[The previous essays in this series are here, here, here, here, here, here, here, here, here, here, here, here, here, here, here, here, here, here, here, here, here, here, here, here, here, here, here, and here.]
Students of business law are probably most familiar with Michael Ovitz as a fourteen-month president of The Walt Disney Company whose departure in late 1996—with a severance package of approximately $130 million—sparked nine years of closely-watched and precedent-setting litigation (1997-2006).
Shareholders ultimately failed to convince Delaware’s Court of Chancery, or the Delaware Supreme Court, that Disney’s directors had breached their fiduciary duties of care and loyalty either by approving the complicated configuration of Ovitz’s employment agreement, or by deciding not to terminate him for cause (which contractually would have denied him the severance payment).
Those decisions, included in many corporate law casebooks, feature discussions of a wide array of issues, such as a board’s “executive sessions”; its preparation of meeting minutes; and its decision to move for the dismissal of a shareholder derivative lawsuit.
Then-CEO Michael Eisner, successor CEO Robert Iger, and journalist James B. Stewart have suggested that Ovitz was more interested in continuing to construct deals than in overseeing Disney’s ongoing operations.
Late in his own book, Ovitz insists that “Michael knew exactly what he was getting when he got me: a deal maker.”
Beyond its chapter devoted to the Disney debacle, and even allowing for an inevitable element of authorial bias, Who Is Michael Ovitz?: A Memoir (2018) should be of value to law and pre-law students, and to lawyers.
First, although the American Law Institute has produced the influential codification, the Restatement (3d) of the Law of Agency (2006) (which some statutory supplements reproduce in part), Ovitz explores, in an often eye-opening way, the specifics of the relationships, and responsibilities, of (talent) agents to their principals, which in his case included many world-famous stars and directors.
Second, though Ovitz had for many years a penchant for privacy, the book provides numerous accounts of his confrontations, negotiations, and placations, occasionally with “troubled but lovable” colleagues or clients. (Robin Williams would “often take refuge in the voice of some character or other. I said, ‘Talk to me as you, Robin.’”)
Third, the memoir illustrates the issues involved in creating, managing, growing, and repositioning a business. Twenty years before joining Disney, the hard-driving Ovitz (“I tried to avoid coming across [to potential clients] as a nudge, while making myself ubiquitous and inexorable”) co-founded the talent management group, Creative Artists Agency (CAA), whose extraordinary rise is also recounted (partially by Ovitz himself) in James Andrew Miller’s richly detailed oral history, Powerhouse (2016).
In his own book, Ovitz characterizes CAA’s culture as “American team sports boosterism mixed with Spartan military tactics mixed with Asian philosophy, all overlaid by the communitarian spirit of the Three Musketeers.” (But, on the same page: “The lack of hierarchy was a myth, of course, a management tool. Nothing happened that [two other partners] and I didn’t want to have happen.”)
Fourth, Ovitz chronicles his and his clients’ ceaseless quest not just for professional power but (more dauntingly) for personal (and, often, popular) approval and permanent loyalty.
Among the many observations, clarifications, and (re)definitions to be found in Who Is Michael Ovitz?:
● On the necessity of delegation.
“Agencies are built on the lie that your agent will give you his total attention—but there simply isn’t anywhere near enough time in the day for that.”
In practice, CAA’s “senior people passed down their top artists as soon as younger agents could handle them, by slow-rolling the return calls.”
● On the power of networking.
(“I was a connector; it’s what I did all day. . . ”)
A UCLA alumnus, Ovitz “worked hard” to support the university’s medical center, “in part because it proved extremely useful for CAA to be able to get our clients or potential clients the best medical care with one call—but even more because I believed in its mission and I liked the idea of helping people, saving people. . . .”
“Our rote functions, called on every half hour, were getting clients a copy of a film, theater tickets, or reservations at a hot restaurant. The next level of ask, which often rose to my desk, was someone who needed to get their children into a school, or needed an appointment with the best knee guy or a high-powered divorce lawyer.”
● On being well-read.
“Be able to talk knowledgeably about what your clients love. This will encompass pretty much everything. I insisted that our agents have a reading list: one national newspaper, one international newsmagazine, and one special-interest magazine, such as Golf Digest. I had two hundred magazine subscriptions, and I’d skim the magazines as I was on the phone, everything from Redbook to Road & Track.”
● On serving the client.
“Sometimes, representing a client’s best interests means not getting him what he thinks he wants. The judgment part of the job requires knowing when to redirect a client’s desires.”
● On being served, with the client.
As an agent, “I was a chameleon, becoming whomever I needed to be to make everyone comfortable and close the deal.” (However, “I always told our agents, ‘Make our clients think they’re your friends—but remember that they’re not.’”)
Thus, around 1980, at New York’s Grand Central Oyster Bar, “if Paul Newman loved clams, then I loved clams. In full chameleon mode, I mimed tossing some back. . . when in fact I was dumping the whole mess underneath the table. An hour later, after a good chat, . . . I raced to the nearest deli and got myself a nice, safe tuna salad sandwich.”
● On sincerity, and on reality.
“There’s nothing sincere in entertainment: every call has at least one agenda, and usually two or three. . .”
“A pillar of CAA’s philosophy was that we told our clients the truth. That didn’t mean we told everyone else the truth. I often had to offer more than I could deliver in order to be able to eventually deliver what I had offered. If the truth was bad for us, we had to change the reality, and then deliver it as what we’d said it was all along. In the meantime, well, you’d get creative. . . .
“I never viewed this kind of misdirection as lying. Lying, to me, is a point-blank misstatement with no purpose in mind. I viewed what we did as positioning, molding, manipulating: taking fact sets and making them work for the result we wanted.”
● On (Jedi Mind) Tricks (to Ovitz, “tactics for achieving a preconceived strategy”).
“If someone on the other side of the table very confidently asserted a number that was confidential or that was plausibly in dispute. . . I would instantly say ‘It’s higher’ or “It’s lower,’ depending on which served our interests. That assertion would throw the other guy off balance, and suggest that I knew everything, when in truth I only knew some things.”
In Powerhouse, superagent Ari Emanuel remembers that Ovitz would “come into a meeting and say, ‘In the next ninety days there’s going to be a huge event,’ and everyone sat there in amazement that he knew about it before anyone else. But it’s Hollywood. S—t happens. Of course there’s going to be a huge event. And then sure enough, something would happen and he would say, ‘See, this is what I was talking about but couldn’t tell you.’ It was unbelievable. Pure genius.”
Yet Ovitz points out that, by negotiating the employment contracts not just for television executives but also for the heads of movie studios, “we represented so many executives that we could see the entire chessboard [of projects and hierarchies]. . . I would often tell our agents to watch a space: ‘In thirty to sixty days, something big will happen at Paramount.’”
● On involving counsel.
Attorney Barry Hirsch told the author of Powerhouse:
“To Michael’s credit, he was the first agent, at least that I was aware of, that embraced lawyers insofar as being part of the original dealmaking process. . . . Michael realized that by getting the lawyer involved in the beginning, he could accomplish several things: One, he would nourish the relationship with the lawyer. Two, he realized that a lawyer might make the deal even better, which would then increase his commission. Three, having the lawyer involved protected him against the lawyer telling the client, ‘Why did Michael do this when I could have done better than that?’ And finally, if the lawyer was involved early on, he wouldn’t have to waste his time being involved in secondary negotiable points as well as boilerplate points, which meant he could jump off and move on to do another deal.”
Ovitz: “If a lawyer did a favor for us, we’d try to do a bigger one for them. In a business of favors, the chits added up.” He catalyzed the formation in 1980 of “Armstrong, Hendler & Hirsch, a hub of motion picture talent. CAA would represent fifty of their clients within a year.”
● On being appreciated.
At the end of his first chapter—which reviews CAA’s representation of David Letterman in the early 1990s, when host Johnny Carson announced plans to leave NBC’s The Tonight Show—Ovitz recalls receiving a telephone call during the process that would result in CBS’s launching the long-running Late Night with David Letterman. Letterman “went on in [a] sweet, generous vein for three or four minutes, a long time for such a reserved guy. . .
“I was stunned. . . . In my twenty-five years as an agent, through thousands of transactions, I had never heard so much heartfelt sincerity and gratitude. This—this—was what I had always secretly hoped the business would be like.
“It was the last time it ever was.”
● On the company one keeps.
Of the iconic polar bear commercials that CAA developed for Coca-Cola (which “I should have insisted on a royalty for”), Ovitz notes, “In real life, these animals are stone-cold killers. But curled up on a snow field, taking in the northern lights, they seemed positively lovable.”
Although his book details many instances of manipulation, hardball negotiation, and breached loyalties, Ovitz describes it, in a 2019 interview with the Harvard Business Review, as “a story about lessons learned: things done right and things done terribly wrong. Each of [several professional] relationships went wrong for a different reason. One stayed wrong. One ended because the individual passed away. And one came back to life, which is pleasing.”
He also observes, in what might serve as a one-line summary of much of his business philosophy, his longtime practice of aikido, and his book:
“When we had leverage, we used it.”
