Handshake deals (known as “oral contracts” in the legal industry) have long thrived in Hollywood. If, for example, an agent agrees to represent an artist in exchange for a percentage of that artist’s income (known as a contingent fee), that agreement would be considered binding even without a written contract. Whether the same can be said of attorneys seeking a percentage fee was recently up for debate in Johnny Depp’s lawsuit against his former attorney, Jake Bloom.
The dispute began last fall when Depp sued Bloom for allegedly collecting more than $30 million in fees, despite the absence of a proper contract. Bloom countersued Depp for breach of contract, citing their 1999 handshake deal. Depp’s attorneys pointed out that California law does not recognize oral contracts, but Bloom’s attorneys maintained that the contract was ratified when Depp continued to accept legal services. Moreover, they pointed out that Depp continued to accept legal counsel from Bloom and his firm after settling his lawsuit with his former management company – a lawsuit that included allegations that the company had failed to maintain proper written agreements.
This last point Judge Terry Green found to be a point in favor of (rather than against) the need to maintain written contracts.
Despite the long-standing Hollywood culture of handshake deals, California law does not recognize oral contracts and Judge Green sided with the law on this one. Judge Green noted that he had grown up in a family that worked in show business and so he said he is aware that many people in show business think they’re above the law, but Judge Green maintains that they are not. California law applies to everyone who lives in California, including those who work in the entertainment industry.
His decision could make big waves throughout Hollywood. Talent attorneys who have been relying on oral agreements might want to think about getting those agreements in writing.
Counsel for Depp’s former attorney made the case that contingent fees are different from percentage fees. While contingent fees are just that (contingent upon the artist getting paid at all, which involves an element of risk), percentage fees are a different matter since they contain no risk.
But Judge Green said there was no difference between a standard contingent fee agreement and the percentage fee agreement at issue in the lawsuit. He said he wondered why the lawyers hadn’t bothered to put the contract in writing, suggesting there was no reason not to do so.
Attorneys representing the law firm said they could explain their reasoning in court if Judge Green were to allow the case to move to trial, rather than dismissing it, but Judge Green didn’t bite. He dismissed the case, saying if the lawyers are so determined to live on handshake deals, they should lobby the state legislatures to change the law, rather than suing former clients for breaching contracts that were never legally enforceable in the first place.
Depp’s attorney released a statement saying that Depp was grateful for the ruling and that he was standing up for all Hollywood artists who had been victims of the industry’s handshake deal culture. How much of an effect this ruling will have on the entertainment industry at large remains to be seen.Super Lawyers named Wheaton and Hyde Park Illinois closely held corporation law trial attorney Peter Lubin a Super Lawyer and Illinois business dispute, shareholder rights and breach of contract attorney Patrick Austermuehle a Rising Star in the Categories of Class Action, Business Litigation, and Consumer Rights Litigation. Lubin Austermuehle’s Illinois business trial lawyers have over thirty years of experience in litigating complex business disputes, shareholder freeze outs and squeeze-outs, breach of fiduciary duty, breach of contract and partnership dispute claims and many different types of business and commercial litigation disputes. Our Kane and DuPage Counties business dispute lawyers, civil litigation lawyers, and copyright attorneys handle emergency business lawsuits involving injunctions disputes involving shareholders, partnerships, closely held businesses and employee breaches of fiduciary duty. We also assist businesses and business owners who are victims of fraud. You can contact us by calling at 630-333-0333. You can also contact us online here.