How to avoid Gary Shandling’s big mistake

In 1998 comedian Gary Shandling and his former manager, Brad Grey, the current chairman and CEO of Paramount Studios in Hollywood had a major falling out, followed by a $100 million lawsuit by Shandling. Their long term relationship collapsed over money issues surrounding the well-acclaimed HBO series The Larry Sanders Show, which ran between 1992 and 1998.

Claiming that he alone created and sold the show to HBO, Shandling accused Grey of “triple dipping” by taking a half ownership of the show; snagging a producer’s fee plus commissions from Shandling’s writing and acting fees. 

Gary Shandling, photo by Edgemar Center for the Arts on Flickr

Worse, Shandling claimed that when asked about the monies he was collecting, Grey threatened to make his life miserable and sent private detective Anthony Pellicano to snoop on his police records and plant smears against him. Pelllicano himself ended up getting indicted by the Feds for racketeering and wiretapping. In 1999 Grey paid $10 million to Shandling to settle the case. But Shandling’s mistake offers a teachable moment for comedians with managers and agents.

For starters, Shandling lawyered up rather late in the game, only after Grey allegedly stonewalled his request for information about the monies. He needed a lawyer much sooner and here’s why.  Most managers tend to be long term pals of entertainers who trust them to provide the best career advice; promote the entertainers’ careers and watch their backs for them. Sometimes, managers can double as agents by finding work and negotiating deals for the entertainers. Thus, managers can  play oversized roles in their professional lives.

But the flip side is that managers can and sometimes do abuse their positions of trust. Comedians should protect themselves first against their managers before the managers protect them from the world. This means that comedians ought to draw up a well-rounded contract with managers which would address most, if not all, of the issues that can arise in their relationship going forward.

Above all, entertainers should make an effort to understand the terms of any contracts their managers are negotiating or signing on their behalf. Here, entertainers should “trust but verify.” And this is important because Shandling claimed that Grey would not even let him see the contracts he was negotiating with outsiders on Shandling’s behalf and that Grey simply kept him on a “need to know” status. Big problem!

In negotiating the manager’s contract, entertainers and their lawyers may perhaps want to follow a simple rule of thumb sometimes called the “officious by-stander” rule, something that most English transactional lawyers would be familiar with. In the Shandling case, you can perhaps imagine this character as some busybody standing around while Grey and Shandling are negotiating their agreement, and although he has no role in the negotiations he nonetheless proceeds to ask the negotiators whether, for instance, Grey would get any share of Shandling’s writing and acting fees. If their answer to that question is not exactly the same, then an expensive lawsuit is probably in their future.

It cannot be said enough that despite a comedian’s bond of trust and affection for a friend and manager, he needs to negotiate his contract with him at arms length and this is where the entertainer could really use the services of an attorney.  To be sure, the relationship between the entertainer and his manager is one that would qualify as a fiduciary relationship where the law tends to look out for the little guy. Yet, the law is not in the business of assisting people who neglect their own affairs.

What happened to Shandling didn’t have to happen and comedians ought to be aware that “a stitch in time saves nine.”

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