In a very unusual move, in support of its writer members, during this period when the Writers Guild of America (WGA) has asked its members to fire their agents, the WGA last night agreed to pay to managers and lawyers of writers, the fees that are due to such managers and lawyers for negotiating the agreements for the writers. http://bit.ly/2Di32u7
As part of their negotiating strategy with the Association of Talent Agents (ATA) over the issue of agencies accepting packaging fees from production companies and production of content by the agencies, the WGA asked its writer members to fire their agents. The agents are accused of not operating as fiduciaries for their writers who are WGA members, because the agencies receive packaging fees from the production companies or the agencies, through affiliated companies or directly, and invest in the productions for which their writer clients provide scripts or teleplays. The WGA determined that this is an unacceptable conflict of interest. While the WGA Basic Agreement, and other collective bargaining agreements remain in effect, the WGA wants the agencies to maintain a strict fiduciary relationship to the writers. (Query: why would the WGA support the payment of fees to a manager or lawyer, when the client actually seeks to reject the obligation to pay the representatives? Further query: What about management companies that finance production of shows written by their clients?)
The need to make sure the writers pay their representatives arises because of the operation of the Talent Agencies Act (TAA) in California, and the myriad decisions under it which enforce the provision that anyone who procures or assists in the procurement of employment in California for writers and others, must be licensed as a agent under the TAA. While the members of the ATA are so licensed, if those agents are discharged, the negotiation of these agreements will fall to managers and lawyers, or other agencies which do not accept packaging fees, or do not invest in productions in which their clients are participants. Until that occurs, however, managers and lawyers who negotiate for writers are at risk for not keeping their compensation.
There are many cases issued by the Labor Commissioner finding that managers were acting as an agent without a license. Most recently, in a 2013 case brought by an on-air sportscaster against his lawyer for assisting in the procurement of employment, by following his client's instructions in negotiating the renewal employment agreement, the Labor Commissioner found that the lawyer was acting as an agent without a license and would therefore be obligated to disgorge any fees paid and not receive compensation.Solis v. Blancarte, http://bit.ly/2KPFS4m.
The New York statute governing licensing of talent agencies is very similar. NY General Business Law §171.8-a defines who must be represented by a Theatrical Employment Agency, which includes writers. NY Arts & Cultural Affairs law §37.01.3 exempts managers from the licensing requirement in certain instances. The General Business Law requires that in New York City, enforcement of that statute falls to the New York City Department of Consumer Affairs (DCA). At a panel presentation for the Association of the Bar of the City of New York (City Bar) in 2014, at which I was present, I posed the Solis v Blancarte fact pattern to the representative there from the DCA, and asked whether an investigation would ensue, if those facts were reported to her. She confirmed that an investigation would be launched, but of course could not opine whether the result would be the same.
As a result, the Entertainment, Arts and Sports Law (EASL) Section of the New York State Bar Association (NYSBA) prepared draft legislation and a supporting memorandum (NYSBA - EASL Atty Exemption memo -SHR Revision - 111915.pdf), which would amend the relevant New York Statutes to exempt attorneys from the requirement to register as a talent agent. The proposed legislation was unanimously approved by the Executive Committee of the NYSBA, and plans are to see that the legislation is introduced this session. The legislation was endorsed by the Entertainment Law Committee of the City Bar, and tracked similar legislation proposed by the Beverly Hills Bar Association to the California Legislature.