “Jeff Light is a stand-up, ethical guy. If you do the right thing, you shouldn’t worry.”

This kind of conflict of interest — the same attorney representing both manager and artist — comes up frequently among lawyers in the music business. Ross Johnson, a crisis communications specialist who works with numerous lawyers, calls the music industry “a very incestuous business” that creates “a lot of strange entanglements.” Allen Grubman, the powerful lawyer who represents some of music’s top acts as well as label executives and managers, is reputed to have said for years, according to Newsweek, “If there’s no conflict, there’s no interest.” Adds attorney Howard King, who represents Dr. Dre, Metallica and other megastars: “We send out multiple conflict letters a month. They’re generally a situation where we have two clients doing a transaction together, like a production agreement.” An ethical conflict, many lawyers say, makes them more attractive to clients because of their intimate connections.

“Wouldn’t you rather hire a lawyer who has done 10 deals with Live Nation rather than zero deals with Live Nation?” asks King. “It’s like having somebody buy a used car who knows to the dime what the dealer paid for that car and what they’ve sold the car for the last 10 times.”

Lawyers like King and Light argue that there’s a simple way to get around a conflict, according to long-standing American Bar Association (ABA) guidelines: They disclose it, in writing, to all parties. “If the client agrees to waive the conflict in writing, then you’re permitted to proceed,” says Light. “It’s all about disclosure and consent.”

But some in the industry say waivers are not enough. One longtime music attorney scrupulously avoids all conflicts, particularly when both sides are negotiating against each other, because “if you represent both sides, you have a conflict. If you’re going into battle, how can you annihilate someone you represent? It makes no sense. For me, it’s a matter of ethics.” Adds Scott Rodger, manager of Paul McCartney and Shania Twain, “It’s not ethical. It really is too much of a compromise. You always want to be neutral.”

The consequences for violating the ABA guidelines — which prevent a lawyer from representing a client who is “directly adverse to another client” without “informed consent, confirmed in writing” — are indirect. Lawyers won’t get disbarred or arrested. But they can be sued. In a high-profile 1993 case, Billy Joel settled for a reported $10 million with his legal team, including Grubman, for also representing executives at his label, Columbia. In 2013, rapper Lil’ Kim sued a former attorney, Sunny “Sanny” Barkats, for $2 million, in part for simultaneously representing her and a branding company he launched on her behalf. Conflicts of interest have arisen through the years in litigation involving Sly Stone and the estates of Jimi Hendrix and Jim Croce.

Why doesn’t everyone just avoid conflicts? Because of the money. “The reason the transactional lawyer can drive a Rolls-Royce is because he doesn’t turn down work,” says Johnson. “The transactional lawyer will become involved in negotiating record-executive contracts. And then the executive says, ‘As long as I’ve got you on the phone, help me with this artist.’ The music lawyer who has just done the deal for the executive with the label is now representing the artist.” Beth Patterson, a former Elektra attorney who later worked for such acts as The Fray and Nathaniel Rateliff, says there were “instances where a law firm who represented a record company also represented the artist.”

“It’s the only industry I’m aware of where the client wants to hire somebody who has conflicts,” says Diane Karpman, a legal ethics expert and former president of the Beverly Hills Bar Association. “Say you’re playing around the [Sunset] Strip and you decide, ‘Hey, we need a lawyer.’ They do not want a lawyer that’s over on La Tijera Boulevard by the airport; they want a lawyer in Century City. They want someone that can connect them to video producers and all the other aspects of the industry. They don’t want someone that doesn’t have conflicts.”

Few attorneys in the music business pay close attention to the ABA’s ethical guidelines, says Jeff Smith, an attorney at Atlanta’s Greenberg Traurig, which also includes top music attorney Joel Katz, who, like Grubman, declined to comment for this story. (Both of their firms have worked on retainer for the three major record companies, sources tell Billboard.)

Consent waivers are necessary and generally helpful, but they aren’t foolproof. Smith, co-author of the guidebooks Legal Malpractice and Preventing Legal Malpractice, gives a hypothetical example in which an attorney represents both an artist and a manager and receives informed consent letters on both sides — but later, another of the attorney’s clients threatens to sue the manager for being drunk and misplacing crucial paperwork. “Now the lawyer knows the manager is an alcoholic,” says Smith. “Are you going to advise your client the manager is an alcoholic? Now you’ve got a big problem.”

“Whenever there’s money, there’s probably going to be litigation,” says Neville Johnson, an attorney who represents Mitch Ryder, Lloyd Price and Rick Nelson’s estate. But he says that many attorneys “are not thoughtful enough” about providing waivers, and they have to be “on alert at all times for potential conflicts, because it can bite them years later.” Adds Light: “Remember, this is America. There’s always somebody willing to take a shot at suing you.”

King, on the other hand, calls music a “tiny” business, and says that “you do your job without regard to whether they’re a former, current or future client” and “negotiate for the best possible deal.” Light says that “there are probably 100 music lawyers in the music business who matter,” so it’s rare to find an attorney who isn’t conflicted in some way.

“One very well-known lawyer said at one point that ethical conflicts in the entertainment industry are an oxymoron,” says Christine Lepera, an attorney for Lukasz “Dr. Luke” Gottwald. “But I take it very seriously, and my firm does, too. I’ve seen horror story after horror story of frayed relationships and people’s views changing. You’re happy, doing great, and all of a sudden, it’s, ‘Let’s find as many things I can to challenge what my representative did so I can try to get out of it.'”

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