Joel Lawsuit an 'Alarm Bell' for Music Industry : Pop: The suit against attorney Allen Grubman highlights an ethical dilemma: Can a lawyer represent a pop client as well as the firm that markets his music?

By CHUCK PHILIPS

Oct. 14, 1992 12 AM PT

SPECIAL TO THE TIMES

Pop star Billy Joel’s $90-million fraud and breach of contract lawsuit against one of the music industry’s most powerful dealmakers entered Round Two on Tuesday.

New York attorney Allen J. Grubman, whose connections to recording companies, executives and artists make him one of pop music’s most influential insiders, called Joel’s claims that he and his firm are rife with conflicts of interest “a sham” and a “contrived and libelous attempt . . . to extort a settlement.”

The singer-pianist has accused Grubman and his Manhattan-based firm, Grubman, Indursky, Schindler & Goldstein, of conflict of interest because he never told Joel that he represented his record company and manager at the same time that he represented the star between 1980 and 1989.

Grubman, 49, whose client list also includes Madonna, Michael Jackson, Bruce Springsteen and a multitude of other top pop stars, said Joel is actually trying to use him to recover millions of dollars that Joel’s one-time manager and brother-in-law, Francis X. Weber, lost in the 1980s.

“Grubman and his firm are ‘deep pocket’ scapegoats,” the attorney said in his 65-page rebuttal to Joel’s New York State Supreme Court suit, first filed on Sept. 23.

Although the dispute over Grubman’s connection to Weber is the heart of Joel’s claims against Grubman, the music industry is paying closest attention to the conflict of interest charges. Many within the business say conflicts are rampant in the pop music industry, and Grubman embodies the problem.

“This case is an alarm bell for the music industry to clean up its act,” said Leonard Marx, Joel’s attorney. “A judgment for Billy Joel will obviously raise serious questions regarding the validity of other artists’ contracts that Grubman has negotiated where he also represented the record company involved or one of their executives at the same time.”

Most of the big pop deals closed in recent years have been negotiated by a small clique of law firms that frequently represent both artists and the companies that market their music--occasionally at the same time. Another entertainment law firm, Ziffren, Brittenham & Branca, was also recently sued for conflict of interest by one of its former television producer clients.

Since 1980, Grubman has negotiated contracts for most superstar clients, as well as for newcomers Mariah Carey and Michael Bolton even as his law firm has also been retained on occasion by the firms that record them--CBS Records, MCA Records, EMI Records, PolyGram and Warner Communications. Grubman has also represented several industry executives, including David Geffen of Geffen Records and Sony Music president Tommy Mottola.

Grubman denies that he was ever in conflict. The attorney, who has settled two malpractice suits out-of-court in the past 10 years, said his firm acted in “full harmony with professional standards” during the nine years it represented Joel.

In general, it is a violation of the American Bar Assn.’s model rules of professional conduct for a lawyer to represent two opposing parties in the same matter without the consent of all parties involved, according to Joanne Pitulla, assistant ethics counsel for the American Bar Assn.

In certain cases, even when a lawyer obtains the client’s consent, the ethical dilemma is not resolved, according to Deborah Schenk, chair of the committee on professional ethics for the New York State Bar Assn., of which Grubman is a member.

“Representing opposing parties during the negotiation of a contract is clearly an example where consent will not cure the problem,” Schenk said. “It’s impossible for an attorney to provide undivided loyalty to one client if at the same time he or she is representing an opposing interest.”

Grubman maintains that his firm never worked for CBS during the period when he negotiated Joel’s contract with the company, although he acknowledges representing CBS and several of its chief executives at different times over the past decade.

“If the relationship between the lawyer and the firm is such that the lawyer might be looking for future business from the company, then in fact, that is no less a conflict of interest,” commented Monroe Freedman, a prominent legal ethics expert and professor at Hofstra University Law School in New Jersey. “The concern is that the lawyer--consciously or unconsciously--would most likely be less than zealous to slug it out on behalf of the artist in order to ingratiate himself with the record company and assure that he does not chill the potential for future business.”

Many rock stars apparently view Grubman’s flair for cross-representation as an attribute rather than an impediment during negotiations. His clients, insiders say, are convinced that Grubman’s long-standing relationships with the industry’s most powerful executives actually help them to obtain the best deals possible.

“All this hullabaloo we keep hearing about Allen and conflict of interest is absurd,” said Giant Records chief Irving Azoff. “Every artist that goes to Allen hires him precisely because he has relationships with all the label executives.”

Robert Morgado, chairman of the Warner Music Group, called Grubman a new breed of entertainment lawyer, comparing his negotiating talents to those of highly regarded and often feared Hollywood power broker Michael S. Ovitz, chairman of Creative Artists Agency, which represents many of the nation’s leading actors and directors.

“While Allen is always very forthright in representing his artist clients, he is also the kind of attorney who operates from the position that everybody’s got to give in a negotiation,” Morgado said. “Allen understands power like Michael Ovitz. He’s more in tune in dealing with the strategic interests of record companies. In a word, Allen is a dealmaker.”

In his suit, Joel accuses Grubman of never fully revealing the extent of his allegiance to the singer’s former manager or record company--a charge Grubman adamantly denies.

Yet it was no secret last spring that Grubman represented both Madonna and her manager Freddie Demann when he negotiated the pop siren’s estimated $60-million multimedia deal with Time Warner--even though his firm was once on retainer to Warner Communications, a subsidiary of the media giant.

Nor did Grubman hide during contract negotiations between Sony Music and Mariah Carey that several executives at the firm, including Carey’s longtime companion, Tommy Mottola, have also retained his services throughout the years.

Jon Landau, manager for Sony recording artist Bruce Springsteen, defended Grubman’s freewheeling negotiating style and decade-long representation of the 43-year-old rock star.

“Allen has done a phenomenal job for Bruce and Bruce is very happy about it,” Landau said. “There’s a very simple reason why Allen has accumulated such a massive list of the industry’s smartest and most sophisticated clients over the years. He gets results.”