(Legal) Career Killers: The Lawsuit That (Officially) Broke Up The Beatles

Why did The Beatles break up?

Was it because of Yoko Ono?

Or Linda Eastman? Or Phil Spector?

Was it due to growing personal and creative differences between four individuals who all wanted to go solo?

Was it because of manager Brian Epstein’s death? Or was it because of his replacement, Allen Klein?

Or was it the lawyers’ fault?

(It’s usually the lawyers’ fault)

One ABA Journal cover story I didn’t edit was the one from May 2016, which asked if litigation killed The Beatles. Excerpted from Baby You’re a Rich Man: Suing the Beatles for Fun and Profit by Stan Soocher, the story traced the many bad contracts and resulting lawsuits that plagued the band — especially during the latter half of their career.

Turns out, as brilliant as they were at writing and recording popular, influential and ground-breaking music, they were terrible when it came to doing business. Most notably, in 1963, Epstein and the lawyer he retained, neither of whom had much experience negotiating merchandising deals, entered into an agreement with a London nightclub owner that ceded 90% of the proceeds to his company. The deal lost the Beatles an estimated $100 million in possible revenue. In the U.S., for instance, during the height of Beatlemania, the band and Epstein only made $79,624 before taxes.

After Epstein’s 1967 death, the band clashed over who should be his replacement. Paul McCartney wanted his future father in law, Lee Eastman, and brother-in-law, John Eastman, both of whom were entertainment lawyers. However, John Lennon, George Harrison and Ringo Starr were concerned that the Eastmans would favor McCartney at their expense, so they pushed for Allen Klein, a hard-nosed businessman who was managing rivals The Rolling Stones at the time.

The four Beatles ultimately compromised, hiring Klein as manager in early 1969 while retaining the Eastmans as their lawyers. But that soon proved to be unworkable and the Eastmans were soon forced out. McCartney wasn’t happy about that and refused to sign the paperwork making Klein manager. It didn’t matter since he was outvoted by the other three and McCartney tried to be a good soldier, going as far as appearing in playful photos with Starr, Lennon, Ono (for some reason) and Klein supposedly signing a contract together. Nevertheless, McCartney never trusted Klein and did almost nothing to try and forge a workable relationship with him.

“In the aftermath of Brian Epstein’s death, four brash New Yorkers entered the Beatles’ inner circle: a Tokyo-born avant-garde artist named Yoko Ono, a photographer named Linda Eastman, a music-biz wheeler-dealer named Allen Klein, and an eccentric producer named Phil Spector,” wrote Rob Sheffield in Rolling Stone in 2020. “All four had a massive impact on the Beatles’ chemistry. Klein is easily the least famous of the four, but arguably the one who played the biggest role in their demise.”

To be fair to Klein, the Beatles were already showing signs of implosion before he even entered the picture. Creative tensions had reached a boil and the various songwriters in the band were more or less preparing for life saw after the Beatles. The divisions had been laid bare on The White Album, which has often been described as “John’s solo albums, Paul’s solo album, George’s solo EP and a token Ringo song.” Subsequent projects only made things worse — most notably the Get Back project, which had been envisioned as a behind-the-scenes documentary of The Beatles getting back to basics and recording and ultimately performing together but ended up nearly breaking up the band.

Klein did what he could to keep them happy financially. First, he trimmed the fat at Apple Corps, the Beatles’ company, firing a bunch of people including hangers-on and cronies who were just there for a paycheck, shuttering quixotic but unprofitable divisions like the electronics line or the experimental music imprint, and getting rid of some questionable business expenses (Apple had a budget for escorts, listed under the line item: “erections and demolitions”).

Klein also freed the band from its previous management deal with Epstein. Under the terms of that agreement, Epstein’s company, NEMS, owned 25% of the Beatles’ earnings. After Epstein’s death, his brother sold the company to a British investment group, who now stood to inherit that 25% stake. Klein negotiated with Triumph and ended up getting back those rights for a fraction of what they would have been required to pay via the ongoing royalty, but only after some tough negotiations, bare-knuckle tactics and a bitter lawsuit which did a lot to cement Klein’s reputation as a no holds barred street fighter — proverbially, at least.

Klein’s reputation may have precipitated one of his biggest failures as manager of the Beatles. At around the same time as the Triumph fight, two of the founders of Northern Songs, the entity set up to hold the publishing rights to Lennon’s and McCartney’s songs for the Beatles, decided to sell their stake to ATV for £1.525 million. According to The Guardian, one of those shareholders, former singer Dick James, had been double-dipping, taking a 50-50 split in the highly lucrative American market and then taking an additional 50% after sending the money back to Britain. With Klein as manager and looking to scrutinize existing deals, James decided to sell and did so quickly and without notice — not even giving McCartney and Lennon a chance to buy those shares for themselves.

After Lennon and McCartney refused a buyout from ATV, Klein then tried to buy up enough shares to take control of Northern Songs, which was a publicly-traded entity. Klein was able to put together a higher bid, but Lennon and McCartney couldn’t agree on the terms. Lennon and Klein also learned that McCartney had secretly bought a few additional shares of the company without telling Lennon, causing the latter to feel betrayed. Ultimately, ATV took over Northern Songs and the catalog eventually ended up in the hands of Michael Jackson, who also had a run-in with McCartney over it. The catalog helped play a role in Jackson’s feud with Sony, a fight that helped ruin the King of Pop’s career.

On the flip side, Klein was able to negotiate a new record deal with label EMI, which included an unprecedented 25% royalty rate for the band. The new accord meant EMI could start issuing compilations, something Epstein had always resisted.

Knowing they still had one film left on their contract United Artists, Klein decided to resurrect the shelved Get Back project that had been a major source of contention within the band. An 80-minute feature film was cobbled together from the miles and miles of footage shot for the original Get Back documentary and released as Let It Be in 1970. Klein then hired famed producer Phil Spector to salvage the tapes from those sessions and create a releasable record/soundtrack, which he did with Let It Be, the band’s last official album.

When McCartney heard what Spector did to the Beatles’ songs, particularly on “The Long and Winding Road,” which had originally been a simple piano-driven ballad but now included an orchestral accompaniment and choir, he got mad. He sent a letter to Klein (interestingly enough, he cc’ed his brother-in-law John Eastman — not to be confused with this guy who’s been in the news lately) telling him to get rid of or minimize some of Spector’s alterations to “The Long and Winding Road” and ended with a terse warning: “Don’t do it again.”

McCartney elaborated in a 1970 interview with The Evening Standard:

I was sent a re-mixed version of my song “The Long And Winding Road,” with harps, horns, orchestra and women’s choir added. No one had asked me what I thought. I couldn’t believe it. The record came with a note from Allen Klein saying that he thought the changes were necessary. I don’t blame Phil Spector for doing it, but it just goes to show that it’s no good me sitting here thinking I’m in control, because I’m obviously not. I would never have female voices on a Beatles record.

Paul McCartney interview with The Evening Standard, 1970.

McCartney even went so far as to release his own version of the Let It Be album 33 years later with the Spector stuff removed. (You can listen to his version “The Long and Winding Road” here. I actually prefer the Spector version. It had a sense of finality and closure to it that was appropriate.)

That wasn’t the only thing McCartney was upset about. His first solo album, McCartney (1970), was ready for release. However, there were other Apple records, including Let It Be, that were scheduled for release around then. So Klein decided to push back the release of McCartney — a decision that made Paul furious.

“When I told Paul that the rest of us wanted to delay his solo album, he went completely out of control. He was shouting at me, prodding his fingers towards my face saying ‘I’ll finish you now’ and ‘You’ll pay,'” Starr recalled as quoted in Soocher’s book.

Rolling Stone added some additional details and context, pointing out in a 2020 piece in advance of Peter Jackson’s Get Back documentary on Disney+ that John and George wrote a remarkably glib and trolling letter to Paul (complete with envelope bearing the words: “From Us to You“) explaining the situation and adding that it was “nothing personal.” McCartney took it very personally and, evidently, Ringo, as the messenger, paid the price.

After some delicate diplomacy, McCartney got his original release date restored. However, he had evidently had enough of Klein and his band mates. On December 31, 1970, McCartney filed a lawsuit against Apple Corps, as well as Lennon, Starr and Harrison to dissolve their partnership.

Klein was not named, but it was clear that McCartney wanted to be free of him and the lawsuit was his best avenue towards that goal. His basis for arguing that the other three had violated their partnership agreement was that they had appointed Klein as manager over his objection and that he had been kept in the dark about the band’s finances.

Dissolving the partnership was vital to McCartney if he wanted to get away from Klein. As long as it was in effect, Klein got paid for McCartney’s work, including his solo records.

As such, McCartney requested that the court appoint a receiver (neutral third party) to do a thorough accounting of the Beatles’ financial situation in order to protect their assets — a clear implication that he was concerned Klein would take control of the Beatles songs the way he had with the Rolling look Stones. He also claimed that Klein had taken more than his fair share of commissions and that he had tried to hurt McCartney by delaying his album release.

Because the other three Beatles had to counter McCartney’s allegations they were put into the awkward position of testifying that their partnership was still intact and that they could still work together — even though they, like McCartney, had no intention of doing so. In fact, Lennon had already decided to leave the band before the EMI negotiations were finalized but had agreed to keep quiet so as not to jeopardize that deal.

Klein, for his part, had not been individually named, but he thrust himself into the proceedings, submitting a long affidavit arguing that he had been responsible for fixing the band’s financial problems and giving them new riches thanks to the deal with EMI. Klein also argued against appointing a receiver, pointing out that doing so would, essentially, put Apple Corps in limbo — unable to sign new talent and creating confusion amongst the various corporate entities and individuals who did business with the company.

McCartney, however, was unmoved, and his lawyer responded in court that Klein entered the picture while the band was riding “the crest of a wave” and “could claim no credit for the wave, let alone the ocean across which it moved.” Essentially, he accused Klein of hitching himself to the Beatles’ bandwagon and trying to argue that it made him smart when it really just showed he was lucky.

Ultimately, the court ruled for McCartney, appointing a receiver as requested. It took another few years for multiple receivers to figure out who was owed what. Finally, in 1974, the four Beatles settled the case and came to an agreement as to how to divide up their royalties with each other and Apple while formally severing their partnership. As with the Klein photo op from 1969, the band members staged a public signing of their dissolution agreement, this time at the Plaza Hotel in New York City.

McCartney got a lot of bad press during that time for filing the lawsuit and being seen as the person who wanted to break up the band, but he’s been largely vindicated in the years since. Lennon, Harrison and Starr all ended up having their own legal struggles with Klein — Harrison’s ended up being the longest and costliest.

Klein first tried to seize Harrison’s publishing entity, Harrisongs. When that didn’t work, he bought the rights to “He’s So Fine,” whose melody Harrison had been accused of plagiarizing for his solo hit “My Sweet Lord,” and took over the pending litigation against his former charge. Citing a clear conflict of interest, a judge limited Klein’s recovery in the matter, but legal issues between Klein and Harrison would drag on for decades, not to be fully resolved until 1998, three years before Harrison died of cancer.

Eventually, time helped heal some wounds — although not enough for the Fab Four to reunite before Lennon’s death in 1980. In preparation for the Beatles Anthology project, McCartney, Harrison and Starr reconvened in 1994 to work on three new Beatles songs to be fashioned out of previously unheard Lennon demos. Two of them (“Free As a Bird” and “Real Love“) were completed before technological limitations shelved the third (“Now and Then“). It would not be finished until recent advancements in artificial intelligence and audio restoration technology made it possible to overcome the poor quality of the original demo.

That song will probably be the last act for the Beatles. Unless, of course, Klein’s estate gets them back in court for one final reunion.

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