Judge Throws Out Depp's Handshake Deal

Johnny DeppA California judge has determined that a handshake deal between Johnny Depp and his lawyer was invalid because it wasn't in writing, the Wall Street Journal reported.

Depp sued last year, trying to recover about $30 million in legal fees he had paid since 1999 to his lawyer Jacob Bloom.

As the Journal noted,

Lawyers, agents and other kinds of representatives in Hollywood often maintain long relationships with actors and directors that begin informally and become deeply personal. Oral agreements remain common, lawyers said, even as other kinds of Hollywood deal making—for instance, when a studio hires an actor or director for a movie or TV show—require terms in writing.

Deals with legal representatives typically call for them to be paid 5% of a performer's earnings.

Depp's films have earned about $7.6 billion worldwide, but of course his earnings are only a small percentage of that amount.

Bloom's other clients include  Jerry Bruckheimer, Ron Howard, Martin Scorsese, Nicolas Cage and Arnold Schwarzenegger. 

Contingency Fees

As the Journal reported,

California law requires attorneys who represent clients on a contingency-fee basis to put their contracts in writing.

The relevant law is California Business and Professions Code Section 6147.

The judge found that the oral agreement could be considered a contingency-fee deal because the lawyer was paid based on how successful Depp was.

More commonly, contingency fees are tied to a lawyer's success in representing a client in a lawsuit. For example, personal injury cases are often handled on a contingent-fee basis, with the client paying nothing (except for some costs) unless the client prevails in court or (far more commonly) settles the case and gets a settlement for the client.

Handshake Deals

As the Hollywood Reporter noted,

Agreeing to a percentage fee deal on a handshake isn’t uncommon in the entertainment business, but it’s been an open question as to whether a percentage fees for transactional legal services such as contract negotiation are considered contingent fees, a concept more familiar in personal injury and other litigation contexts. Now talent lawyers may need to revisit any agreements that weren’t memorialized in writing.

Lawyers for Bloom's firm argued that percentage fees (which Bloom was paid) are different from contingent fees (such as personal injury lawyers are paid) because the latter are speculative — the lawyer might be paid nothing at all.

Bloom argued that Depp validated the oral agreement by continuing to request his legal services over the years. He also counter-sued for unpaid legal fees, saying that he worked thousands of hours for Depp.

Bloom won't necessarily have to give up all of the money he's already been paid. Under California law he's entitled to seek "reasonable compensation" for his services.

The remaining issues in the case are expected to go to trial in May, unless the parties settle.

The ruling is expected to change how deals are done in Hollywood.

Squandered Money

In July, Depp settled a dispute with his former business managers. He accused them of "causing" him to go into debt and "letting" him squander more than $650 million.

Among other things, Depp spent $30,000 per month on wine and either $3 million or $5 million for a “specially made cannon” to blast Hunter S. Thompson’s ashes over Aspen, Colorado, according to Vulture.


By nicogenin (cropped version of flickr.com) [CC BY-SA 2.0 ], via Wikimedia Commons

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