Screenwriters Think Agents Are Illegally Ripping Them Off, So Now They're Suing

The Writers Guild and the group representing the four big talent agencies have been in a feud that slowly simmered for a long time, but now it's hitting full boil. The WGA, which represents screenwriters, announced Wednesday that they've filed a lawsuit. The goal: for a court to declare talent agency "packaging fees" illegal, now and forever, and to get repaid for those alleged illegal profits.

What's a packaging fee? The short version is that it's money the agencies charge studios for "packaging" talent together.

A simple example could be saying that they represent X writer, Y actor, and Z director -- want them all? Give us 5% of the project's budget. (It's a lot more complicated than this, because lawyers, money, etc., but you get the idea.)

File: The headquarters of the Creative Artists Agency in Century City. (Minnaert/Creative Commons)

The named plaintiffs include several high-profile TV writers, including Meredith Stiehm, who created CBS's Cold Case. According to the release, she didn't learn that her show was packaged by her agency, Creative Artists Agency (CAA), until six years after the deal was made.

"It turned out that on the show I created, and worked on exclusively for years, CAA ended up making 94 cents for every dollar that I earned," Stiehm said in the release. "That is indefensible. An agency should make 10% of what their client makes -- not 20, not 50, not like in my case, 94%. 10% is enough."

According to the Writers Guild, the big four agencies receive more than 80% of the packaging fees paid by Hollywood studies and networks.

The WGA, and many of its members, argue that agencies are now making substantially more money via the packaging fees on the overall project, rather than on the traditional 10% agent cut -- and that making so much money on packaging fees de-incentivizes agents from negotiating more money for writers.

"Packaging fees are not a new practice in Hollywood, but they have always been controversial," WGA West general counsel Tony Segall said in a press release. "It is time to put an end to the egregious conflict of interest that they pose."

You can read more of the agencies' responses to the Guild's claims here. You can also watch the Writers Guild's argument for what they see as agency conflicts of interest here:

In addition to both the West and East Coast outlets of the Writers Guild, the inclusion of high-profile guild members as clients may help to establish the lawsuit's legal standing.

"All of the writer plaintiffs have been hurt financially by packaging deals," Segall said. "They are creators and writers of television shows that have shaped a generation, yet their agents have profited at the expense of their own clients."

They're looking for a court to declare that packaging fees are illegal, along with an injunction keeping talent agencies from entering into future packaging deals, according to the release.

"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.

This follows the Writers Guild requiring its members to leave their agents if they haven't agreed to a new Code of Conduct. The new code bars agencies from behaviors that the Guild sees as conflicts of interest -- which they argue de-incentivizes agents from trying to get writers more money in their deals. Thousands of writers are leaving their agencies, according to the Guild.

The suit includes two claims. The first is that packaging fees violate California fiduciary duty law. They argue that talent agents are required by law to represent writers without conflicts of interest, and that packaging fees violate that.

The other claim is that packaging fees violate the state's Unfair Competition Law. As part of that, they argue that packing fees violate part of the federal Labor-Management Relations Act, known as the "anti-kickback" provision -- it prevents representatives of employees from receiving anything of value from that employee's employer.

The WGA's overall deal with studios is up for negotiation soon as well -- and observers note that the dispute with agencies may make a strike by the Writers Guild during those negotiations more likely. The dispute between writers and agents could also expand to include actors and directors re-examining their own relationships with agencies.

Editor's note: Mike Roe is not a paid screenwriter, but has written scripts and participates in the screenwriting community in his free time.