Actor’s victory could end lawyers’ handshake deals

A ruling in Johnny Depp's favor over an agreement with his former law firm will "force tectonic change" for Hollywood attorneys relying on "handshake deals" to get paid, the actor's attorney said Wednesday. Many entertainment attorneys think he's right.

Los Angeles County Superior Court Judge Terry Green ruled in Depp's favor on a motion for judgment Tuesday, finding Depp's former law firm, Bloom Hergott Diemer Rosenthal Laviolette Feldman Schenkman & Goodman LLP, voided any potentially enforceable agreement by failing to put pen to paper.

Howard King, an entertainment partner at King, Holmes, Paterno & Soriano LLP, said such informal deals aren't unheard of in the business world, and they're "very common" in the entertainment industry. There's no question Green's ruling will force many attorneys to pick up the phone for some uncomfortable conversations with their clients, he said.

"Think about it. There's a lot of rich entertainment lawyers who have been getting 5 percent from shows that have been in syndication for 20 years and will continue to be in syndication," King said. "If those lawyers don't have a written fee agreement, the clients can stop paying them tomorrow."

The "What's Eating Gilbert Grape" star had been a longtime client through partner Jacob Bloom, who Depp said in a 2017 lawsuit bilked him to the tune of $30 million despite the lack of a formal contract. Bloom argued the oral contact was enforceable because the pact with Depp wasn't a contingency agreement, in which lawyers work on particular assignments based on specifically tailored assessments of the claim.

Instead, Bloom Hergott said it provided "a wide array of entertainment-related services" to Depp on a non-contingent basis, which the defense argued made a written agreement unnecessary. Depp et al. v. Bloom et al., (L.A. Super. Ct., filed Oct. 17, 2017).

Mark Geragos, of Geragos & Geragos PC, said it's true some lawyers find themselves acting more like one-stop legal shops for high profile clients despite ostensibly working on contingency. The broad, undefined nature of the relationship between celebrity and counsel likely explains why many of these handshake deals come about in the first place, he said.

"There's something to the fact that the entertainment lawyer can become kind of the go-to person in a lot of different facets in an entertainer's life. I'd ascribe that as the genesis of these sorts of arrangements," Geragos said.

For the court, that apparently wasn't enough to escape California Business and Professions Code 6147, which requires attorneys on contingency to provide a duplicate copy of the contract signed by representatives for both parties, which details the attorney's rates and how incurred costs are handled, among other things.

Failure to comply renders the contract voidable. Despite the atypical relationship between attorney and client, the court held there's no special exception for Hollywood.

Adam Waldman, an attorney at Endeavor Law Group and counsel to Depp, said Wednesday there's only one reason lawyers would intentionally violate a law designed to protect clients from being taken advantage of -- "to take advantage of them."

"Hollywood entertainment lawyers who violated the law and skirted the clear, written contract requirements with their artists are scrambling to fix their problem," Waldman said. "The problem may not, however, be fixable."

King agreed it wouldn't be an easy fix, particularly for attorneys who have had these kinds of agreements for a long time. After a few years, King said, there's no opportunity to casually bring up the lack of a written contract, "and there wasn't any reason to ask for one in writing until yesterday."

"I'm not sure what percentage are in Jake Bloom's situation, but after five or 10 years in a relationship, it'll be a little weird to say, 'Hey, let's put this in writing for 5 percent," King said, noting 5 percent is the typical rate for entertainment attorneys on contingency.

While the ruling dismisses Bloom's breach of contract claim, it doesn't appear to affect Bloom's quantum meruit claim, meaning he could still argue at trial he deserves standard rate compensation. But King said Bloom -- whom he called a great but "notoriously reclusive" attorney -- is not likely excited by the prospect of having to explain to a jury why he should be paid for his work.

"[Bloom] is likely to bring in an expert to say that 5 percent is a reasonable value for services, but Depp can bring in another expert to say, 'Well, there's plenty of lawyers who charge 500 bucks an hour.'" King said.

Attorneys at Reed Smith LLP representing Bloom, including partners Kurt Peterson and Peter Kennedy, did not respond to requests for comment Wednesday.

Ken Feldman, chair of Lewis Brisbois Bisgaard & Smith LLP's legal malpractice defense department, said they could potentially petition for a writ of mandate, but it's not likely they'd have much success.

"There is a lot of money at stake, and it's a high-profile case. When you couple those together, they likely have a better shot," Feldman said. "But the ones that get granted are in the 2 to 3 three percent range."

Depp's case is the most prominent dispute over a handshake deal, but Geragos said it's hardly the first. In most cases, though, there's an underlying agreement between the parties binding them to arbitration.

He's been in a couple such arbitrations himself, and said he's "always been amazed at the informality that exists in the culture."

"I always thought it was a matter of time before someone was going to challenge it," Geragos said. "It's just mind-boggling to me."