Back when I was a young lawyer, I’d often get assigned to Hollywood accounting cases. Some big talent—David Duchovny on The X-Files, Peter Jackson with The Lord of the Rings, the showrunners of Home Improvement, to name a few—would make something that earned a ton of money, their backend checks wouldn’t be as big as they’d hoped (or wouldn’t arrive at all), so they’d request an audit and discover the studio was stiffing them on profit participation—their cut of the revenue based on the negotiated definition in their contracts.
These were interesting cases because they taught me all the ways vertically integrated entertainment companies make money on a film or TV series—the “waterfall,” in studio parlance. But at their core the disputes were all the same: Studios set the table via complicated profit definitions (some are dozens of pages long), then gorged on self-serving calculations and phantom “fees,” and often the talent was left with relative scraps. Or at least that was the view of the clients, all of whom came to my firm because they were really pissed off.
Most cases settled for dimes on the studio dollars, but a couple I worked on actually went to trial—and one, alleging Disney cheated the producers of ABC’s Who Wants to Be a Millionaire?, ended with a stunning $319 million jury verdict that led to an embarrassing write-down. Unfortunately for my own efforts to become a millionaire, I had left for journalism before my old firm could cash those contingency fee checks.