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Friday, March 29, 2024 | Back issues
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Writers Guild Sues Big 4 Talent Agencies in Fee Dispute

The Writers Guild of America sued four major talent agencies Wednesday, claiming the agencies have benefited from packaging fees that violate state and federal law at the expense of the union’s 20,000 scribes.

LOS ANGELES (CN) – The Writers Guild of America sued four major talent agencies Wednesday, claiming the agencies have benefited from packaging fees that violate state and federal law at the expense of the union’s 20,000 scribes.

Defendants include WME Entertainment, Creative Artists Agency, United Talent Agents and International Creative Management. The union filed its lawsuit in Los Angeles County Superior Court.

Outside of handshake agreements over three-martini lunches, talent agents secure jobs for their clients and receive a cut of the earnings from the deals they make between their clients and studios or production companies.

An agent’s cut is capped by law at 10%, but agencies also make money through package deals in which they provide a roster of talent to a studio for a TV show or film that is ready to go. Those packaging fees fall outside the client-agent relationship.

But over the last few decades, the agencies have abandoned the traditional model of representing talent in favor of packaging fees. Agencies have consolidated control of key talent throughout the industry, and the union says they leverage control to strongarm agreements with TV and film production companies.

“The packaging fees paid by production companies to the agencies are unrelated to their own clients’ compensation and generate hundreds of millions of dollars in revenue for the agencies each year,” the union says in its 25-page lawsuit.

“These agents owe a fiduciary duty to their clients and must provide their clients with conflict-free representation,” the union adds.

The writers say the packaging fees violate the Taft-Hartley Act, which says agents cannot receive money from their client’s employer.

Claims made in the lawsuit spill over from stalled negotiations between the writers and the Association of Talent Agents. Earlier this month, the guild told its members to fire their agents in a sign of solidarity over the guild’s efforts to reform the industry standard of packaging fees. Guild members can only be represented by agencies that have signed a “code of conduct” – the foundation of an agreement the writers want to take the place of the 40-year-old deal it had with agencies.

Along with cutting writers out of the deals, agents don’t act in their client’s best interest because they will instead seek out a deal that shortchanges a writer, the union says.  

“Because the agencies’ packaging fee is generally tied to a show’s revenues and profits, the agencies have an incentive to reducethe amount paid to writers and other talent for their work on a show,” the union says in its complaint. “Further, the agencies seek to prevent the writers they represent from working with talent represented by other agencies in order to avoid having to split the packaging fee with other agencies – even where the project would benefit by drawing from a larger talent pool.”

In addition to the east and west divisions of the union, other plaintiffs include actress Patricia Carr, screenwriter Ashley Gable, TV writers Barbara Hall, Deirdre Mangan and George Johannessen, author Deric Hughes, producer and “Cold Case” creator Meredith Stiehm, and writer David Simon, who created the HBO hits “The Wire” and “The Deuce.”

Tony Segall from Rothner Segall & Greenstone represents the plaintiffs and says packaging deals have hurt writers of TV shows as the four agencies named in the lawsuit receive over 80% of packaging fees paid by Hollywood studios and networks.

“The plaintiffs will seek a judicial declaration that packaging fees are unlawful and an injunction prohibiting talent agencies from entering into future packaging deals. The suit will also seek damages and repayment of illegal profits on behalf of writers who have been harmed by these unlawful practices in the past,” Segall said in a statement.

Stiehm said CAA packaged “Cold Case” and received 94 cents for every dollar she earned while working on the series.

“That is indefensible,” said Stiehm. “An agency should make 10% of what their client makes — not 20, not 50, not like in my case, 94%. Ten percent is enough. Claims made in the complaint could be viewed as spillover from stalled negotiations between the WGA and the Association of Talent Agents.”

In a statement, ATA Executive Director Karen Stuart called the guild's lawsuit "ironic" since packaged deals have been part of the industry for more than 43 years. 

"Even more ironic is the fact that the statute the WGA is suing under prevents abuses of power and authority by labor union leaders, even as the Guild has intimidated its own members and repeatedly misled them about their lack of good faith in the negotiating room," Stuart said.

"While the legal process runs its course, we strongly believe that in the interim it remains in the best interests of writers to be represented by licensed talent agencies."

The stalled negotiations and the guild’s lawsuit come at a busy time for Hollywood, specifically the TV industry. Over the next several weeks, showrunners take submissions from prospective writers to fill out their writing staffs on shows hoping to be picked up by networks for the fall and spring schedules.

Categories / Entertainment, Law

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