The House Of Grubman

When Allen Grubman's daughter got kicked out of prep school years ago, the high-powered music lawyer knew just what to do: he made a few phone calls and got her enrolled in another (and still another when she flamed out of that one--and another after that). When she wanted to start her own public-relations firm in 1997, he opened his checkbook as well as his Rolodex, sharing some of his own clients to help fill her roster. And so, when 30-year-old Lizzie Grubman woke her father in the wee hours this past Fourth of July weekend to inform him that she'd had an accident in his Mercedes-Benz SUV, he knew exactly what to do: he picked up the phone. "I said, 'I'll volunteer to help'," uber-spinmeister Howard Rubenstein told Grubman. "And he said, 'No! No!' " No price is too high to pay to help Daddy's girl.

Surely by now you must have heard of Allen Grubman's daughter Lizzie, the rich, cover-girl celebrity publicist who reps the likes of Britney Spears and Jay-Z and controls the guest lists of Manhattan's hottest nightspots--and who's facing possible prison time for mowing down a crowd outside a chic nightclub in the Hamptons, the summer playground for New York's elite. With pal actress Tara Reid ("American Pie") as a passenger, Lizzie popped her dad's SUV into reverse and sped into a well-heeled throng outside the Conscience Point Inn around 1 a.m. on July 7, just minutes after she'd clashed with one of the victims, a club bouncer who'd ordered her to get the car out of the club's fire lane--to which she allegedly responded by calling him "white trash." Lizzie fled to a friend's home, leaving behind 16 bloodied clubgoers and a bitter taste in the mouths of Hamptons locals fed up with the antics of nouveau riche weekenders from Manhattan. She says it was an accident--claiming she had intended to put the SUV in drive, not reverse--and has repeatedly expressed remorse. But police have charged Lizzie with six counts of first-degree assault and one count of leaving the scene. The victims have so far filed several lawsuits totaling roughly $100 million. In short, it's a publicist's--and a father's--worst nightmare.

The Grubman blood ties go a long way toward explaining the ongoing tabloid feeding frenzy around Lizzie several weeks after the incident. Allen Grubman is perhaps the music industry's wealthiest and most powerful attorney, with such superstar clients as Madonna, Bruce Springsteen, Elton John, U2 and Sean (Puffy) Combs. And so it wasn't much of a leap for folks to slap his daughter with the "spoiled rich girl" label. There's a cruel Web-site game that depicts Lizzie repeatedly plowing over club patrons with a bloody SUV. So far, Daddy has been powerless to stop the onslaught.

It must be an unfamiliar feeling. Grubman, 58, has established himself as the music industry's peerless dealmaker for the past quarter century. A gritty New Yorker who chews with his mouth open and barely made it through Brooklyn Law School, Grubman seems to enjoy leaving the impression he's from the waterfront. "Allen can be incredibly coarse and sexist, but with a goofy charm," says Hilary Rosen, the music industry's chief Washington lobbyist. "He makes all his clients happy." Grubman started off with an unimpressive client roster (remember K-tel and the Veg-O-Matic?). But by the early '80s he'd signed on music manager Thomas Mottola, CBS Records chief Walter Yetnikoff, and record-industry mogul David Geffen. The hits keep coming: just last week Grubman and a star partner, Kenny Meiselas, landed a deal for Whitney Houston with Arista said to be worth tens of millions of dollars, her biggest contract ever. He is now helping to negotiate a major start-up label for Ted Field, the entertainment titan who founded Interscope. Grubman is "probably the most central figure in the music industry," says Geffen, now a billionaire and co-founder of DreamWorks studio. By one close friend's estimate, Grubman has amassed a fortune of at least $100 million; according to fellow lawyers, he earns $7 million to $10 million a year.

But for all of his success, Grubman has been controversial. He has built his career playing both sides of the fence--representing not just artists but the labels and executives they record for. That has made Allen Grubman exhibit A in debates over incestuous business relations in the music industry. Most clients praise the lawyer effusively. Rubenstein declares that Grubman never represents both parties in any one matter, is scrupulous in disclosing his relations to all his clients and abides by the conflict rules of the legal profession. "Allen is pristine about disclosing conflicts," says client Strauss Zelnick, former CEO of Bertelsmann Music Group. Still, Grubman's tactics have gotten him sued on occasion, the most celebrated of which involved Billy Joel, one of his first superstar clients, in 1992. Joel, who claimed financial losses, accused Grubman of, among other things, representing him and CBS Records (now Sony Music) without disclosing it to the artist or getting a conflict-of-interest waiver. It was settled out of court when CBS Records stepped in with a multimillion-dollar payment to Joel. Since then Grubman's reach has continued to raise questions and entangle him in some difficult situations. Last year he hired on as a well-paid adviser to Napster, the Internet song-swapping service--at the same time he was representing the very artists and companies that were suing Napster. (Grubman's spokesman said the lawyer sought to help reach "an understanding" with record companies, but he did "nothing" for them.)

Grubman also last year found himself caught up in a bitter management-succession battle at Bertelsmann Music Group. All of the parties to the warfare--BMG, former BMG boss Zelnick, former BMG Arista label boss Clive Davis and current Arista chief Antonio Reid--are, or were then, Grubman clients. Ultimately, Grubman ended up backing Davis, but the situation has left lingering bitterness among some BMG executives. NEWSWEEK also has learned of Grubman's uncomfortable, if profitable, role in a legal fight pitting recording star Luther Vandross against Sony Music; both have appeared on his client roster. Vandross turned to Grubman when the crooner wanted to bail out of a contract Grubman had helped him negotiate. But Grubman's Sony ties left him unable to represent either side, and Vandross sued Sony using another lawyer. Grubman still managed to broker a settlement--and pull down a nice paycheck, Rubenstein confirms.

At times, Grubman's business connections have proved valuable in the service of his own family. He helped Lizzie launch her PR firm, which is regarded as a huge success. Many of her rivals snipe that Lizzie's business would hardly be thriving were it not for her father's influence. The Grubmans' spokesman says Lizzie and her father have only two of her 50 or so clients in common. Allen Grubman's professional ties also appear to have benefited his wife, Deborah, a New York real-estate broker. NEWSWEEK has learned that she has represented at least two of her husband's clients--Lyor Cohen, president of Island Def Jam, and Steve Stout, a top executive at Interscope Records--in big-ticket real-estate transactions. With Deborah's help, Cohen bought a town house just off tony Fifth Avenue, he says--around the same time that Allen Grubman was representing him (and his partner Russell Simmons) in selling their remaining stake in Def Jam Records. Stout rented a Trump Tower apartment. "His wife is a great realtor," Stout told NEWSWEEK. Through their spokesman, Grubman says Deborah has sold a home to only one of his clients, eight years ago. As for Cohen and Stout, "she said she didn't sell to either," Rubenstein said.

To not have captured both clients certainly would be a departure from her husband's playbook. Or to borrow what some Grubman clients maintain is his favorite witticism, "If there's no conflict, there's no interest."