January 19, 2010 5:03 PM

Legal Angles Abound as Conan-NBC Standoff Nears Endgame

Posted by Brian Baxter

UPDATE: Jan. 20, 12:15 a.m. Conan O'Brien addressed his stalled exit talks on television tonight, telling viewers that he "spent the afternoon at Universal Studios' amusement park, enjoying their brand-new ride, the 'Tunnel of Litigation.'" He quickly added, "That's a crappy ride."

Maybe Conan O'Brien's lawyers knew what they were doing, after all.

As the negotiations between NBC Universal and the soon-to-be-former host of The Tonight Show dragged on, various reports had O'Brien on the verge of nabbing nearly $40 million to walk away from the network.

That would be quite a haul for a man roundly criticized for failing to have his lawyers ensure that his Tonight Show contract explicitly include an 11:35 p.m. start time. But it may well be that omitting a specific time slot has given O'Brien the upper hand in the negotiations over the terms of his exit.

"Sometimes in contract negotiations it's better not to ask," says Jonathan Handel (photo at right), entertainment of counsel with Los Angeles's TroyGould and author of the Digital Media Law blog. "Five years ago Conan was just doing what he could to try and ascend to the throne. And when he did, it was considered a big victory."

Because O'Brien was successful in getting NBC to promise him The Tonight Show in 2004, Handel says the question now is how hard the comedian's counsel pushed the time slot question at that time.

"Conan got the throne, but did he [want his lawyers] pushing to make sure it's the same shade of gold it's always been?" Handel asks. If O'Brien had asked that the 11:35 p.m. time slot be spelled out in any agreement--and had NBC refused--the red pompadoured captain of 'Team Coco' would be in a weaker position in the current negotiations.

"If you ask and are refused, or even worse, if you ask and the other side pushes for a 180, such as a time slot not being guaranteed, you can end up with something worse," Handel adds. Without having their hands bound by language in the contract on when The Tonight Show would air, O'Brien's lawyers are in a better position to negotiate their client's departure from NBC.

As reported by The Am Law Daily last week, one of those lawyers now advising O'Brien is well-known L.A. litigator Patricia Glaser from Glaser, Weil, Fink, Jacobs, Howard & Shapiro. A secretary for Glaser forwarded all calls to O'Brien's spokeswoman, Leslee Dart, in New York. (Click here for a 1995 profile of Glaser from The American Lawyer.)

According to sibling publication The National Law Journal, the lawyer who has historically handled O'Brien's employment contracts is Leigh Brecheen from noted Beverly Hills-based entertainment firm Bloom Hergott Diemer Rosenthal LaViolette Feldman & Goodman.

Brecheen, an O'Melveny & Myers alum who heads the television department at Bloom Hergott, told The NLJ last week that NBC Universal executive vice president and deputy general counsel Andrea Hartman was attending meetings for the network. Gibson, Dunn & Crutcher media, entertainment, and technology cochair Scott Edelman is also advising the studio, reports The NLJ.

Edelman, who has previously represented NBC during disputes over other television shows, tells The Am Law Daily that "both parties are continuing to work out their differences." (It's been a busy year for Edelman, who's also been retained by Chevron for its environmental mass torts fight in Ecuador.)

Given the personalities involved and the eight-figure severance package being bandied about, there are plenty of sticking points for Gibson Dunn and Glaser Weil to clear before reaching a final deal.

"On-air talent differs from a business or ad-sales executive, but one of the most important issues is the departing employee's access to trade secrets and key relationships," says Skadden, Arps, Slate, Meagher & Flom media and entertainment of counsel David Sussman (photo at left), who spent a decade as executive vice president and general counsel at MTV Networks.

Sussman also says it's not unusual for a media company to look to prevent a high-profile former employee from joining a competitor for a certain period of time.

"There's a very specific, state-by-state set of legal rules as to the circumstances by which an employer can prevent an executive from going to work for a competitor," Sussman adds. "And if that executive goes to work elsewhere, there has to be a negotiation as to whether the new income a person receives will mitigate any payments that are due from the old employer."

The mitigation issue is one that TroyGould's Handel believes is the primary reason why an agreement has yet to be reached between O'Brien and NBC. "What these things often hang up on at this level is dollars and cents," he says.

Mitigation and offsets on what O'Brien could earn should he sign with another network--Fox is the early front-runner--will likely determine the overall compensation package for the late night host. Handel believes that any offset agreement between NBC and O'Brien will be partial in nature.

"Conan's not going to agree to take all of the sting out of this for NBC," he says. "And of course whatever the final fee is, be it $30 million or $40 million, some of that won't go into his pocket but be for people that work for him. So that money is not money that he'd be willing to have subjected to any offset."

The size and fate of O'Brien's 200-person staff is an issue that Skadden's Sussman says is unique to the late night TV wars.

"It's more on the highest-end of the entertainment industry totem pole where you see a Jay Leno, David Letterman, or Conan O'Brien own their own production company that employs their own staff," Sussman says. "And so there will be issues about paying the staff that need to be negotiated."

Then there are concerns over who owns the intellectual property rights behind characters--think Triumph the Insult Comic Dog, Horny Manatee, The Fed-Ex Pope, Pimpbot 5000, and, of course, The Masturbating Bear--created by O'Brien and his staff over the years.

"The IP issues will likely be sliced down the middle, giving Conan the ability to take some, but not all, of his characters," Handel says.

Amid all the legal wrangling, it's worth noting that O'Brien is no stranger to heeding the advice of counsel.

As previously noted by The Am Law Daily, O'Brien's mother, Ruth Reardon O'Brien (photo at right), is a retired corporate partner at Ropes & Gray in Boston.

According to this profile of Reardon O'Brien by Stanford University, she became the second female partner at Ropes in 1978 and went on to a successful career at the firm before retiring in 1996.

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