25 February 2002
Apart from possibly a child, what do pregnant model and actress Liz Hurley and Hollywood producer and alleged father of her child Steve Bing have in common? Their law firm, the niche media and entertainment outfit Schilling & Lom and Partners, which in a cosy triangulation also acts for Hurley's former long-term beau Hugh Grant.
And what do Schillings and Bing have in common? Two things: US lawyer Marty Singer and The Mirror newspaper. Singer is Bing's lawyer, who refers Bing's UK legal work to Schillings. Bing is suing The Mirror newspaper from Los Angeles for calling him 'Bing Laden' and printing his telephone number on its front page after he denied being the father of Hurley's child. What is more, The Mirror's head of legal Martin Cruddace is joining Schillings in April.
Meanwhile, Schillings advises supermodel Naomi Campbell, who is suing The Mirror for snapping her coming out of a Narcotics Anonymous meeting. Schillings also acts for Sara Cox, who is suing Mirror Group paper the Sunday People on another privacy case.
Schillings, however, is not on the Bing case, Cruddace is not joining Schillings until the Campbell case is over and Cruddace's colleague at The Mirror Marcus Partington is dealing with the Cox case. Otherwise, there really could be a conflict of interest.
"All these potential conflicts can get difficult sometimes, especially in a seven-partner firm," Schillings senior partner Keith Schilling admits. But what can you do when warring celebrities want you, their PR firms want to instruct you, and the tabloid lawyers you fight in court want to join you?
So Schillings has found itself propelled to the top of the defamation league. Founded in 1984, it was set up to provide libel protection for celebrities. Schillings has done just that for many years, and the instructions keep on coming.
"Schillings is now known as the claimant defamation firm, and has clearly eclipsed Peter Carter-Ruck and Partners in the views of many," says Mark Stephens, head of media and international at Finers Stephens Innocent.
In the current climate, many claimant defamation firms are having trouble finding work without resorting to risky conditional fee arrangements. Libel payouts are getting lower and the law is fighting against the claimant by introducing new get-out clauses for the defendant, such as qualified privilege. But Schillings' only problem seems to be not being able to represent all of its famous clients at once.
Take the Hurley-Grant-Bing situation. Bing is involved in litigation over Hurley's child, and Grant has reportedly expressed a willingness to bring up the child. But the situation his clients are in does not seem to perplex Keith Schilling.
"All three are clients of the firm, but we wouldn't act for one against the other. We're not involved in the litigation in LA. That's Marty Singer, and through Singer we've acted for Bing on occasions. We're Hurley's lawyers and have ongoing instructions for her. We took Hurley and Grant on at the same time, although not as a pair. We acted for Grant over the Divine Brown incident [when Grant was caught liaising with a prostitute] on matters of UK law," Schilling explains.
Other stars on Schillings' list include Kate Winslet, Martine McCutcheon and hypnotist Paul McKenna. But how has Schillings managed to land every celebrity that has found themself in a legal predicament over the years? One answer to that question is Freud Communications.
|"I may cast a long, dark shadow. But it's also natural that a client will want the senior partner to do the work"|
Keith Schilling, Schilling & Lom
Freud Communications is a public relations company owned by Matthew Freud (relation of Clement and descendent of Sigmund) following a £10m management buyout last summer. And Freud's books contain more celebrities than you would find gallivanting across the pages of a bumper edition of Hello!. Freud's relationship with Schillings is exclusive, so all of Freud's clients are, potentially, Schillings' clients.
"We have an exclusive relationship in terms of legal referrals with Freud Communications. We do everything for the celebrities," says Schilling .
One celebrity who may or may not be a common client of Freud Communications and Schillings is Campbell. Schillings is definitely her law firm, but she denies any ongoing relationship with Freud Communications. Schillings advised Campbell on her privacy case against The Mirror, which has now concluded, with judgment pending. When cross-examining Campbell, Desmond Browne QC, acting for The Mirror, raised suspicions that Campbell had used Freud Communications to publicise her case. He focused on the fact that Campbell was being advised by Schillings to try to prove this. This is testament to how strong the relationship between Freud Communications and Schillings is perceived by outsiders to be.
"Mr Freud came to see you and said, 'We're going to find a way to change the law', as he had clients who were involved in similar situations," Browne suggested to Campbell. "Was it his idea, not yours, to commence legal proceedings?" he asked her. Campbell said it was her own idea. "Did Matthew Freud suggest Schilling & Lom?" Browne also asked. Again, this was something the model denied.
"This is interesting, as most of Schillings' clients happen also to be represented by Freud," says Kevin Bayes, a partner at Davenport Lyons, who advised The Mirror.
The law on privacy, inspired by the right to respect for privacy and family life in the 1998 Human Rights Act, is developing fast. But what it is lacking so far is a serious test case to prove its worth. Campbell's may be it, but also pending is the case of Cox, a Schillings client and definite one-time client of Freud Communications.
Oliver Wheeler, a Freud Communications director, was not able to comment on the Campbell case, but when asked if his company would seek to change the law on privacy, he replied that his company would go to extreme lengths to protect a client.
If the law endorses celebrities suing newspapers on privacy grounds, it could be a good thing for the agencies that manage celebrities and their reputations. But Bayes does not believe there is the legal ammunition to help Freud Communications develop the law on privacy. "Freud Communications is not likely to change the law," he chuckles.
Schilling himself takes care of most of Freud Communications' celebrity claimants. But he is not the only partner at the firm, although for a while this may have seemed the case.
Schillings founding partner and film specialist Nicholas Lom decamped to Simons Muirhead & Burton last October, taking the firm's film, television and media department with him. Then, just days afterwards, Schillings lost defamation partner Mark Thompson and assistant Hanna Basha to Peter Carter-Ruck. And these departures came only months after highly-rated defamation lawyer Jonathan Coad departed for the Simkins Partnership.
Since the departures, Schillings has recruited partners to shore up areas of the firm outside its core claimant libel work. Just before Lom and Thompson left, Schillings recruited the highly-rated defamation head at Finers, Amber Melville-Brown. Then the firm took on Cruddace from The Mirror and its second sports partner Peter Goodman.
Goodman joined in January 2002. His main contacts are in the world of motor racing. Goodman became a leading player on the racing circuit when he began advising Formula 1 team boss Frank Williams on a manslaughter charge arising out of the death of Ayrton Senna at the San Marino Grand Prix in 1994. Goodman trained as a criminal lawyer and once represented Graham Young, the St Albans Poisoner.
Schillings is well known as a fierce litigation firm and Goodman's past experience shows that he will fit in well. Schilling is known as 'The Rottweiler' in Private Eye, but Goodman is certainly no lapdog. "Once you've shaken hands with a poisoner and a murderer, no one can scare you in contract negotiations," Goodman quips.
Melville-Brown and Cruddace are primarily defendant libel lawyers who have been recruited to add this new capability to the firm. The pair will seek out new publishing and media clients to defend against libel claims.
Cruddace was described in The Guardian as "once umbilically linked" to The Mirror editor Piers Morgan, who had to survive without him throughout the Campbell case. According to sources close to the firm, Cruddace and Schilling have a very strong friendship that has survived the pair's naturally adversarial professional relationship. Cruddace agreed to join Schillings in November 2000. According to some media sources, Morgan nearly succeeded in pulling Cruddace back just before Christmas, but Schillings won out in the end. Partners at Schillings refused to comment on this.
Cruddace cannot join the firm until April this year, though, because of the Campbell case. He will also not be involved in the Cox case, another potential conflict area. Schilling is confident that, even in his tiny firm, the partners will be able to put up Chinese walls when Cruddace arrives.
"Martin won't be in the country until the Mirror case is over. He's coming in April after having two months of back-to-back holiday. He wasn't involved in the Sara Cox case, but we'll have to implement a Chinese wall over Sara Cox and operate like a barristers' chambers in that respect," says Schilling. "Martin will certainly not be acting against The Mirror."
So why has there been such a high level of partner turnover?
Schilling suggests two reasons: to get better people and to bring new capabilities to the firm. Five of the seven partners in the firm will now have an equity stake. Before the partner merry-go-round, Schilling and Lom were the only partners with an equity stake in the business. The rest drew a salary. Schilling says that the quality of the new hires is his reason behind giving them a stake in the business.
"The people we have now are much more senior and experienced than the people we had and this is a natural progression," he explains. "The firm's becoming more diverse. People will have their own clients and be responsible for their own business."
But what has been the effect of the departures on the firm's business? Thompson, who left for Peter Carter-Ruck, took his client Carlton Communications with him; and Jonathan Coad, who left for the Simkins Partnership, is also rated very highly.
"There's only one lawyer I'd now ring up other than Keith Schilling, and that's Jonathan Coad at Simkins. I have a relationship with him as an individual, although not with Simkins," says Wheeler at Freud Communications.
Several media lawyers have offered an alternative reasoning for the departures. According to one source close to the firm, it is because the distribution of power within the firm was not equal enough, with Schilling making all of the decisions.
"There are unfortunate issues between the firm and Keith," comments the source. "It's an oligarchy. If you are by nature a great litigator, you may not be a natural people manager."
"It's said that Keith Schilling doesn't like having people around him that challenge him," speculates another media lawyer. "It's an interesting question, but is Keith Schilling the firm, and does he see himself that way?"
Wheeler disagrees. "If you find yourself in a situation where your reputation is under threat, you think of Matthew Freud for your PR and Keith Schilling for your legal work, but each have excellent teams of people behind them," he explains.
Schilling admits to having a strong persona, but firmly disagrees that he has 100 per cent control of the firm.
"I may cast a long, dark shadow," he says. "It's also natural that a client will want the senior partner to do the work. Also, if your firm is named after you, you're invariably identified with it. Allen & Overy doesn't have that problem. Simon Smith, the managing partner, and the finance director and the office manager make 99 per cent of the operational decisions [at Schilling & Lom]. The rest of the decisions are one partner, one vote, and all decisions have to be unanimous."
The accusations that Schillings is a one-man band may, of course, stem from professional jealousy. After all, by dividing up its equity, the firm is undisputedly becoming more democratic. But scepticism also stems from the firm's decision to move into defendant defamation work.
Schillings already has a sports law capability through partner Eddie Palmadorio, so Goodman should be able to expand the practice smoothly. But to dedicate two out of seven partners to defendant defamation work, Schillings must be serious about grabbing a market share. This could be difficult, as the market is not a large one.
Schillings also has an obvious problem with the potential conflicts with its existing claimant clients. It has a 'no tabloid' policy with regards to its defendant work, meaning that it will not exploit Cruddace's connections to get work from The Mirror. This puts it out of competition with Davenport Lyons, its usual adversary. As illustrated by the Campbell and Cox cases, this would cause too many conflicts. But, as a source in the defendant defamation market speculates, Schillings may still have difficulty grabbing a share of what is already a contracting market.
"The partners will need a client following to seriously get the firm into the defendant defamation market. All the large publishing and media clients have strong relationships with their major advisers. For a main adviser, it's good to act for The Times and not The Guardian, as the relationship with the one client will keep you in work. But if you can't get to one really good client, you're forced to play second fiddle to a main adviser and then you need to try and work for everyone. This creates too many conflicts if you're primarily a claimant firm, which needs to be able to sue nearly everybody," predicts one leading defamation lawyer.
Melville-Brown says Schillings will not pitch its defendant practice at newspaper proprietors and television companies, which are likely to be fighting the firm's existing libel claimants.
"We don't intend to work for a large number of defendants," she says. "We'll look at book publishers and distributors rather than daily papers, and all our work will be subject to conflict rules."
Schillings may also be shying away from the main broadsheets and television companies because of the established relationships these companies have with their existing advisers. With regards to non-tabloid press clients and the major television companies, the market remains tight.
To name just a few, The Times has Theodore Goddard defamation partner Martin Kramer as its main adviser. The Guardian has a strong relationship with Geraldine Proudler at Olswang, who advised the paper in its successful defences against former cabinet minister Jonathan Aitken and former MP Neil Hamilton. In television, Duncan Lamont at Charles Russell has the main relationship with ITN. The BBC handles nearly all of its legal work in-house. Channel 4 also uses in-house lawyers for the majority of its legal work, but outsources litigation work to DJ Freeman.
It is interesting that Schillings started out around the same time as media and commercial firm Olswang. And as Olswang grew, it concentrated more on defendant defamation work. Is Schillings aiming to follow the same path?
"Olswang started as a core film finance firm in the early '80s. We had quite a similar vision in the beginning, but they're more company commercial now," explains Schilling. "This firm will grow, but it won't get any bigger than 20 partners, as we're principally a media litigation firm."
Schillings has shown some signs of wanting to expand in recent months. As well as the three new hires, the firm was recently in merger talks with two-partner defendant libel firm H2O. H2O has now decided against a merger, but linking up with a small firm seems to best fit Schillings' requirements.
"We'd always take on good individuals with a good client following," says Schilling. "The problem with a lot of lateral hires is that they either don't have a client following or they're under restrictive covenants."
One thing that is certain is that Schillings wants to remain independent at all costs and has resisted several takeover approaches in the past.
"We've had approaches from big US firms who want to take us over, but that's probably true of 90 per cent of niche practices. We keep in touch with other media firms, but we want to be independent. Anyway, is 'big' good?" argues Schilling.
For Schillings' client base, big would not be good. It is doubtful that Kate Winslet would have wanted to walk through a reception area the size of Clifford Chance's, past gaping receptionists and goggleeyed trainee solicitors, in order to sign her divorce papers.
What a small firm like Schillings has to offer famous clients is intimacy and privacy. As well as the resident Rottweiler to keep the paparazzi at bay.