Stein Brings Down the Studios

Why would one man be foolish enough to take on the major Hollywood studios?

Published in 2006 Southern California Super Lawyers — February 2006

In 1999, when actor David Duchovny filed a highly publicized lawsuit against 20th Century Fox, it was the shot heard ’round the entertainment world. War had officially been declared.
 
Duchovny merely wanted what he believed to be his fair share of the profits from the hit TV show The X-Files. Fox, the suit alleged, had conspired to rob Duchovny of royalty fees by licensing reruns of the series to appear on Fox’s broadcast and cable networks for less money than it could have fetched on the open market. In effect, Duchovny claimed, Fox was selling the show to itself for an artificially low price, reducing profit figures on which his contracted percentage was based.
 
It’s no easy fight for an actor to take on an entire studio. Duchovny turned for help to attorney Stanton “Larry” Stein. It wasn’t the first case of its kind for Stein, who had brought a similar suit against Disney in 1997 over the profits of the ABC comedy Home Improvement. That case was quietly settled out of court. Duchovny’s case, on the other hand, became something of a cause cèlébre among movie folks. Such “vertical integration” lawsuits — named for the towering media conglomerates at which they typically take aim — have become the elephant in the studio accounting department, and Stein has become the cause’s premier paladin as jilted entertainers flock to his door and Hollywood executives put down their mocha lattés at the sight of a letter from him.
 
With less-experienced attorneys now jumping into the vertical integration fray, Stein, who has helped stars like Robert Redford, Sean Connery and Madonna negotiate the labyrinthine world of contracts and other issues for more than two decades, says his vast experience in these matters has made him the specialty’s point man. “I know the entertainment industry,” he says. “I understand how agencies work, I understand how managers work. I know the transactional lawyers, I know the studios, I know the networks, I know the record companies. I know how they create product. I know how they exploit product.”
 
Given Stein’s reputation for tenacity, Los Angeles magazine once named him one of the city’s top “pit-bull lawyers” — he’s magnanimous about the vertical integration issue and surprisingly idealistic about his war against it. “I understand the reason for vertical integration,” he says. “I understand the economics of it.” But his purpose is not just to get more money for the plaintiffs, he says — it’s about helping an individual or small company take on a monolithic, seemingly untouchable corporation. And it’s about maintaining a free market for creative professionals. Stein says self-dealing, as the practice of selling creative product from one company division to another is sometimes called, “destroys independent production because it destroys competition.”
 
Overlooking an artificial lake at the magnificent Water Garden business complex, Stein’s bright corner office at the Santa Monica firm Alschuler Grossman Stein & Kahan is a carefully arranged boutique of his achievements and passions. Press articles about him hang framed on the walls. A marionette of Albert Einstein — Stein’s idol — rests on a seat. Family photos line a sideboard. The Olympic torch Stein carried briefly for the 1984 Summer Games stands encased on the credenza behind his sleek worktable-style desk and Aeron chair. All this, plus a large lithograph of Bruce Springsteen that dominates one wall, makes the room feel like the Herman Miller version of a Hard Rock Café.
 
Dressed in a blue oxford shirt and navy slacks — no jacket, no tie — Stein, who goes by Larry, says he encourages a relaxed dress code among his staff. “It creates a much better working environment,” he says. The look of that environment is important to him. “I don’t like a lot of clutter,” he says, sitting in a small, immaculate conference room that’s connected to his office. “I like openness.”
 
The firm’s modern, manicured décor — frosted glass, soft lighting — is part of the calming effect he wants to bestow on new clients. “They’re already agitated when they’re here,” he says. “Somebody’s done something wrong to them. You need to take the burden off them. You need to make them feel that you can handle the situation for them and that it’s going to be all right.”
 
Most vertical integration cases are settled out of court, making the overall success rate impossible to gauge, but Stein’s prowess as an entertainment litigator has kept show business folks seeking his services for decades, earning him a lifestyle even some of his clients would envy. He bears both the tanned skin and the satisfied air of someone with a home on Malibu’s Broad Beach, one of the priciest stretches on the West Coast, where Stein plays volleyball on the sand on the weekends and his neighbors include Steven Spielberg. And that’s only Stein’s second residence. The first is a house in Santa Monica Canyon. The third is in La Quinta, a tony community near Palm Springs. Stein shares the homes with his wife of 38 years. They have two grown children, a daughter and a son.
 
Stein is gracious, his voice soft and gravelly. “I’m not one of those people who comes on in an aggressive manner all the time,” he explains. “I will get aggressive if someone provokes me into aggression. I don’t go in with a sledgehammer; I go in with a stiletto. Some of the other litigators are angry people. I’m not an angry person. I have a blessed life.”
 
It started out less than ideal. The youngest son of parents who didn’t finish high school, Stein grew up in Pacoima, a working-class community in the San Fernando Valley. “It was a tough neighborhood,” he says. “There were a lot of gangs.” Plus, Stein’s was the only Jewish family in an area where “they weren’t very fond of Jews.” He says facing such adversity at an early age “gave me the inner fortitude to deal with things and to seek more acceptance from within than from without.”
 
Saddled with asthma and allergies, Stein nevertheless played league baseball. Off the field he charmed onlookers with his precocious repartee. “They would pay me to tell dirty jokes when I was 5 years old. I was that kind of kid. I had that little twinkle.”
 
Stein announced his career choice even before his academic record supported such a plan. “I wasn’t much of a student,” he says. “I think I was kept back in the first grade. I don’t think I wanted to come out from under my desk.” But he was enamored of Perry Mason, and on a drive one day with his father and older brother, the young Stein — he was 8 or 9, he recalls — proclaimed, “When I grow up, I’m going to be a lawyer.”
 
After turning his grades around in high school with the help of two devoted teachers, Stein used his skills on the speech and debate team to earn a scholarship to USC and went on to attend USC law school, also on scholarship. He wanted to practice civil liberties law, and when he read that the prestigious firm Wyman Bautzer Rothman & Kuchel was planning to open an office in L.A.’s low-income Watts area, he eagerly signed up. “Lo and behold, they never opened up the Watts office,” he says. “It was great publicity, but it never happened.”
 
Stein spent three years working in securities, real estate and other aspects of commercial law but eventually turned to entertainment. In 1976 he formed a partnership with attorney Robert Kahan and soon built a reputation for helping TV actors such as Gary Coleman and Erik Estrada renegotiate their contracts. Later he helped actress Jane Fonda obtain a larger share of the profits from the film On Golden Pond. He enjoyed laying siege to the Hollywood hegemony, finding it a satisfying replacement for the civil liberties work he had first tried to pursue. In both areas, “it’s a matter of David and Goliath,” he says.
 
Biblical allusions aside, he deals with all parties in a given matter realistically, says Warner Bros. general counsel John Schulman, who has known Stein for 25 years and opposed him in several cases. “Larry’s desire, to me, has always been to represent his client in a first-rate way, bereft of histrionics,” he says. “He’s not above negotiating and posturing, but he wants to get what he thinks he’s entitled to and will listen to reason. I trust his word. I’ll take a yes from him over the phone.”
 
In addition to helping stars get their dues, Stein says he’s also trying to rescue his own field from itself. “I’m very concerned with what’s happening in the legal profession now,” he says. “It isn’t a profession anymore; it’s a business. The best and the brightest don’t want to practice law anymore. They go to the big firms and after two or three years they’re totally burned out.” Young law school graduates are partially responsible for the problem, he says, with their demands for higher starting salaries, which in turn has forced firms to demand more output — like a punishing 2,200 billable hours a year.
 
That number’s not for him. Stein doesn’t work evenings or weekends and doesn’t demand that his associates do. He does ask them to do some kind of community service work — any kind, he tells them, just be involved. His own distinguished record of pro bono work began when he formed a group called the L.A. Council of Lawyers in the late 1970s, which led to the founding of the Public Interest Law Firm of the Beverly Hills Bar Association. Building on its success, in 1980 Stein and his Beverly Hills colleagues pooled their resources with the L.A. Bar Association to form Public Counsel, which is now the nation’s largest public interest law firm. In 2004, the American Civil Liberties Union named Stein Civil Liberties and Pro Bono Lawyer of the Year. That, incidentally, was the same year he was named Entertainment Lawyer of the Year by the Beverly Hills Bar Association.
 
About five years ago, he started planning to cut back on his caseload at Alschuler Grossman. Instead he’s shouldering an even broader array of matters, expanding his practice to include virtual umbrella service for certain clients. He is representing teen star Ashley Olsen in her $40 million defamation suit against The National Enquirer. “I get more involved in an institutional sense,” he says of Olsen and other celebs whose harried, multifaceted careers require his assistance on an ongoing basis.
 
Despite such a workload, Stein is “extraordinarily balanced,” says Diane Reichenberger, CEO of Dualstar Entertainment, the burgeoning media empire of Olsen and her sister, Mary-Kate. “I’ve worked with a lot of law firms and a lot of lawyers out there,” she says. With Stein, “it’s never a sales pitch.” She adds, “He clearly lays out all the facts. He gives you his time. He stays focused.” She says his level of attention is reflected throughout the firm. “I deal with a lot of different lawyers at AGSK and I have not one single complaint.”
 
If Stein has one chief complaint, it’s that his work tries to make good use of a judicial process that is “not the greatest system” but instead a sluggish “catch-up way” to deal with vertical integration and other issues. “The legislature, the executive branch — these are the things that are supposed to be out ahead of the problem,” he says. “But I’m not a legislator, and I’m not president.” And then that little twinkle that he had even as a 5 year old returns to his eyes. “Unfortunately.”

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