Regulating the Dealmakers

Photo Courtesy of the Associated Press; Former chess World Champion Garry Kasparov makes a move against Anatoly Karpov during an exhibition rematch in Valencia, Spain, Thursday, Sept. 24, 2009. (AP Photo/Alberto Saiz)

This author has written previously on the differences between agents and attorneys.  The first article was entitled “Ethical and Practical Implications and differences between Sports Agents and Attorneys,” and the second, “Lawyers, Agents, and the Blurred Lines Regulating Talent Representation.” A third article was written about the close relationships between agencies, streaming services, studios, and talent entitled “Circular Integration in the Entertainment Industry: Good for Business or ‘Over-The-Top’ Antitrust Violations?”      

The above articles demonstrate the main issues at heart in the debate between the Writers Guild of America (WGA) and the major talent agencies.  However, the existing and brewing debate goes beyond the WGA.  Mainly, that conflicts of interest may arise where talent is packaged in deals with studios for production and distribution thus driving down pay rates and opportunities.  What complicates the agent-talent relationship further is that agencies have now become or are trying to become the studios for production and distribution made available through the advent of streaming and social media platforms and partnerships.  For better or worse, the talent dealmakers have now also become the content creators, producers, and distributors. 

A conflict of interest is what happens when talent is somehow lost to opportunity, success, or pay by way of a relationship that the agent or representative has with someone or something else that competes with the talent.  This conflict could be with another actor client, studio, etc.  Imagine, for example, two actors competing for the same role represented by the same agent or agency.  Conflicts are something attorneys must avoid or risk losing the client, getting fined, and/or disbarred. 

The main WGA complaint is about leverage, fairness, and a bigger slice of the pie.  Agents and agencies representing talent in the entertainment, media, and sports industries do have an argument against conflicts in that it is the studios, teams, and networks that choose the talent for a role, position, or post, not the agents.  However, in the legal field, judges and arbitrators make decisions as well, not the attorneys for their clients.  On the other hand, it may also be that the agency business is more attuned to the bidding process in a negotiation where the attorney-client relationship standards are not necessary and may be impractical.   

There are three points to consider in this debate on whether agents in the entertainment, media, and sports space should be treated to the same or similar conflicts of interest rules and regulations as attorneys.

1. Practicality

The rules against in-person contact and the multi-jurisdictional practice of law make it difficult for attorneys to work as agents, but the same rules including the conflicts of interest do not apply to agents.  However, agents have specific knowledge in representing talent and the debate becomes what is practical.  The debate is whether practicality should overcome whether the ethical rules applicable to attorneys or a similar standard should apply to agents.

2. Antitrust

Will the more recent practices of the agencies in talent sales, packaging, production, and distribution bring the attention of the United States Justice Department?  If the unions do not push for change, the government just might. Time will tell.

3. Unions

Will the Screen Actors Guild‐American Federation of Television and Radio Artists (SAG-AFTRA), the Directors Guild of America (DGA), and other unions join the WGA in the debate and the power struggle with the agencies?  Each union does have a specific constituency with differing needs and interests.  One thing is certain, the agent Code of Conduct suggested by the WGA if implemented would be a turning point in Hollywood dealmaking that could produce change with the Talent Agencies Act, the Miller-Ayala Act, and both the agency and legal industries (at the least) in California.  For example, if agents are immediately conflicted out of representing certain talent, would attorneys be the first industry to fill the gap based on the conflict of interest rules of professional conduct already in place for attorneys?

Between the practicality, antitrust, and unions involved in the arguments for and against a proposed agent Code of Conduct, the debate will hopefully bring some clarity to roles, opportunities, obligations, and more money in your pocketbook.         

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