Source: http://passmanjones.com/Resources/Articles-Authored-Work/Conflicts-of-Interest-in-the-Entertainment-Law.aspx
Timestamp: 2019-04-22 19:11:36+00:00

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Entertainment has been called “an incestuous business, with a premium attached to ‘whom one knows’.” Kenneth J. Abdo, 18-FALL ENT. & SPORTS LAW. 3 (2000). Because the business of entertainment is built on relationships, the entertainment lawyer must be especially vigilant – and should be especially thorough in considering possible conflicts of interest.
Because a lawyer is expected to exercise independent professional judgment on behalf of a client, he/she should not be engaged by the manager or agent, whom the lawyer may be called on to negotiate with or even litigate against on behalf of the performer, writer or artist. Such dual representation can provide the appearance of a conflict of interest and may serve as prima facie grounds for a legal malpractice action. See Grisham v. Garon-Brooke Assocs. Inc., Action No. 3:96 CV045-B (N.D. Miss 1996).
Conflict of interest claims against entertainment lawyers used to be raised in motions to disqualify but also, with increasing frequency, in ethical complaints. See, e.g., In re Crane and DePew, Cal. St. Bar Ct., Nos. 84-0- 14252, 84-0014253 (Los Angeles Daily App. Rep., 8/15/90) (recommending suspension for SEGA’s in-house counsel who formed his own company and, without disclosing his ownership to SEGA, acquired a license from SEGA which authorized it to sublicense one of SEGA’s games to the home computer market).
In addition, conflict-based allegations against entertainment attorneys could be brought in injunction actions. See, e.g., Hannan v. Watt, 147 Ill. App. 3d 456, 497 N.E.2d 1307, 1311 (1986). Also, allegations may be brought in actions for breach of fiduciary duty. See, e.g., Croce v. Kurnit, 565 F. Supp. 884 (S.D.N.Y. 1982), aff'd, 737 F.2d 229 (2d Cir. 1984) (where widow of singer-songwriter Jim Croce sought rescission of certain contracts executed at the suggestion of “his” lawyer; at the initial meeting, the attorney was introduced to the Croces as “the lawyer”; although they were aware that the attorney had a business relationship with the publishers and managers, he did not advise Croce to seek his own lawyer; Mrs. Croce did not win the rescission action, but she was awarded judgment against the lawyer for the costs and attorney’s fees she incurred in prosecuting her unsuccessful claims on the grounds that, but for the breach of fiduciary duty, those claims would not likely have arisen).
Detroit Lions, Inc. v. Argovitz, 580 F.Supp 542 (1984).
Doris Day v. Jerome B. Rosenthal, 217 Cal. Rept. 89 (1985).
Also, claims may come in legal malpractice actions. See, e.g., Day v. Rosenthal, 170 Cal. App. 3d 1125, 217 Cal. Rptr. 89 (1985) (affirming a $26 million fraud and malpractice judgment against Doris Day’s attorney), cert. denied, 475 U.S. 1048 (1986).
In a number of unreported cases, lawsuits by entertainers and artists against their entertainment attorneys alleging conflict of interest rule violations have been filed. See, e.g., Adler v. Manatt, Phelps, Phillips & Kantor, L.A. Super. Ct. BC 053076 (Apr. 1992) (where former Guns’n’Roses drummer sued law firm for malpractice and other causes, alleging damages suffered as a consequence of his signing an agreement with other members of the band); Wilson v. Irving Music, Inc., and Mitchell, Silberberg & Knupp, L.A. Super. Ct. C737675 (Sept. 1989) (where Beach Boys leader Brian Wilson sued law firm for, inter alia, malpractice, claiming that at the time his father sold the catalog of his music to Irving Music, the firm represented him, as well as his father, but did not inform him of his rights or of the firm’s conflict of interest).
A possible remedy where an attorney breaches the fiduciary duty to his entertainment client is disgorgement. For example, the Supreme Court of Pennsylvania noted that “courts throughout the country have ordered the disgorgement of fees paid or the forfeiture of fees owed to attorneys who have breached their fiduciary duties to their clients by engaging in impermissible conflicts of interests.” Maritrans Gp, Inc. v. Pepper, 529 Pa. 241, 602 A.2d 1277 (1992). While that case didn’t involve an entertainment lawyer, it seems that entertainment attorney are subject to the same rationale.
IV. What This Means for Texas: The Texas Rules of Professional Conduct (41 states adopted ABA Model Rules of Professional Conduct, including Texas. Others adopted ABA Model Code of Professional Responsibility).
Texas Rules of Professional Conduct 1.06 through 1.09 address conflicts of interest.
Rule 1.09 governs conflicts of interest with regard to former clients. This “former clients” rule is of particular relevance in the realm of representing entertainers. Comment 4A to Rule 1.09 might prove especially significant for entertainment lawyers in Texas. It describes a circumstance in which a lawyer would be prohibited from representing a client against a former client where the representation involved the same of substantially related matter, unless the lawyer were to obtain prior consent. Such a situation might arise where a manager/agent (of a performer/writer/artist who is the lawyer’s client) calls on the lawyer to negotiate with or even litigate against that performer/writer/artist after his representation by that lawyer has ended. The “substantially related” language would likely be satisfied in such an instance given that the lawyer will have likely been privy to confidences of the performer, writer or artist that could potentially be used to that person’s advantage or disadvantage, according to Comment 4B to Rule 1.09.
Finally, the fact that Texas has been up and coming in the entertainment industry over the past several years, and because it is common in entertainment business practices and in the entertainment market for entertainment clients to merge and create joint ventures. Result: the conflicts become even more complex. 14-SPG ENT. & SPORTS LAW. 3 (2000).
A waiver of potential conflicts of interest for an entertainment client must be detailed and thorough and created for that particular client. A standard form letter will is not enough. Conflicts can appear subtle and insignificant, and so letters regarding waiver of conflicts must be detailed and comprehensive. It has been said that multiple-client entertainment transactions are so complex that a standard form to clear conflicts is virtually useless. See Peter L. Haviland, Presentation at the Black Entertainment and Sports Lawyers Association 17th Annual Conference (Oct. 30, 1997).
The matters in which you represent the other party. This representation must be thoroughly described.
Whether this representation is on a regular basis.
Whether you expect to continue to represent the other party in the future.
Describe the relationship of the other party to the present matter.
Whether any matter that you have worked on for the other party is substantially related to the present matter.
Whether you have received any confidential information from this client that is related to work for the other party.
Whether you have received any confidential information from the other party that is related to the present matter.
Whether you believe that the representation of the other party by you (or the firm) would adversely affect your ability to represent you [this client] in this matter.
That, with the client’s permission, you have discussed the matter with the other party and they have given their consent to representation.
That the client has indicated their consent to the representation notwithstanding the conflict of interest.
Summary to advise client of the nature of the representation.
In re Fred C. Jans, 666 P.2d 830 (1983). (“It is never proper for a lawyer to represent clients with conflicting interests no matter how carefully and thoroughly the lawyer discloses the possible effect and obtain consent”).
In addition, it is a good idea to articulate in representation agreements the fact that most representatives of entertainers cannot avoid representing many clients that may potentially compete for the same roles or jobs. Also, making copious records reflecting efforts made on behalf of each and every client would be wise.
1 Special Thanks to Erin Hendricks (SMU 02’) for her assistance in preparing this outline.

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