The Wheeler-Dealer of Rock ‘n’ Roll
In 1995, Interscope Records, then part-owned by Time Warner, was embroiled in an ugly dispute with the entertainment conglomerate over the release of several controversial gangsta-rap albums. Interscope founders Ted Field and Jimmy Iovine felt that the company should either release the albums or release Interscope from its deal. But Michael Fuchs, who had recently taken over as Time Warner’s music chief after years of running HBO, refused to compromise.
“It was a war,” recalls Iovine. “It was very volatile.”
Enter Allen Grubman, longtime lawyer for Iovine, David Geffen, Tommy Mottola and countless other music industry moguls. “He looked Fuchs in the eye,” says Field, “and he said, ‘I represent 48 of the top 50 people in the record business. You don’t renege on a deal. You don’t do business that way. This is too small a business to act that way.’ And that was that--we got out.”
There is no six degrees of separation in the music business, not when Grubman is in the room. When a multimillion-dollar acquisition or contract renegotiation makes headlines, the pudgy 55-year-old lawyer is there. His clients include Madonna, Bruce Springsteen, U2, John Mellencamp, Rod Stewart, Sean “Puffy” Combs, Luther Vandross and Andrew Lloyd Webber. He is the big macher of the music business, a consummate deal-maker whose fingerprints are all over many of the biggest industry transactions of the past decade. When longtime client David Geffen sold his record company to MCA (now Universal) in 1990 for $545 million in stock, Grubman did the deal, as he did when Geffen launched his DreamWorks record label five years later. When Time Warner unloaded Interscope, Grubman orchestrated that deal, too, as he did when MCA bought 50% of the company in 1996.
Sometimes the web of cozy connections seems awfully sticky. When Mellencamp asked then-PolyGram Music chief Alain Levy to let him out of his contract with Mercury Records last fall, Grubman jumped in, negotiating Mellencamp’s release with Levy, a close friend, and Mercury chairman Danny Goldberg, another client.
Didn’t it worry Mellencamp that he was represented by the same lawyer as the head of his label? “Hey, that’s the whole point,” he says. “He’s everyone’s lawyer. How do you think I got out?”
Grubman says, however, that his firm has never represented two different parties in the same transaction, and that clients are always informed about other clients he represents.
Grubman is the peacemaker, the mediator of the music business. Says Def-Jam Records co-founder Russell Simmons, a Grubman client for 15 years: “If you’re Alain Levy or [former EMI chairman] Charles Koppelman or [Universal Music chairman] Doug Morris and you get fired, your first call is to Allen Grubman. He has an unprecedented position in the industry because so many people allow him into their confidence.”
In the music business, warfare is not waged using Marquess of Queensberry rules. Grubman’s arsenal of deal-making weaponry includes a steady stream of Yiddish epithets, under-the-table kicks and, when all else fails, loud protestations of guilt. “With Allen, negotiations are theater,” says MCA Records president Jay Boberg, a longtime client whom Grubman affectionately calls “one of my goyim.” “His favorite tactic is to say, really loudly: ‘You guys are so crazy! You’re killing me!’ ”
Like a Washington insider, Grubman’s influence comes from being a shrewd judge of the true psychology of power--not just who wants a deal but why they want it. And all of that negotiating is done in his head. As one executive put it: “The only piece of paper I’ve seen him touch has been wrapped around something edible.”
Grubman’s firm occupies three floors of the fashionable Carnegie Hall Towers in New York City, but the voluble lawyer has none of the high-voltage gravitas of a legal lion; he’s more like a counterman at the neighborhood deli. When gossiping or recounting an anecdote, he lowers his voice and tugs on your shirt-sleeve, eager to pull you closer into his world. Making calls from a suite at the Peninsula Hotel, where he stays on his frequent trips to Los Angeles, Grubman kicks off his loafers and stretches out on a couch. When the phone rings, he pads over to a desk, issuing directives to his staff as he idly plays with his room key and a wad of $50 bills.
That wad looks at home in his pocket. In the music business, artists make art; Grubman makes them money. At lunch one day, he points out a patron wearing a polo shirt adorned with a designer logo. “If I had a family crest,” he says, “it would be an ‘S’ with two vertical lines.” He explodes with laughter. “That’s my crest--the dollar sign.”
Grubman’s unlikely rise from the bottom of his 1967 Brooklyn Law School class to his lofty perch as the most powerful attorney in the music business has the rags-to-riches air of a show-business success story. But his career also embodies the unsettlingly insular nature of the music industry, where personal relationships and street smarts count for more than an impressive resume or an Ivy League degree. Perhaps that’s why Grubman has been so publicity shy with the press, having given only two in-person interviews in the past 10 years.
He’s Mr. Inside, a lawyer most valued for his nonlegal advice. When Danny Goldberg was agonizing over whether to take his job running Mercury Records, Grubman was an invaluable advisor. “Allen has a very high degree of emotional intelligence,” he says. “I’d just been fired [from my last job], and I was emotionally confused, and I was saying, ‘Geez, the [Mercury] offices don’t look very impressive.’ And Allen said, ‘Schmuck, take the money and make your house nice.’ Allen cuts through all the clutter. When you’re a senior executive, how many sounding boards can you have? At one time, people talked to Lew Wasserman or Swifty Lazar or Michael Ovitz. But in our business, you talk to Allen Grubman.”
When VH1 president John Sykes was a young executive at MTV in the early 1980s, his boss told him to take a call from Grubman. The lawyer instructed Sykes to meet him at the Friar’s Club, where he was having a drink with a prospective client, record producer Phil Ramone.
“Allen said, ‘I want to impress him, so come over and tell him what a great guy I am and how close I am with you guys at MTV,’ ” Sykes recalls. “So I said, ‘OK, Allen, I only have one question. What do you look like?’ ”
Even in his baby pictures, Grubman has the look of a lovable rogue, a young man with a Sammy Glick-sized hunger for success. Growing up in the then-heavily Jewish neighborhood of Crown Heights in Brooklyn, he was obsessed with show business. At age 10, he was singing show tunes on NBC’s “Horn & Hardart Children’s Hour.”
What Grubman remembers about the experience was the glamour. “They’d send a limo, a car and driver, to Brooklyn!” he says, still seemingly in awe. “It was totally unheard of. In my neighborhood, I was a macher. I was on a TV show.”
But his moment in the spotlight was brief. Later, his father’s children’s underwear business failed, forcing Grubman to borrow money for his law school admission fees. “Growing up without a lot of material comforts creates a drive in a human being, knowing you have to do it on your own,” he says. “You have to develop a lot of survival instincts, because you don’t have the safety net that affluent kids have. My safety net was a cement floor.”
After finishing last in his class at Brooklyn Law, Grubman wrote letters to a list of New York firms, pleading for a job. One of the few people who would see him was Walter Hofer, a veteran attorney who’d worked with the Beatles. “I didn’t know what to say, so I tried to get him to like me,” Grubman recalls. “I said, ‘I really want to work for you, but I don’t come from a very wealthy family, so I can’t afford to pay you very much to hire me.’ ”
A few days later, Hofer offered Grubman a job, saying, “I’ve got good news for you. I’m going to pay you.” In 1974, Grubman went out on his own, joined by Hoffer associate Paul Schindler and a year later by law school buddy Artie Indursky. The three men have been together ever since at the firm Grubman, Indursky & Schindler. Grubman does the high-wire wheeling and dealing; he’s strictly the big-picture guy. Indursky and Schindler handle the firm’s complex business and legal work.
Grubman’s first new client at his firm was Sony Music chairman Tommy Mottola, then a hustling young rock manager. It was Mottola who introduced Grubman to Walter Yetnikoff, who was at the height of his power as head of CBS Records. The two men, both bumptious, Brooklyn-born sons of Jewish immigrants, hit it off immediately. When Billy Joel’s contract was up in 1980, Yetnikoff, unhappy with the performer’s lawyer, offered Joel’s manager a better deal--if he would switch attorneys.
So it came to pass that Grubman had his first A-list client. David Geffen introduced him to manager Jon Landau, who had Grubman represent Bruce Springsteen. By 1988, Grubman represented nearly 40% of the CBS Records roster.
Grubman’s relationship with Yetnikoff became the stuff of legend. When the men were separated from their wives, Yetnikoff would spend the night at Grubman’s apartment, surprising visitors by strolling out of the bedroom in a bathrobe. At CBS, Grubman would follow Yetnikoff into the bathroom and beg for a deal sweetener for a client. There were shouting matches galore, often concluding with Yetnikoff ripping apart Grubman’s shirt. It was the equivalent of an Abbott and Costello routine.
As Yetnikoff’s behavior became more erratic, fueled by drinking and drugs, the friendship grew strained. In 1990, not long after CBS Records was sold to Sony Music, Yetnikoff was ousted and replaced by Mottola. Grubman has been among those accused of speeding his fall, though supporters claim Yetnikoff destroyed himself. Yetnikoff won’t discuss his dealings with Grubman, who says, “I didn’t contribute to his downfall. The saddest thing in my career is that I no longer have any relationship with Walter.”
To an outsider, the episode illustrates Grubman’s greatest gift--or perhaps his most deeply hidden conflict. He has the unique ability to make a host of powerful men, many often at odds with each other, believe he is their most trusted confidant. But if forced to choose between allies, one on the rise, the other in decline, Grubman inevitably sides with the more powerful player.
“Allen realizes that being friends with people is really his job,” explains John Mellencamp. “It’s not just a business relationship. All his friends are his clients.”
Grubman can always tell you who’s at the top of the charts, but when he wants to relax, he listens to his idol, Frank Sinatra, whom he once met backstage after a concert at Carnegie Hall. Grubman offered Sinatra the ultimate compliment: “I told him I represented some of the biggest names in the business, but I’d give them all up to represent you.”
Sinatra’s reply: “You know something, kid. You’re stupid.” Knowing Grubman, he’d have signed Sinatra and used him as a lure to attract even more clients.
“Only Allen would build an estate 50 yards from the beach in East Hampton and never set foot on the sand,” says Arnold Stiefel, a veteran rock manager and film producer. “He sits by the pool and talks on the phone.” The house, built on a three-acre lot, has six bedrooms, a pool, tennis court and putting green. Located on Lily Pond Lane, one of East Hampton’s best-known streets, the home is something of a Gatsby-esque mansion. As one friend puts it: “It looks like someone built it on a lot in Beverly Hills and just moved it to the Hamptons.”
Still, the neighborhood isn’t bad. Martha Stewart lives across the street. Down the block are such tycoons as Steven Spielberg, Calvin Klein, Mort Zuckerman, Ron Perelman and Carl Icahn. The house is often full of clients or friends of his children from his first marriage to Yvette Fischer, which ended in divorce in 1990. The couple had two daughters, Lizzie, 27, a successful New York publicist, and Jennifer, 24, a third-year student at Cardoza Law School.
After Grubman’s divorce, he began dating. “The women who wouldn’t look at me when I was 20 were looking at me at 40.” At a party one night, he met Deborah Haimoff, a blond real-estate broker with two children from a first marriage of her own. Grubman was smitten. He phoned her up, pretending to be interested in finding a new apartment. Instead, he asked her out on a date. A year later, in 1991, they were married.
To make a splash, Grubman cast about for a macher-sized venue for the wedding reception. He eventually decided on the venerable New York Public Library. There was only one problem--the library didn’t do wedding receptions. But Grubman fixed that. He even got the city to close down Fifth Avenue so the music industry elite could make an easy entrance.
And how did he wrangle such an unprecedented change in policy? “I made a substantial contribution to the library, and they let me have the wedding reception there. It was like all my deals--it was a good deal for everyone.”
Not everyone admires Grubman’s octopus-like grip on the upper echelon of the pop music world. In 1992, client Billy Joel filed a $90-million conflict-of-interest claim against Grubman, alleging that the lawyer didn’t officially inform him that his firm was working for both Joel and the performer’s record label, Sony’s CBS Records. Joel, who would not comment for this story, dropped the suit after receiving a $3-million payment from Sony, an advance against future earnings authorized by Mickey Schulhof, then head of Sony’s U.S. operations and a close friend of--surprise--Allen Grubman.
Grubman’s firm, which now employs 31 lawyers, is paid a monthly retainer by several record companies, prompting charges, denied by Grubman, that his firm steers young artists it represents to labels that employ the firm. Grubman supporters say that since the Joel suit, the lawyer has been vigilant about avoiding blatant conflicts of interest. In 1996, when Edgar Bronfman Jr. moved to replace Universal Music Group chief Al Teller with Doug Morris, then running a Universal Music subsidiary, Grubman found himself faced with a potentially sticky conflict, since he represented both executives. “I called Allen and asked if he’d do my deal,” recalls Morris. “And he said, ‘I can’t. I represent Al Teller. I can’t do both.’ He didn’t conflict the two things.”
Still, even Grubman’s closest friends have voiced concern about his tight web of relationships. “I think it breeds conflict,” says Alain Levy. “It’s a disease of the entertainment business. I’d feel uncomfortable with a label president negotiating with an artist [when both] are represented by the same lawyer. But I can’t tell my executives not to do it if everyone else does it.”
If Grubman practiced law in the real world, he’d be judged by a different standard. If you were negotiating a new contract with your boss, you would be unhappy to learn that your lawyer also represented your boss--and perhaps his boss, too. But the music business, like Hollywood or Washington, D.C., is not the real world. It is a tiny, elite club with members who play by their own set of rules.
According to the New York State Bar Assn., which counts Grubman as a member, it is a violation of the organization’s code of professional responsibility for a lawyer to represent two opposing parties in the same matter without the consent of both parties involved. Grubman insists he’s never done that. He also says all his clients sign a conflict-of-interest waiver, which details any potential conflicts the firm might have.
The bottom line: In an insider’s business, you want the ultimate insider. “Jimmy Iovine has this great expression--ducks need to be in business with ducks,” says Charles Koppelman. “And Allen’s a duck. If I want someone to negotiate a deal for me, I don’t want to go to some white-shoe law firm. I want a duck.”
Sure, some of Grubman’s deals have been multimillion-dollar misfires. PolyGram’s hiring of Andre Harrell to run Motown Records was a disaster, with Harrell being fired less than two years after he was paid a $20-million signing bonus. Grubman reportedly earned $1.5 million for negotiating Harrell’s initial deal--and his exit package.
But Grubman’s clients feel good even about their bad deals. “Allen wants everybody involved to make money and be happy,” says Russell Simmons. “Then we’ll pay him forever.”
Seated at a corner table at the Universal commissary, Grubman has just made an important decision: He’s having eggs, onions and lox for lunch. “Very, very well done,” he instructs the waitress. Across the table is Koppelman, who has been negotiating with DreamWorks to launch a new music publishing company, with Grubman, of course, doing the deal.
In a playful mood, Grubman is formulating his philosophy of life, a declaration delivered with a Yiddish spritz. “Life,” he says, “is 80% mazel and 20% brains. You can be the smartest guy in the world, but if you don’t have any luck, you’re screwed.”
Grubman waves his fork in Koppelman’s direction. “You agree with that?” Koppelman shakes his head. “I don’t know about 80%.”
Grubman’s eyes sparkle. “So, it’s 75%,” he says gleefully. “Now we’re negotiating.”
When it comes to the art of the deal, Grubman has no rival. He has an intuitive sense, what the great Washington lawyer Edward Bennett Williams called a “gypsy’s instinct” of how to reach a consensus. “Usually, successful businesspeople are tough and intimidating,” says John Sykes. “But Allen disarms people. When we go into a negotiation, he always says: ‘This could be tough or it could be enjoyable. Why not make it enjoyable?’ ”
For Grubman, dining out goes hand-in-hand with deal-making. Just under 5-foot-9, he weighs “about” 200 pounds, down from a post-divorce high of more than 250. “Call me chubby,” he suggests. “I’ve got the fat gene. It’s hard for me to keep the weight off.” The Brooklyn Diner in Manhattan serves a dessert named after him, the Allen Grubman Double-Dark Chocolate Cream Pie.
At lunch at Ago on Melrose one day, he polishes off a monkfish with risotto, then orders a cherry and raspberry tart “for the table” but manages to eat most of it himself.
At meals, conversation returns to business. Lifestyle maven Martha Stewart says she met Grubman while he was preparing to renegotiate Madonna’s contract with Time Warner subsidiary Warner Bros. Records. Hearing that Stewart had just done a deal with Time Warner, Grubman took her to dinner, quizzing her about her negotiations.
“I told him everything I knew,” she recalls. “And of course he proceeded to make a deal for Madonna that was infinitely superior to my little deal.”
“Allen is interested in everybody’s business,” says Mellencamp. “He doesn’t know much about basketball, but if we go to a game, when the referee comes by, Allen will say, ‘Hey, ref, how much money do you make?’ ”
Grubman is more circumspect about his own earnings, refusing to reveal his annual take. Industry insiders speculate that he makes anywhere from $6 to $10 million. He doesn’t bill per hour, as is customary with most lawyers, preferring to take a piece of each transaction, depending on how well he does and how much time he puts in. He calls it “instinctual” billing.
Grubman wants everyone to feel comfortable because it’s good for business. In earlier days, the most powerful music attorneys were fierce combatants whose harsh tactics often left bruised feelings. Grubman prefers both sides to feel that they have earned a partial victory. “In a good deal, there has to be a mixture of emotion,” he says. “Everyone has to feel good, but they should feel a little bit bad, because then they remember that they’ve had to give up a little something, too. You don’t want to do a deal where one guy feels he’s been taken advantage of, because then he’s always going to try to get back at you for it.”
But does this philosophy still hold true when the power equation isn’t equal, when it’s a naive young rock band on one end of the negotiation and a mega-mogul like David Geffen on the other? In fact, for years, Geffen, a longtime client, wouldn’t let Grubman represent any artists on his label. Geffen insists his refusal had nothing to do with conflict of interest. “I just didn’t want to fight with him, because Allen can be so egregiously greedy on behalf of his clients,” he says.
Finally, Grubman persuaded Geffen that the ban was hurting the lawyer’s business. Soon, Grubman was representing Nelson, a new band that wanted to renegotiate its contract after having a surprise hit with its first album. “I [told Allen]: ‘Come on, they just made one record. How do I know the next one will do anything?’ ” Geffen recalls. “And Allen said, ‘You can’t embarrass me. They’re my new clients! They had a hit; they deserve it.’ ”
Geffen gave the group a great new deal but says its next record was a flop. “It cost me a fortune,” he says. “Friendship always costs you more, especially if your friend is Allen Grubman.”
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