Time has come to transform the TAA

If there were a Hippocratic Oath for talent representatives, it might be: "protect the artist at all costs and make every reasonable effort to maximize the artist's career opportunities and financial security."

A principal/agent relationship, being the paradigmatic fiduciary relationship, dictates that the primary role and function of agents, managers and attorneys is to fulfill this "oath." Where a representative's interests diverge from the artist's, absent full disclosure and consent by the artist, the artist's interests must take precedence.

Examining the Writers Guild of America's current dispute with the major talent agencies through this lens reveals that changes in businesses of talent agencies, as they have expanded from a purely representational capacity into production and packaging of projects in which their artist clients may be placed, have complicated their relationship with artists, potentially placing them in a position where their fiduciary responsibilities cannot be met.

Nobody in the business of Hollywood is served by a protracted war between the agents and their (former) writer-clients. Instead, the WGA's lawsuit should motivate all of us -- talent, agents, managers, lawyers, the guilds and the legislature -- to find common ground in order to fashion an appropriate solution to the problem of talent representation in the 21st century, rather than have one imposed upon us by the courts.

None of the serious commentary on the Talent Agencies Act criticizes the act's fundamental mission: protecting talent. Neither repealing the TAA nor eliminating the requirement for registration are workable solutions because they do not serve to protect artists. Under the current regime, though, artists are not adequately protected and other representatives -- i.e., personal managers and talent attorneys -- are at great risk. This is primarily due to the Labor Commission's expansive interpretation of the TAA, which has been bolstered in many (though not all) respects by court rulings.

Labor Code Section 1700.4(a) defines a "'Talent agency" as "a person or corporation who engages in the occupation of procuring, offering, promising, or attempting to procure employment or engagements for an artist or artists," excluding rendering of such services in the context of recording contracts.

Under the Labor Commission's unduly expansive interpretation, the term "procure" does not simply mean soliciting or initiating discussions regarding potential engagements, but ends up sweeping in "any active participation in a communication with a potential purchaser of the artist's services aimed at obtaining employment for the artist," including negotiating the terms of the engagement. Danielewski v. Agon Investment Company (Cal. Labor Com., October 28, 2005) TAC No. 41-03, pages 15-16; see also Doughty v. Hess (Cal. Labor Com., April 4, 2017) TAC No. 39547.

The TAA's regulatory framework does not concern itself with the type of representative who performs service for the talent, but rather the conduct of the representative. Marathon Entm't, Inc. v. Blasi, 42 Cal. 4th 974, 986 (2008). Thus, any person who, under the expansive interpretation of "procuring employment," participates in some fashion in the employment of the artist must either be licensed or risk not only disgorging any monies it may have been paid but also the invalidation of an otherwise perfectly legitimate contract.

Perhaps at one time this framework may have been sensible, but it is no longer. Today, effective talent representation is complex, requiring the multi-disciplinary and interlocking skill set of talent agents, personal managers, attorneys and business managers who collaboratively work together for the benefit of the artist. Because these representatives are working toward the same objective, the tasks they perform often overlap--sometimes significantly. While it may be the agent who is primarily tasked with "procuring" work, personal managers and attorneys also undertake activities that the Labor Commission would define as procurement under its exceedingly broad interpretation of the term.

Because the TAA is designed to regulate conduct, not job role, it views every artist representative as a talent agency. In so doing, it over-regulates certain activities and is ultimately ineffective in carrying out its missions to protect talent. It also perpetuates uncertainty because the regulatory framework is at odds with the way business is actually conducted. Moreover, the involvement of lawyers and personal managers, without challenge under the TAA, could help ameliorate the risks created by the divided loyalty of talent agents whose now multifaceted agencies are also involved in production and packaging productions. Under such a regime, the interests of the artists as well as the talent agencies under the TAA would be far better protected than currently.

Under the current regime, in the context of the WGA's directive that members terminate their agents, and the agencies' response to that termination, the flaws in the TAA make it difficult for managers and attorneys to protect the artists they represent and also unnecessarily limit an artist's ability to retain the representative of their choice. These are serious issues in California, where the entertainment industry is a vital facet of the economy.

The following are four key reform proposals which would allow the TAA to more effectively protect talent.

Adapting the regulatory framework to address personal managers. Currently, when a personal manager solicits or procures work for the artist, the manager is subject to the licensing and other requirements of the TAA. On the other hand, California state and federal courts have concluded that a personal manager providing advice, direction, coordination and oversight to an artist regarding their career is not implicated by the TAA. (This was never a foregone conclusion because the TAA expressly states that talent agents may also "counsel or direct artists in the development of their professional careers.") The problem is that because of the Labor Commission's expansive definition of the term procure, there is very little meaningful service that a personal manager can render without subjecting themselves to the TAA.

One solution would appear to be for every personal manager to become licensed as a talent agent, but there are a number of reasons why a personal manager would not wish to, and should not, be registered, including the tension it could create among agents. It would also not serve to protect the legitimate interests of either the artist or the talent agencies, instead creating tension between representatives to the detriment of all.

Instead, guidance can be found from New York's statutes governing talent representation, which hold that managers and other representatives who perform "incidental" procurement do not require registration. Adding a safe harbor in the TAA for incidental procurement would be a sensible reform and is consistent with the definition of talent agency as one in the "occupation" of procuring.

A better approach, however, would be to revamp the procurement prong by creating a comprehensive framework that expressly addresses all of the various representatives an artist is likely to have. Specific regulations under the TAA that govern the role of the personal manager should offer some allowance for them to perform defined services in the procurement process.

Attorneys are not talent agencies. Talent attorneys -- the stalwarts of Hollywood dealmaking -- are also subject to risk under the current regime. If negotiation truly equates to procurement as the Labor Commission would contend, then the TAA restricts an attorney's ability to practice law. In California, negotiating employment agreements is considered practicing law. Morgan v. State Bar, 51 Cal. 3d 598 (1990). It is doubtful that the Legislature intended the TAA to restrict attorneys in this way, and equally far-fetched that the superior court would endorse the Labor Commission's interpretation of procurement.

This misguided interpretation as applied to attorneys unquestionably cuts against the TAA's artist-protection mandate. As other commentators have noted, attorneys are already well regulated by the Business and Professions Code and the State Bar. Moreover, an attorney's ethical and fiduciary relationships with clients are well-defined and more protective of the client than the TAA's requirements. Consequently, the TAA should be amended to expressly exempt attorneys from the definition of a talent agency, as the Beverly Hills Bar Association proposed nearly 15 years ago.

Specifying remedies. Another necessary reform to the TAA involves explicitly dealing with remedies. The TAA itself does not specify a remedy for a violation of the licensing requirement. In the vacuum created by the Legislature's failure to expressly provide for a remedy, the California Supreme Court devised one: voidability. Where a party engages in unlicensed procurement, the labor commissioner may void the talent's contract with the unlicensed agent. If the contract is void, the artist is entitled to disgorgement of all fees and commissions paid to the unlicensed agent.

This remedy is not appropriate for a variety of reasons. First, it promotes gamesmanship and, in some cases, can result in the unjust enrichment of an artist looking for a way out of their contract with a manager. Second, it creates an unnecessary barrier to entry that serves to protect only the talent agencies but not the artist. A reformed TAA should reconsider the remedial framework to include incentives to comply and reasonable penalties for failure to do so.

Removing TAA oversight from the Labor Commission. The final reform should be taking regulation of talent representation out of the hands of the Labor Commission. Neither the Labor Code nor the Labor Commission is equipped to provide effective oversight of talent relationships. Rather, a reformed TAA should be made part of the Business and Professions Code, which is better suited to address the complexities of the business of talent representation.

Despite years of complaints about the problems with the TAA, there has been little appetite by the Legislature to reform it. The best outcome of the current dispute between the WGA and the agencies would be a wake-up call for Sacramento to finally amend the TAA to better enable talent representatives to perform their services and accomplish its purpose of protecting talent.