On-screen, actor Johnny Depp is best known for his role as Jack Sparrow in the highly successful Pirates of the Caribbean franchise. But off-screen, his legal battle with his former managers has evolved into another must-watch drama due to its potential impact on Hollywood, The Hollywood Reporter detailed in a new post.

In mid-January, Depp filed a lawsuit accusing The Management Group, which had represented him for more than a decade, of fraud and mismanagement. During this time, TMG's Joel Mandel claimed Depp made more than $650 million, an enormous figure that Depp used to fuel a lavish lifestyle, including 14 residences, more than 200 artworks and a 156-foot yacht. Ultimately, Depp's extravagant spending led to financial troubles.

TMG slapped Depp with a countersuit, claiming Depp did not pay a commission to the firm for the upcoming installment of Pirates of the Caribbean.

The legal wrangling is shaping up to be a closely watched battle that could reshape how Hollywood management works. Depp's lawyer claims his managers did not have a right to a slice of his earnings without a written contract.

Under California law, attorneys are not entitled to a portion of the clients' earnings until they have a contract. Still, TMG asserts that while Joel Mandel and his brother Robert are attorneys, they did not provide legal work for Depp and thus are exempt from the law.

TMG declined CNBC's request for comment. Depp did not respond to CNBC's requests for comment.

To learn more about Depp's legal wrangling with his former managers, read The Hollywood Reporter's in-depth profile.