EXCLUSIVE: I am interrupting my personal days to give you this scoop: it’s not clear who is running The Firm or whether it will survive beyond tonight. CEO Jeff Kwatinetz just left the management and production company “to do his own thing”, my insider tells me. “He’s expected to start his own music, film and television management firm and film and TV production company. But it’s unclear who takes over running The Firm assuming that people do.” New information coming in to me is that Kwatinetz, one of the most secretive men in the entertainment biz, was supposed to leave The Firm and go his separate way at the same time that principals Rick Yorn, Julie Yorn and Dave Baram (also the president/COO) did during the week of October 19th. But I’m told there was some “legal obligation” that prevented Kwatinetz from exiting at that time. Now Kwatinetz will be leaving with unspecified clients and personnel.

The rumor mill has been working overtime about the futures of The Firm and its Harvard-educated lawyer Kwatinetz ever since Rick Yorn departed. While Kwatinetz quickly issued a statement indicating there were no hard feelings — “I am sorry to lose Rick as a partner, but I remain proud to call him a dear friend. I wish him well” —  tip after tip has come in to me of possible litigation by ex-Firmers Rick Yorn, Julie Yorn, Dave Baram and Constance Schwartz (who reps Snoop Dogg and was a bright marketing mind there before recently leaving) to force Kwatinetz to dissolve The Firm. There also have been allegations about The Firm’s imminent bankruptcy, or its eventual eviction from its Wilshire Boulevard offices because of a year’s worth of unpaid rent, not to mention stories about Kwatinetz’s personal behavior creating a professional nightmare at The Firm. Both sides have denied these rumors to me for weeks. So it’s all the more interesting that at this point in time the future of The Firm is up in the air.

So in just a scant few weeks, The Firm has now lost its CEO Kwatinetz as well as its president/COO Dave Baram, who spent nine years in that post until he announced on October 21st he was joining the Yorns in their new management and production company. Baram also co-founded the investment fund VMG Equity Partners which raised the money for consumer brand development and intellectual property creation projects that included the acquisition and re-launch of the footwear and apparel company Pony, Baram also is the manager of magician Criss Angel, whose “Mindfreak” shows have been a staple of Las Vegas and cable TV and who exited The Firm with Baram to join Yorn.

Yorn left The Firm to form a new management company with his ex sister-in-law Julie Yorn who will run the production side of the business. All of Rick’s day-to-day point clients went with him, which meant the loss to the firm of marquee names including Marty Scorsese, Leonardo DiCaprio, Cameron Diaz, Justin Timberlake, Benicio Del Toro, and Rick’s brother, musician Peter Yorn. Also joining the Yorns was their Firm colleague Jennifer Killoran, who co-manages DiCaprio and Timberlake with Rick as well as runs Leo’s production company Appian Way. Those clients following her also included director and writer Richard Kelly (Donny Darko), Robert Schwentke (Flight Plan), and writer John Orloff (A Mighty Heart). The Yorns’ deal with The Firm lapsed in June 2007, and Rick was coy about signing another contract. He’d been a principal since an internal restructuring in 2005 when Kwatinetz and Yorn renewed and extended their partnership. Yorn has been there ever since he rather famously left Addis/Wechsler and joined up with Michael Ovitz’s short-lived Artists Management Group, which after it fell on hard times was then sold to The Firm in 2002. The purchase moved The Firm from a music mangement company into the heady up-and-down world of movie and TV management and production. But it also left the company up to its eyeballs in debt.

Kwatinetz from then on found himself knocking down rumors that Yorn was about to leave the company. Many doubted that the Yorns were going to stay long-term, but few knew he was anchored in place in part by a business debt personally backed by the company’s partners, including Kwatinetz, Baram and Yorn himself. In 2004, Kwatinetz, with prodding from investor Thomas H. Lee Partners, explored a plan to unite with Irving Azoff, the powerful music manager who at the time repped the Eagles, Christina Aguilera, Jewel, and others. The deal would have paid The Firm an estimated $60 million. But Kwatinetz stupidly balked at the prospect of having his authority diluted. The Firm’s problem was that its CEO dreamed big but rarely delivered in recent years. He had made a name for himself early on with several smart moves in the music biz: The Firm was, for example, the driving force behind a deal in which EMI and big concert promoter Live Nation paid Korn $27 million to create a separate corporation that oversaw and shared in the profits from sales of the band’s records, concert tickets, and merchandise. After buying Ovitz’s firm, Kwatinetz talked about grand schemes to cross-breed actors, musicians, advertisers and other ventures in new business lines. But The Firm never developed into a true Hollywood powerhouse.

It’s also interesting to note that The Firm survived a massive exodus of execs and clients back in 2005 when, JoAnne Colonna, a manager of the company’s film talent department, left with her clients that includes Anna Paquin, Sarah Michelle Gellar, Brittany Murphy (Kwatinetz’s one-time fiance), and Brendan Fraser. Only weeks before, her co-manager, Aleen Keshishian, had also left with  clients Natalie Portman, Orlando Bloom, Laura Linney and Freddie Prinze Jr. And those moves followed the departures of the co-managers of the music department when Simon Renshaw took with him the Dixie Chicks, Clay Aiken and Anastacia, and Andy Gould left with Rob Zombie. But the most recent exits of the Yorns and Baram were a major, and perhaps fatal, blow. Now with Kwatinetz having left, The Firm looks to be on its last legs.

  1. Rick Yorn Exits The Firm; Julie To Follow
  2. Is Marty/Leo Manager Rick Yorn In Play?