IT DEPENDS: The WGA-ATA Situation—Understanding the Code of Conduct

Entertainment attorney Christopher Schiller sheds light on the current dispute between the Writers Guild of America and the Association of Talent Agents to help writers understand the Code of Conduct and its impact on writing careers.

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If you haven’t been writing under a rock for the last little while you are probably aware of the major dispute between the Writers Guild of America (WGA) and the Association of Talent Agents (ATA) with regard to the current common agency practice of packaging and its impact on the writers those agents represent. But there is a big difference between being aware of the issue and understanding all the intricacies of what it’s about and how it might impact writers and others in the wake of the dispute.

Hoping to bridge that gap a little, this article will attempt to set the stage, introduce the players and their roles and hopefully dissolve some of the confusion and misdirections interfering with being able to understand what’s going on. It will not answer every question and will likely ruffle a few feathers along the way, but, hopefully it will help more than hinder those trying to understand the issues.

Luckily, a lot of the definitional story has already been told in previous columns. We’ve discussed just what an agent is and how one differs from managers and lawyers. We’ve also extensively discussed, in a multipart series of articles, what Guilds and Unions are. We’ve even discussed just what packaging is. So peruse those articles for a refresher if needed. We’ll assume at least a familiarity with the complexities of these terms as we continue.

The Contract Conundrum or What’s In a Name?

To summarize the situation here’s the nutshell (leaving out tons of important, critical stuff):

Writers hire licensed agents to find them employment and negotiate the contracts for that employment. Agents are often gathered together in agencies. These agencies in turn have more power to negotiate since, they represent the interests of more than one agent’s client base at the producers’ table. Agencies utilize this negotiational power by packaging their agents’ clients as enticements for producers in a one-stop-shop arrangement. Where this activity comes into question is when the agency compensation for packaging becomes more lucrative to the agency than the obligation of serving the interests of the writers who’ve hired the agents, to the writers’ detriment. The WGA serves the interests of all its writer members and so, in a bid to protect its members has instituted a “Code of Conduct” and require all agents representing guild writers to abide by it, requiring writers to fire agents who do not comply.

Succinct, but like I said, this leaves out a lot of crucial stuff. As I write this, the vast majority of agents have refused to sign. Therefore, per WGA mandate, thousands of writers have fired their agents. Those Guild member writers that have not are being considered for punitive measures by the Guild, including possible loss of membership.

There has also been a lot of rhetoric bandied back and forth by both sides with varying levels of “truthiness” as well as ill-informed reporting of the story by well-intentioned but errant sources. It leaves a cloud of uncertainty as to just what is and isn’t so. To try to clear that air a bit, let’s reaffirm the basics of who’s who and what specific part each party is supposed to be playing.

The agents in question are licensed by a state (likely either California or New York) to find employment and negotiate the terms of that employment for the writers that hire them to the exclusion of any other interests than that writer’s interests. This is a stipulation of the licensing schema. The exclusivity of the ability of “procuring employment” for an artist that comes with being a licensed entertainment agent is predicated on the trust that the artist’s interests are fully protected when the agent steps in to negotiate the deal.

Spurious statements have been made that cite exclusivity language in the state statutes that establish entertainment agents’ powers. These statement claim that agents are the only ones who can negotiate employment deals. That is just not the case. An artist has always had the right to procure employment and negotiate a deal for themselves. It is assumed that they would keep their own best interests in mind while doing so. An attorney, by nature of the fiduciary relationship of the attorney-client arrangement is mandated to also keep the client’s interests at the forefront to the exclusion of all others in every negotiation lawyers handle for the clients, employment related or all other lawyer representation arenas. (That’s what “attorney at law” literally means.)

So for an agent to properly represent a client in an employment procurement or negotiation they must also maintain the client’s interest as the most important one at all times.

While serving the artist’s interests, the agent’s main power has lain in their connections to the industry’s employment grapevine, their personal connections to the power brokers in that capacity and their ability to match the writer artist with the right opportunity in a timely fashion. Additionally they hopefully wield the ability to negotiate the best deal possible for the interests of the artist. The agent’s sole recompense for all this labor is stipulated by the license to only be a commission of the resultant compensation portion of the successful negotiation.

In simplest terms (which of course are too simple to be highly accurate) an agency is just a collection of agents. The organizational form is predicated on the concept that pooling resources amplifies bargaining power. And this concept works quite well. A single agent knows (and works towards the sole interests of) the abilities of only that agent’s talent pool, those that agent represents. When you pool multiple agents’ resources under one roof, the potential of finding a right fit amongst the represented talent grows. This is attractive to the producers looking to fill out their artist needs.

The agency that can better serve the diverse needs of many producers looking for talent will be in a stronger position to bargain for the best deals for those artists represented by the agents under that umbrella. If a producer desperately wants one of the agency’s represented artists and needs to fill other roles, the agency can argue that filling those roles (packaging) from within the agency stable would make the bargaining at the table easier for the desired artists. And so, power brokering is born. Initially, this leads to better deals all around for the agency’s artists.

The bigger the agency, the more bargaining power it can wield. But at a certain point the organization is too complex to be run just by a partnership of agents. A more efficient business structure is usually needed. A typical large agency is often run by non-agent specialists to handle the logistics of running a large organization. If an agency is not careful, the further away the corporate structure gets from the specialized interests of a gathering of agents, the more likely that the state mandated priorities of artists’ interests first may slip behind corporate or (if public) shareholder interests. Therein lies the path to where the problem sits today.

The Writers Guild of America represents approximately 13,000 writers in its two branches. As a guild its main objective is to advocate for and protect the collective rights of writers as a whole within the industry. It does this by collectively bargaining for writers with the usual employers of those writers, producers, production companies and studios. In doing so it establishes and occasionally modifies a Minimum Basic Agreement (MBA) that signatory producers agree to abide by when engaging Guild writers in their projects.

Previous WGA West President Howard A. Rodman on How Hollywood Really Works

Since the legal relationship of the WGA is solely with its members and not directly with the producers, that’s where its enforcement power lies, with its hold over the writers. In the usual case it enforces the MBA rules by restricting its members from only working with production entities that have signed on to agreeing to the MBA. If a producer falls short of its promises or refuses to sign the MBA, the WGA prohibits their members from working with that producer, or else find that they are sanctioned by the Guild, potentially having their membership revoked. It may seem harsh to punish the writer for the offenses of the producer/employer, but, in the whole it protects the interests of all writers by the guild solidarity it instills.

The current dispute again is involving a party the Guild doesn’t have a direct connection to or ability to sanction directly. But the Guild looks out for its writer members and if bad practices in agent led packaging deals affects them, the Guild finds it a duty to look into it and step in as best it can.

Packaging can happen with any form of production that uses multiple artists, but, because of the multitude of writers used during the course of a multi-year series, television deals are the most onerous if a packaging deal harms writers. The Guild felt it had to step in and do something.

The WGA bargained with the agencies, in the form of the ATA alliance, to no avail. Since the agencies didn’t sign, the Guild cannot affect them directly. But, similar to how it punishes non-signatory producers by not allowing Guild writers to work for them, the WGA set up a response to sanction any Guild member who continues to employ a non-compliant agent.

Unfortunately, a little legalese is needed to understand the intricacies of the responsibilities and duties at issue. Definitions are always a good place to start.

The reason 22 states currently require a license to become a talent agent is to make certain the agent is beholden to the required specialized personal relationship. The talent is going to be represented as a specific individual whose reputation is tied to the performance at issue. This is an intimate, fiduciary relationship, not to be taken up lightly because of the personal consequences of reputation involved. Because of this burden of duty, the agent is granted in exchange the limited exclusivity to represent the client’s interests in securing jobs. (note: This exclusivity does not extend to already established relationships or already written scripts (e.g. specs) nor does it preclude the writer finding jobs themselves or negotiating on their own or having a legal representative negotiate for them.)

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The usually substantial requirements for agency licensing varies per state. Considering the two most active agency loci for the industry, New York and California, financially they can include a periodic (annual or biannual typically) license fees ($300-$700) and a substantial security bond ($10,000-$50,000) per agent. Again, these vary by state and can be changed over time. The agency license statutes can even stipulate that an agent must not serve any other interests above the artist’s, including those needs of corporate overseers or shareholders. (e.g. California Code of Regulations, Title 8 §1700.40 (b).)

It is quite clear that a properly performing agent is charged with observing great care when dealing with the talent’s personal interests.

The Writers Guild of America is a collective bargaining entity which is empowered by its members through membership obligations and agreements, and through federal and state labor laws, to represent their members in established employment bargaining situations aggregating bargaining power of all its members against employers. In this type of relationship the Guild does not look to the interests of the individual member, but, to the best result for the whole of its constituency. It is only when an action by employers rises to a level that affects or could affect the population as a whole that they are moved to act for writers’ interests. Individual milage may vary, so to speak.

So we have established the claims that entities that are supposed to be looking out for individuals are aggregating them into “packages” and supposedly looking to profit from that aggregation to the detriment (or at least indifference) of the interests of the individuals they are supposed to have a high duty to honor. And then coming to the rescue of the individuals calling foul is an organization of aggregation that can only fight for the collective, and only enforce that fight by telling the individuals who they can and cannot hang out with. That’s confusing. But that’s not all.

– Packaging itself is not a problem. Bundling players into a single negotiational ball is a common practice, done by many different parties to make the final results attractive and serve the needs and interests of all (or at least nearly all) involved. It is the compensation and power that agents are seeking and receiving for their efforts to provide packaging to the exclusion or detriment of writers interests that the writers say oversteps the line of fiduciary responsibility that is owed them by the terms of the licensed agency relationship.

– In order to package, you need more than one. Once you start considering the needs and interests of more than one individual there is a potential of conflict of interests between those represented. This is compounded if the packager also has an independent stake in the outcome. It is possible to negotiate multiple party interests without conflict, but, it is a tightrope walk and the potential of conflict and how to resolve it properly must be addressed.

– Giving up agent commissions in favor of packaging fees is not a proper exchange. It seems that certain agencies have been claiming that by “giving up” their agent percentage of the writer’s salary when a packaging deal is done is somehow relinquishing the responsibility to look out for the writer’s interests. This neglects to recognize that that compensation is already waivable if the writer works for “scale” minimums. By WGA rules any percentage commission that would reduce the income below that floor minimum is forbidden. This is why agent negotiations start with at least “scale + 10%” as their floor. They want to get paid for their efforts. Mere waiver of fees does not remove the obligations from a licensed agent relationship.

– Agents working in an agency have to hold their artists interests above all other, including agency staff and management. Agents within an Agency must maintain the interest of the clients before the interests of the Agent’s employer, colleagues or staff. Therefore, if an Agency in this arrangement is packaging, the Agents are forbidden to participate financially or otherwise in the packaging to the detriment of the artist. Clearly, this is muddled or ignored or at least poorly understood by the agencies attempting to package all their clients.

– An agency can be the agent of record. By the terms of some licensing statutes (notably, California is one) an “Agent” can be an agency as the entity. Then all employees represent through the agency (individual agents can’t take clients with them if this is so.) If the agency is the agent, then it gets around some problems of conflict (see above,) but, creates more confusion as to who is actually standing in the shoes of the artists in question and where conflicts of interest truly lie.

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As of Apr. 6th, the WGA and ATA negotiations ended with no agreement. Since then very few agents or agencies have signed the code of conduct. The majority of agencies and agents have not. Therefore, en masse firing of agents in the thousands has occurred. The Guild intends to sanction those few writers who don’t comply with firing their agents. Most writers have been standing in solidarity with the Guild and have fired their agents, even though many of those relationships were quite amicable on both sides and had been uncontentious, some having lasted happily for decades.

Since then and during the current staffing up period of many television shows, ad hoc, agent-less hiring systems have been cropping up. Some showrunners are volunteering to collect and vet writer’s samples/resumes/etc. to offer to those shows staffing up. WGA has established a database for member writers to post the equivalent of their resumes (not without some controversy) and the hash tags #WGAStaffingBoost and #WGASolidarityChallenge have been used in social media to both show support and provide avenues of finding employment sans-agents.

As to where things could go from here, it depends. (You knew I had to use my catch phrase somewhere in here, right?)

– First adopters boon. Those agents and agencies that have signed the WGA’s code of conduct might benefit greatly from all the newly unrepresented writers learning just how much work it is to find your own jobs and negotiate your own contracts.

– Defector agents, same client base. Those agents in agencies who lost clients because of the agency’s stance could leave their big agencies, form boutique agencies with other like-minded defectors, sign the WGA code of conduct and seek to get their old clients back as well as new ones.

– WGA blinks. In digging in their heals, it is pivotal that the WGA get and maintain a critical mass of writers supporting their efforts. If those writers start to waiver and re-sign with non-Code agents then the WGA might have trouble enforcing their rule. If there are too many writers to reprimand who don’t fire their agents they may have to change direction. Guild signatories can only hire guild writers. If too many good, proven writers become non-guild the benefit of being a signatory wanes.

– Agencies blink. Agencies could decide that clients are better than empty packages they can no longer deliver, sign the code of conduct and attempt to woo their clients back. Of course this would mean that they would have to stop their form of packaging for profit. If agents hold their ground, it won’t be too long before they will have difficulty fulfilling the promised packaged talent – no longer representing them. This breaks the packaging deals for failure to live up to the promise, freeing the productions to seek whatever talent they chose.

– Agencies become management companies. Management companies and managers are not prohibited from producing and participating in packaging deals while representing their clients. Managers are not restricted by the licensing issues that agents are, but, also cannot enjoy the advantages of that role either. So as long as the agencies are willing to give up the employment procurement and other restricted aspects of representing clients, agencies could transition to a managing talent structure and pursue their packaging interests to their hearts content.

– Producer choices. Signatory producers may have to decide between keeping with WGA-only writers or going after the best writer, guild or not, and letting the chips fall where they may. Both the Guild and the Agencies are weakened by this battle at the moment. Some producers may see an advantage and exploit this.

– States could investigate. The state attorneys general curiosity could be piqued by the ruckus and they could decide to investigate the performance of the licensed agents actions. If they find some of those actions to be out of keeping with the mandates and intentions of the licensing requirements, legal recourses could be pursued regardless of whatever resolution is found within the industry.

Whatever happens, it’ll likely mark a change in how things are done. What that change is and how it will impact the future of the industry remains to be seen. As someone with an iron or two in this fire, I will be watching the resultant flames quite closely.

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