In a suit filed Wednesday in California Superior Court, the Writers Guild of America alleged that the major agencies’ use of certain business practices puts their own financial interests ahead of their clients’.
The defendants are the four biggest agencies: Endeavor LLC’s William Morris Endeavor, Creative Artists Agency Inc., United Talent Agency LLC and ICM Partners.
At issue are financial deals that agencies often make with movie and television studios known as packages. When an agency has several clients involved in a project, it often negotiates for a hefty packaging fee from the production company in lieu of the typical 10% commission it would collect from the clients’ compensation.
The lawsuit alleges that such fees can reduce the amount of money available to pay for writers or other production costs, hurting the quality of the finished show or movie.
“Packaging fees create numerous conflicts of interest between writers and the agencies serving as their agents,” the union’s suit said. “Unlike a commission-based system, the economic interests of the agents at the agencies that represent writers and other creative talent are no longer aligned with those of their writer clients.”
The suit escalates tensions following a move by the union last week to fire agents en masse over the practice of packaging.
Besides the Writers Guild, a handful of prominent television writers are also named as individual plaintiffs, including David Simon, who created “The Wire” and has emerged as an outspoken critic of packaging fees, and Meredith Stiehm, whose credits include “Homeland” and “NYPD Blue.”
A spokeswoman for a trade group representing the talent agencies, the Association of Talent Agencies, didn’t respond to a request for comment. Agencies have argued that packaging is beneficial to their clients not only because it frees them from paying a commission but also because it can create more work for writers.
The guild and the agencies had been negotiating a new employment contract following expiration of a deal that dated back to 1975. That agreement permitted packaging deals under what union lawyers described as limited circumstances. “Abuses of packaging have become increasingly appalling,” said Casey Pitts, a lawyer representing the guild.
After weeks of talks failed to yield an agreement, the union instructed members late Friday to fire their agents if they wouldn’t sign a “code of conduct” barring the collection of packaging fees. The major agencies haven’t agreed to such a code.
Speaking to reporters at the WGA’s offices, union general counsel Tony Segall said a majority of members who are currently represented by agents had electronically signed letters firing their agents. Additionally, he said: “Some writers have gone ahead and had those difficult conversations directly with their agents.”
The union claims around 15,000 members, but Mr. Segall estimated the number with active agency representation is closer to 8,500.
The effects of the mass firing may not be felt within the industry for several months. But eventually it could create chaos as new productions attempt to staff up without the participation of agents.
The lawsuit requests a judicial declaration that packaging fees are unfair and represent a breach of agents’ fiduciary duties to their clients; an injunction barring agents from entering new agreements to collect them; and payments to writers by agencies to compensate for losses allegedly incurred by past packaging fees.