Dealmaking in the creative community is in a state of limbo as the traditionally close alliance among writers, agents, managers and lawyers has ruptured amid a highly volatile climate.

Since the Writers Guild of America filed suit against Hollywood’s four largest agencies — WME, CAA, UTA and ICM Partners — on April 17 in Los Angeles Superior Court, the steady stream of termination letters flowing from writers to their agents has cast a dark cloud over the industry. Writers are essential to job creation in the TV and film businesses. Nothing gets done in scripted entertainment without a script.
Meanwhile, lawyers and managers are scrambling to sort out what they can — and can’t — do on behalf of their writer clients in the absence of agents. The ATA maintains that the guild is overreaching its authority as the collective bargaining agent for writers.

The WGA, meanwhile, has sought to expressly empower talent managers and lawyers to step into the job-hunting breach. But that opens up the hornet’s nest of job “procurement,” which is legally codified in Los Angeles and New York as something only state-licensed agents can do. The ATA struck back on April 18 at the WGA’s “delegation of authority” to managers and lawyers to seek jobs for its members by promising to take legal action if need be. The ATA even asked its member agencies to help “track” suspected illegal dealmaking — a veiled threat that only increased the nervousness of many managers and lawyers.

“People are depressed,” says a veteran showrunner. “The lawsuit seems like it’s going to preclude any more negotiations now.” In a memo, WGA estimated that 92% of its supporting members have fired their agents.

Prospects for a quick settlement in the standoff between the WGA and Hollywood’s largest talent agencies have grown dim as both sides escalate their legal threats and continue to snipe at each other.

The WGA maintains that packaging fees are fraught with conflict-of-interest concerns because they are paid to agencies by the production entity, rather than as the standard 10% commission of a client’s salary. The guild blames agents’ focus on packaging as a reason for what
it describes as stagnant wages for writers in recent years, particularly those in lower-level job categories.

The ATA has balked at the WGA’s effort to ban agents who take packaging fees from working with guild members — one of the recent reforms of the WGA’s rules governing business relations between agents and writers. The sides tried to negotiate a new agency franchise agreement in fits and starts during the past two months, but it became clear that they were too far apart on the core issues. On April 12, talks broke down and the WGA issued a directive to its nearly 15,000 members to fire agents who refused to sign on to its newly implemented Agency Code of Conduct.

The guild’s lawsuit asserts that packaging fees are a violation of California’s labor code and the rights of WGA members to have “conflict-free and loyal” representation from talent agents, who are licensed by the state. Agents have fiduciary responsibility to clients, which increases their legal liability if conflicts should arise. The guild is seeking damages and a legal declaration in support of its position. The lawsuit includes eight writers as plaintiffs: Patti Carr, Ashley Gable, Barbara Hall, Deric A. Hughes, Chip Johannessen, Deirdre Mangan, David Simon and Meredith Stiehm.

“Agencies receiving a packaging fee do not negotiate on their clients’ behalf with the same vigor they would if they were being paid a portion of their clients’ compensation, and their financial interest in the program creates an incentive for them to hold down or reduce the amount paid to their clients,” the WGA’s complaint states. “The Guild’s members, including the Individual Plaintiffs, have seen their writing wages stagnate or decrease over the last decade, particularly on shows packaged by their Agencies, despite the substantial expansion of the television market in recent years.”

As the fight moved into the legal realm, many WGA members were vocal in expressing their solidarity with the guild. But as relations between the ATA and WGA deteriorated, there were increasing reports of unease among members with hot projects and big deals at stake. One TV development executive cited an apt metaphor for the situation in which the endgame for either side is anything but clear.
“It’s like they started shooting the movie before the script was finished,” says the executive.