Duo likely to finalize settlement this week
ICM and attorneys for deposed co-president Ed Limato were working Monday toward a settlement agreement that will likely be finalized this week. That would head off an Aug. 1 arbitration date and pave the way for Limato to land at another agency with his star acting clients.
While the community was still discussing the surprisingly curt manner in which Limato was stripped of his president’s title Friday, which began exit talks, the focus on Monday was in getting past the non-compete agreement in his contract and settling on commissions that ICM hopes to share for deals he’ll make for Denzel Washington, Mel Gibson, Richard Gere, Liam Neeson, Steve Martin and Billy Crystal. Limato’s present contract runs through 2010.
Limato has a non-compete clause in his contract, but such agreements are largely unenforceable in the state of California, said attorney David Jacobs, who specializes in restrictive covenants for the Century City firm Epstein, Becker & Green. Unless an executive has sold his business and then attempts to start a competitor, the state sides with employees shackled by non-compete clauses, Jacobs said.
“I haven’t seen Ed Limato’s contract, but if a person is an employee and is forced to sign a non-compete agreement, that in itself is a violation of state law,” Jacobs said. “Under Business Professions Code 16600, you cannot ask an employee to agree in advance not to compete. Companies get in trouble by having non-compete agreements, when they use the same contract around the country and forget they are asking California residents to sign something that is illegal in California state statutory law.”
For Limato and the agency, the issue comes down to money. To get out of existing contracts, agents sometimes share commissions. In other cases, agencies have “beached” exiting employees, making them sit on the sidelines while they continued to get paid.
That won’t happen to Limato, who resisted a clause in his current ICM contract that would have made him a consultant this month. The only question: How many commissions may ICM split?
Jacobs said that in most industries, the law once again favors the employee.
“ICM might be entitled to get money from deals that are already in the pipeline,” he said. “I’ve had cases where companies tried to get money from totally new deals that weren’t in the pipeline. Once again, if he’s not a partner or hasn’t sold a business, it comes down to penalizing somebody for competing, and the law won’t permit that. I haven’t seen the contract, but clients are going to go where the clients want to go — that is their right. And if they want to follow Ed, they will follow Ed.”
Agency watchers cited the upcoming labor strike as an issue in both Limato’s settlement and where he’ll land next. A prolonged work stoppage would eat up star slots. It might also dampen the enthusiasm for Limato’s pricey contract, as agencies brace for a possible stoppage of commissions.
Still, speculation had WMA and CAA as the most likely spots for him to land. WMA was cited because of the particular strategic benefit to that percentery of securing a dealmaker and his superstar clients, and CAA because of past willingness to pay big bucks for agents and their star clients. But after spending freely to lure talent agents, build a sports department and erect a new Century City headquarters, CAA has gone into cost-cutting mode.
Bringing in Limato would be expensive, but it is rare that an agent of his stature and experience becomes a free agent. And if he books his clients into films, he can generate millions in dollars of commissions faster than most agents.
Washington makes $20 million a film, Gere and Martin have made eight-figure salaries, and Neeson and Crystal are close, if not there. Gibson hasn’t taken an actor-for-hire job since “Signs” in 2003 and he self-financed his last two directing projects, “The Passion of the Christ” and “Apocalypto.” Crystal hasn’t made a live-action film since 2002’s “Analyze That.”
Gibson hasn’t committed to another project. Washington is engaged in directing and starring in “The Great Debaters” for the Weinstein Co. and MGM. It seems doubtful that Washington can squeeze in another starring role before next summer, when studios are bracing for a possible labor strike.
Gere, who has been starring with Diane Lane in the George C. Wolfe-directed “Nights in Rodanthe,” is booked to star in and produce “Hachiko,” a film that shoots in September, with Inferno Entertainment financing. Martin will star in a “Pink Panther” sequel in September. Several of the actors could book another job for a film that would be finished by June.
Others said that agencies won’t look at the short term but instead make a deal because they want an agent who can get anyone in town on the phone and bring in valuable clients who’ll be viable earners for years to come.