Attorney to the Superstars

Ousted Motown Records President Andre Harrell wasn’t the only one who cleaned up last week when PolyGram decided to restructure its moribund Motown division.

Harrell’s New York attorney, Allen J. Grubman, cashed in handsomely on the deal too.

Harrell’s exit package is said to have been worth an estimated $7 million--the remainder of what PolyGram owed him on a five-year, $30-million management pact signed in 1995. Sources say Grubman, who negotiated Harrell’s entrance and exit at Motown, socked away about $1.5 million for the two transactions.

Grubman is also believed to have racked up nearly $1 million negotiating two contracts for PolyGram employee Danny Goldberg, who will be promoted next week from president to chairman of Mercury Records, the company into which Motown is expected to be folded in the months ahead.

And while the 54-year-old attorney did not represent PolyGram during the transactions with Harrell or Goldberg, his law firm has worked frequently for the Dutch-owned conglomerate in recent years and also negotiated contracts for a number of top executives and artists at PolyGram, including Elton John, John Mellencamp and Jon Bon Jovi.

With unrivaled connections to record executives, companies and artists, Grubman occupies a unique position in the entertainment field as one of pop music’s most influential insiders.

Legal experts, however, say they would be hard pressed to find a lawyer operating in any other industry with so many clients on both sides of the fence. How can one attorney, they say, aggressively represent the interests of so many different parties at the same company without a conflict?

“There is a very easy answer to that question,” Grubman said in a phone interview from his New York office. “Anybody who knows me knows that when I represent a client in a transaction, I kill for that client--sometimes to the frustration and anger of the person on the other side of the table--whether or not that person also happens to be a client.

“When the guy on the other side of the table sees me trying to get the absolute best deal for my client in that transaction, he realizes that I am going to kill the same way for them when I am hired to work on some future transaction on their behalf.”

For the last 10 years, Grubman has been negotiating contracts for Bruce Springsteen, Madonna, Luther Vandross and a stream of superstar clients, even as his law firm, Grubman, Indursky, Schindler & Goldstein, has also been retained on occasion by the firms that record them--Sony Music, Universal Music Group, EMI Music, Bertelsmann, PolyGram and Time Warner.

Grubman also represents a long list of powerful industry executives, including David Geffen of DreamWorks SKG, Doug Morris of Universal, Clive Davis of Arista Records, Jimmy Iovine of Interscope Records, Bryan Turner of Priority Records and Thomas Mottola of Sony Music.

Grubman’s connections at Sony raised some eyebrows five years ago when singer Billy Joel filed a $90-million conflict-of-interest claim against him in New York court. Joel’s lawsuit alleged that Grubman did not get a conflict-of-interest waiver from the singer or adequately advise Joel that his firm was also simultaneously working for Sony’s CBS Records.

Joel agreed to drop his suit against Grubman in October 1993 after the singer received $3 million from Sony. It is unclear why Sony, which was not named as a defendant in the suit, paid the money to settle the case. The settlement funds were authorized by Grubman’s close friend, Michael P. Schulhof, former chief executive of Sony Music’s corporate parent, Sony Corp.

Entertainment analysts say conflicts are rampant in the pop music industry, and practices pioneered by Grubman’s firm, which employs almost three dozen lawyers, embody the problem.

It is a violation of the New York code of professional responsibility for a lawyer to represent two opposing parties in the same matter without the consent of all parties involved, according to Mary Daly, chairwoman of the committee on professional ethics for the New York State Bar Assn., of which Grubman is a member.

Grubman said his firm has never represented two different parties in the same transaction and that they always inform clients of other parties whom they represent.

In certain cases, however, even when a lawyer obtains the client’s consent to proceed, the ethical dilemma is not resolved, according to Monroe Freedman, a legal ethics expert and professor at Hofstra University Law School in Hampstead, N.Y.

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‘One of the risks that has to be explained to the client is that even if the lawyer is not consciously favoring the other party in any way, the client must be aware that unconsciously, because he likes these guys and wants their business in the future, it is possible that he might sell the client out--without even intending to,” Freedman said.

“The response from the client might just be, ‘Well, I know half a dozen people that you’ve represented in similar circumstances, and if you get a deal for me like you got for them, I’m willing to take that chance.’ In the end, though, it’s the client’s obligation to call the shots.”

And Grubman has plenty of satisfied customers.

To be sure, many artists and executives view his flair for cross-representation as an attribute rather than an impediment during negotiations. His clients, sources 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.

Grubman broke into the business in 1969 working at the firm of attorney Walter Hoffer, who represented such acts as the Beatles. Five years later, he opened his own firm--and business has been booming ever since.

It was no secret in 1992 that Grubman represented both Madonna and her manager, Freddie Demann, when he negotiated the pop singer’s multimedia deal with Time Warner--even though his firm often did work for Warner Communications, a subsidiary of the media giant.

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Nor did Grubman hide during contract negotiations between Sony Music and Mariah Carey that several executives at the firm, including Carey’s husband, Sony President Mottola, also retained his services throughout the years. Carey, however, recently dropped Grubman shortly after she separated from Mottola.

Grubman’s success has spawned an elite clique of law firms that represent both artists and the companies that market them. “I think I’ve made an important contribution to the practice of music law,” Grubman said. “I believe we’ve done a significant job in solving problems that other attorneys might not have been able to accomplish simply because they don’t have the relationships we have.

“But the fact is there is only one thing I have that has kept me in business all these years. I don’t own master recordings. I don’t own artist contracts. All I have is my reputation. All I have is my credibility.”