Thinking About a Lawsuit? You Might Want to Think Again.

by Leon J. Owens

Is your lawsuit really worth it?

After law school, my first real experience in the business world involved working with David Weisz,  who mentored me in the world of distressed businesses, insolvency, and bankruptcy.  My introduction was a true “baptism of fire,” as I found myself holding the reins of the Hollywood entertainment industry’s most notorious bankruptcy auction of the 20th Century: the disposition of MGM Studios physical assets, an incredible experience which you can read all about here on this blog.

Since then, I’ve been personally involved in dealing with the creditors and assets of other major Hollywood studios and production entities.  I’ve learned a lot about how the timely assertion of creative rights, the reasonable valuation of intellectual property, and the “standard accounting procedures” of the entertainment industry can entangle both creditors and debtors in a downward spiral in which nobody comes out ahead.  The reality of litigation dealing with intellectual property in the entertainment industry is that the objectives of plaintiffs in asserting or reinforcing their legitimate creative rights can be lost in the weeds of depositions, interrogatories, interpleaders, arbitrations, and verdicts which leave only lawyers and legal scholars satisfied.

I just this week came across a classic and very current example of the complexities of engaging the major studios in litigation–and the pitfalls of doing so even when a claim is arguably legitimate–in the case of producer Tony DeRosa-Grund who is relentlessly pursuing a claim against Warner Bros. Studios over rights acquisitions and financial accounting.  Whether or not DeRosa-Grund’s claims are legitimate (“legitimacy” of a claim often determined by judges and juries completely unfamiliar with the “standards and practices” of show business), a recent court ruling in his favor may ultimately do little to mitigate his ongoing losses and mounting legal costs in the matter.

You can read the entire story in The Hollywood Reporter here.  Mr. DeRosa-Grund may eventually prevail in court, but it has all the earmarkings of a painfully Pyrrhic victory.  From my perspective as a trusted business advisor, I often remind Real Estate Matters clients who may find themselves in a similar test of will and the law that judges and juries are human, with all the flaws and foibles that implies.  Courtrooms are unpredictable environments in which outcomes are always uncertain.

There is an old Chinese proverb about litigation, and it goes like this: two adversaries walk to the edge of a cliff.  They each begin throwing money off the cliff, into the abyss below.  The one left standing with a dollar in his hand is the winner.  But all he has won is that dollar in his hand.