The Beatles’ story doesn’t quite end with their split in April 1970, as another couple of years of wrangles followed in which they fought it out in court. Paul instigated the move to rid himself of Allen Klein – something which the remaining members wished they did at the beginning. John’s sorry statement in 1975 read: “There are many reasons why we gave him [Klein] the push, although I don’t want to go into the details of it. Let’s just say that possibly Paul’s suspicions were right…”
10th April, 1970 – Paul announced the split in an interview accompanying his new McCartney LP (which had been sent to the papers for review). An accompanying press release said: “Spring is here and Leeds play Chelsea tomorrow and Ringo and John and George and Paul are alive and well and full of hope. The world is still spinning and so are we and so are you. When the spinning stops – that’ll be the time to worry. Not before. Until then The Beatles are alive and well and the Beat goes on, the Beat goes on.”
15th June, 1970 – Lee Eastman fired off a letter to Allen Klein, asking him to dissolve The Beatles partnership. After a month of stonewall silence from Klein, Paul tried sending a letter to John instead, simply to be told: “I will only consider it after George and Ringo have had their say.” But George’s reply was a little more forthright, saying: “You’ll stay on the fucking label. Hare Krishna.”
15th November, 1970 – By now, Paul was adamant that he wanted out of The Beatles partnership for good. But without cooperation from Klein and the others, the only way that he could do it was to sue the members of the partnership – John, George, Ringo and Apple Corps. And the thought of suing his former friends in the law-courts didn’t exactly fill him with glee: “I agonized over the prospect of suing my best mates and being seen to sue my best mates,” but there wasn’t a lot he could do, because he was convinced that Klein was screwing him, and he didn’t see why the others should share in the profits from his solo stuff.
31st December, 1970 – The High Court in London issued the writ to start the split. It was signed by Paul against ‘John Ono Lennon of Ascot, Berkshire, George Harrison of Henley-on-Thames, Berkshire, Richard Starkey of Highgate, London, and Apple Corps of Savile Row, London’ and sought “a declaration that the partnership and business carried on by the plaintiff and the defendants under the name of The Beatles & Co., and constituted by a deed of partnership dated 19th April 1967 and made between the parties hereto, ought to be dissolved and that accordingly the same be dissolved.”
Paul also asked that a receiver be appointed to handle all of Apple’s accounts until the court case had been settled – accusing Allen Klein of mismanaging Apple’s funds.
1st January, 1971 – Allen Klein was asked what he thought about Paul’s attempt to appoint a receiver for Apple’s assets: “It doesn’t accomplish anything,” he said, “…except bring into public a lot of dirty laundry within the life they live. Because of the financial and tax structures, which had gone before I came, they cannot simply write a piece of paper and say ‘Goodbye’ without horrendous tax problems… They entered into a 10-year agreement that they would, in effect, split the money. It’s a financial arrangement and the position really comes down to what the understanding was. Would the four of them divide equally the moneys, which were earned either on a collective or individual basis? Paul, for example, was the only one of the four on ‘Yesterday’. He sang, he was the player and performer, yet all four shared the money on that record equally. The other three had always understood that they always shared everything. It is whether or not they should share the money equally… that is the bone of contention. Plus the tax problem!”
19th January, 1971 – The Beatles & Co., court case opened in the Chancery division of the London High Court. The Judge’s name was Justice Stamp. Mr. David Hurst, Paul’s QC, started the ball rolling by listing all of the reasons Paul wanted the split:
1. The Beatles had long since ceased to perform together as a group, so the whole purpose of the partnership had gone.
2. In 1969, Paul McCartney’s partners, in the teeth of his opposition and in breach of the partnership deed, had appointed Mr. Klein’s company, ABKO Industries Ltd., as the partnership’s exclusive managers.
3. Mr. McCartney had never been given audited accounts in the four years since the partnership was formed.
Another three reasons were submitted on the 18th February:
4. Allen Klein tried to delay the release of Paul’s album McCartney.
5. Klein’s company ABKCO altered Paul’s song ‘The Long And Winding Road’ without consulting him first.
6. ABKCO, without any authority from Paul, had transferred the film rights of Let It Be from Apple to United Artists.
“Until 8:15pm yesterday,” he said, “the only accounts we had received of the partnership were draft accounts for the 16 months up to March 31st, 1968. The partnership agreement was entered into in April 1967, before the death of the Beatles’ manager, Mr. Brian Epstein. The next year, and early in 1969, serious disagreements began to occur.
He went on… “Artistic disagreements arose, particularly between Paul McCartney and John Lennon, who had written most of the songs. In January 1969, Mr. Klein was introduced by John Lennon, who proposed that he be appointed manager. George Harrison and Ringo Starr were also keen. Mr. McCartney did not trust Mr. Klein and wanted a New York law firm, Eastman & Eastman, where his father-in-law and brother-in-law were partners. In March 1969, the other three insisted on appointing Mr. Klein and ABKCO Industries Inc, as exclusive director. Mr. McCartney opposed and protested strongly, but ABKCO was appointed manager, at a fee of ‘no less than 20 per cent of the gross income.’”
“Up to 1965,” he carried on, “Mr. Epstein had run their business affairs, selected their professional advisors and been completely trusted by the Beatles. In 1966, the four decided to abandon touring and make records instead. That increased their financial success because of the enormous worldwide market. On tour they had a close personal relationship. Once they switched to recording they began to drift apart. After the Beatles partnership deed was signed in 1967, the group activities began to decline. They made their last record in the summer of 1969, and that September John Lennon announced that he was leaving the group. Since then, each Beatle had increasingly gone his own way. Last Spring Paul McCartney decided that he, too, should leave the group. Mr. McCartney’s first solo record was released last April in spite of efforts by Mr. Klein, Mr. Harrison and Mr. Starr to postpone it’s release.”
A lengthy discussion about money then ensued, with the lawyers trying to work out where Apple’s assets would be kept while the trial was in progress. It was eventually agreed that all of Apple’s money would be paid into a solicitor’s joint account. They also agreed to halt all of their spending until the Judge had passed judgement. The trial itself was set for sometime in February.
26th January, 1971 – A ten-minute hearing was held to announce that Apple’s assets would in fact be paid into a different solicitor’s account – in New York instead of London.
12th February, 1971 – Allen Klein submitted his affidavit to the High Court.
19th February, 1971 – Day One. The trial opened with Paul and Linda sitting in front row seats. All of the other Beatles decided to stay away because of the potential media scrum. The opening statement by Paul’s QC didn’t beat around the bush – going straight for Allen’s jugular: “On January 29th last,” he said, “Mr. Klein was convicted of ten tax offences by a jury in New York’s Federal District Court, even though they are effectively under appeal.” The trial was then adjourned until Monday morning.
22nd February, 1971 – Day Two. The opening statement for the defence was obviously kinder on Klein: “He has saved the Beatles from almost total bankruptcy,” it said. “He considers that his main job was to try and get money to rescue the group from the dreadful situation in which he found them. And in that, he was very successful… The Beatles had always counted their individual earnings as group assets. And this arrangement would not necessarily be disadvantageous to Mr. McCartney, who claims that the royalties from his solo records should belong to him alone. Mr. Harrison’s royalties on ‘My Sweet Lord’, his individual record this year, are going to be nearly twice as much as Mr. McCartney’s – nearly £1 million!”
23rd February, 1971 – Day Three. The defence carried on with Mr. Morris Finer reading out John’s affidavit. “After the death of Brian Epstein,” he read, “the Beatles’ company Apple was full of hustlers and spongers. The staff came and went as they pleased and were lavish with money and hospitality. We have since discovered that around that time, two of Apple’s cars completely disappeared and that we owned a house which no one can remember buying. But a few weeks after Mr. Klein had been authorised by me to make changes in the organisation of Apple the effects were felt. Early in 1969, Mr. Klein dismissed incompetent or unnecessary staff; the hustling and lavish hospitality ended; discipline and order appeared in the Apple offices.”
He carried on: “If Paul is trying to break us up because of anything that happened before the Klein-Eastman power struggle, his reasoning does not make sense to me. After Mr. Epstein’s death, Mr. McCartney and me, in particular, tried to be businesslike over Apple’s affairs, but we were handicapped by our ignorance of accounting, business practice and our preoccupation with our musical activities. Above all, although royalties were coming in, none of us had any idea at all about the state of our finances or our liabilities. We decided that we must find a new manager and we interviewed several people, but none seemed to have any idea of what was needed. I arranged to see Mr. Klein, whom I had heard about from Mr. Epstein. He was tough but he knew the entertainment business. I then introduced Mr. Klein to the other Beatles. If Paul is suggesting that I was trying to rush him and the others into engaging Klein or pushing him down their throats, that is a wrong impression. At all times, Mr. Klein had shown himself on top of the job. The only other major contenders for the manager’s job were the Eastmans – father of McCartney’s wife Linda, and her brother. I had opposed the idea of having as manager anyone in such a close relationship with any particular Beatle.”
George then weighed in with his opinions: “The only serious row was between Paul and me. In 1968 I went to the United States and had a very easy cooperation with many leading musicians. This contrasted with the superior attitude which, for years past, Paul has shown towards me musically. In January 1969, we were making a film at Twickenham, which was dismal and cold, and we were all getting a bit fed up with our surroundings. In front of the cameras, as we were actually being filmed, Paul started to ‘get at’ me about the way I was playing. I decided I had had enough and told the others I was leaving [these events actually happened on different days – the 6th and 10th]. This was because I was musically dissatisfied. After a few days, the others asked me to return and since I did not wish to leave them in the lurch in the middle of filming and recording, and since Paul agreed that he would not try to interfere or teach me how to play, I went back. Since the row, Paul has treated me more as a musical equal. I think this whole episode shows how a disagreement could be worked out so that we all benefited. I just could not believe it when, just before Christmas, I received a letter from Paul’s lawyers. I still cannot understand why Paul acted as he did.”
Ringo’s affidavit was a great deal shorter, but no less accusing: “I was shocked and dismayed, after Mr. McCartney’s promises about a meeting of all four Beatles in London in January, that a writ should have been issued on December 31st.”
24th February, 1971 – Day Four. The next affidavit was by Allen Klein himself: “The groups assets are not in jeopardy,” he said. “I more than doubled the Beatles’ income in the first nine months after I took over as manager in May 1969. In 1970, I had increased it fivefold. Furthermore, as a result of my efforts, the Beatles’ partnership income has increased from £850,667 for the year ended March 31st, 1969, to £1,708,651 in the nine months ended December 31st, 1969. In the year to December 31st, 1970, the income was £4,383,509. When I became the Beatles’ manager I was taking over a very perilous situation which, according to the auditors, involved solvency. My first task was to help them to generate enough income to alleviate this situation. The largest potential source of income was from royalties on records and I wanted to negotiate a new arrangement with EMI. It was decided by all four Beatles that I should go with them and have the authority to negotiate. Mr. McCartney was anxious that Mr. Eastman should attend, but McCartney went along with the collective decision. A meeting was held on May 7th, 1969, attended by Mr. McCartney, Mr. Lennon, Mr. Harrison, Yoko Ono, myself and three representatives of EMI. No conclusion was reached at that meeting [follow the link and see why!], but EMI made it clear that they were not prepared to negotiate any arrangements so long as the NEMS claim was outstanding. I had arranged for my company ABKCO to take over from NEMS at considerable profit to the Beatles. Notwithstanding, on July 8th, 1969, Mr. John Eastman saw fit to write to each of the Beatles criticising the settlement and alleging I cost them £1.5 million.”
25th February, 1971 – Day Five. More evidence from Allen Klein: “Paul McCartney never accepted me as his manager, but the partnership did, and I have continued as manager of the partnership. McCartney has accepted all the benefits, which I have negotiated in that capacity. As regard to my ability to make deals, I am content to be judged on my record.”
Their QC, Mr. Finer, then produced some interesting figures: in the six-and-a-half years between June 1962 and December 1968 (the Brian Epstein years), the total income of the Beatles (minus the money from song writing) was £7,864,126. But the following nineteen months brought in well over £9 million – the vast majority of which came from Allen Klein’s increased royalty rates.
26th February, 1971 – Day Six. Now it was Paul’s turn to take the stand: “Since the Beatles stopped making group recordings,” he explained, “we’ve stopped thinking of ourselves as Beatles. One has only to look at recent recordings by John or George to see that neither thinks of himself as a Beatle. On his recent album, John Lennon has listed things he did not believe in. One was ‘I don’t believe in Beatles.’ When we entered into the partnership agreement in 1967, we did not consider the exact wording or give any thought to the agreement’s legal implications. We had thought that if one of us wanted to leave the group he would only have to say so… And if one disagreed, we discussed the problem until we reached agreement or let the matter drop. I know of no decision that was taken on a three-to-one basis.”
Paul then recalled the gung-ho bully-boy tactics that Klein used on NEMS: “He told us, ‘I’ll get it for nothing.’ That was typical of the exaggerated way in which Mr. Klein expressed himself to us. I became more and more determined that Klein was not the right man to be appointed manager.”
One killer piece of evidence that Paul turned up was Klein’s greedy grabbing of an extra slice of pie. According to the terms of his management contract in 1969, he was only entitled to 20% if he improved an existing contract. So when he upped the Capitol agreement from 17.5 to 25%, he was rightly entitled to 20% of the difference. But Paul’s accountants found that he had paid himself 20% of the entire amount – half a million pounds too much! “And we got him!” cheered Paul. “That was the only thing we caught him on, and we couldn’t send him to jail for that, but at least we could get a judgement.”
1st-4th March, 1971 – Days Seven, Eight, Nine and Ten. These days were used for summing-up. An interesting exchange took place on the 4th, when the solicitor William Forbes detailed the Beatles’ spending habits: “Before Mr. Klein took over the management of the Beatles, the four partners had been drawing from the partnership account at the rate of £6,000 a month. In the 28 months before the Klein era, the Beatles had drawn a total of £272,000 from the account, although the combined net profit available to them was only £122,000! In the pre-Klein era, the four of them were drawing an average of £10,000 a month, an overdrawing of £6,000 a month. But after Klein took over their management, the Beatles’ drawings continued at £11,000 a month, but the money available to them increased to £40,000. For the year ended December 31st, 1970, the net profit available for them was £840,000, out of which they drew £184,965.”
5th March, 1971 – Day Eleven. Another Judge involved in the case, Mr. Justice Plowman, granted an application by Northern Songs to ban Maclen Music from publishing any songs by Lennon/McCartney.
12th March, 1971 – Final Day. The Judge delivered his verdict – in favour of Paul. James Spooner was appointed receiver and manager of all the Beatles’ business interests whilst they decided what to do with the company itself. John, George and Ringo immediately left the court and speed off, with an abrupt “No comment!” for the assembled press.
26th April, 1971 – John, George and Ringo announced that they will not appeal against the decision.
20th November, 1971 – Paul started a tit-for-tat barny in the pages of the Melody Maker: “I just want the four of us to get together somewhere and sign a piece of paper saying it’s all over, and we want to divide the money four ways. No one would be there, not even Linda or Yoko, or Allen Klein. We’d just sign the paper and hand it to the business people and them sort it out. That’s all I want now. But John won’t do it. Everybody thinks I am the aggressor but I’m not, you know. I just want out.”
Two weeks later John replied with a letter of his own, nine lines of which had to be scrubbed to head off a possible libel action. “Dear Paul, Linda, et all the wee McCartneys. Thanks for your letter… 1) We give you money for your bits of Apple. 2) We give you more money in the form of royalties, which legally belong to Apple. (I know we’re Apple, but on the other hand, we’re not.) For the millionth time in these past few years I repeat, what about the tax? It’s all very well playing simple honest ole human Paul in Melody Maker, but you know damn well we can’t just sign a piece of paper. You say, ‘John won’t do it’. I will if you’ll indemnify us against the taxman. Anyway, you know that after we have our meeting, the fucking lawyers will have to implement whatever we agree on – right? It’s up to you, as we’ve said many times – we’ll meet you whenever you like. Just make up your mind. E.g.: Two weeks ago I asked you on the phone ‘please let’s meet without advisors etc, and decided what we want.’ I especially emphasised Maclen which is our main concern; but you refused – right? You said under no condition would you sell to us, and if we didn’t do what you wanted, you’d sue us again.”
5th December, 1971 – The High Court appointed a receiver for Maclen Music Ltd.
31st March, 1973 – Allen Klein’s management contract with John, George and Ringo expired, and was not renewed. He wasn’t formally fired until November. When the press asked John why he was dumped, he replied: “There are many reasons why we gave him the push, although I don’t want to go into the details of it. Let’s just say that possibly Paul’s suspicions were right… and the time was right.”
2nd November, 1973 – John, George, Ringo, Apple Corps Ltd. and thirteen other companies in the group issued a writ against Klein and ABKCO for misrepresentation and payments outstanding. Klein immediately countersued them for $19 million. He also tried to sue Paul for $34 million but the case was chucked out.
2nd November, 1974 – Allen Klein lost the court case.
27th December, 1974 – John finally signed the piece of paper dissolving the Beatles & Co. partnership for good, in – of all places – Disneyworld.
9th January, 1975 – The Beatles & Co. partnership was dissolved in the law courts.
9th April, 1975 – Exactly five years (minus one day) since Paul first announced the split, the Beatles formally dissolved themselves in a private hearing. A short statement read: “All matters in the dispute between Mr. McCartney and John Lennon, George Harrison and Ringo Starr have been fully settled.”