September 19, 2012 7:00am PT by Matthew Belloni
Why Talent Representatives Are Suing Their Clients (Analysis)
This story first appeared in the Sept. 28 issue of The Hollywood Reporter magazine.
In Hollywood, breaking up is hard to do. Just ask Christopher Nolan. When The Dark Knight Rises filmmaker left CAA for WME in March, the ensuing squabble over commissions from his $1 billion-grossing hit got so heated that he sued both talent agencies Sept. 6 to figure out exactly whom he's supposed to pay. CAA, which employed Nolan's longtime rep Dan Aloni, was the director's agency of record when he signed his rich Dark Knight Rises contract. Under the usual industry practice, CAA thus would be entitled to all "post-termination commissions" from the deals it brokered (usually 10 percent). But CAA had fired Aloni in February, forcing the agent (and Nolan, who sources say had little contact with anyone else at CAA) into the arms of Ari Emanuel's WME, which now argues that it deserves to share the commission for handling the director's complicated affairs, including difficult matters like his response to the Colorado shooting tragedy.
The Nolan suit is just one high-profile example of a rash of legal actions spreading through Hollywood's talent representation community -- most of them over who should get paid when a client severs ties with his or her reps. In February, SDB Partners sued Star Trek star and former client Chris Pine for unpaid commissions, in the process disclosing top-secret salaries like the $5 million he earned for the February flop This Means War. (The case settled in June.) ICM Partners sued Jersey Shore star Paul "DJ Pauly D" DelVecchio in April, seeking a cut of the millions he has made from the MTV hit since he left the agency. WME on Sept. 6 targeted CNBC anchor Amanda Drury for failing to pay 10 percent of her lucrative network deal it negotiated before she left in 2010. And on Aug. 23, a federal judge upheld UTA's right to $325,000 from Men in Black 3 director Barry Sonnenfeld -- who parted ways with the agency about 17 years ago -- because his UTA-negotiated deal to direct the original MiB gave him first dibs on any sequels.
The increase in courthouse activity is enough to raise the eyebrows of even longtime industry legal experts. "I'm seeing more litigation between agencies and between agencies and their clients than I've ever seen," says litigator Patty Glaser, who is representing WME in the Nolan flap.
Why? Observers note that while image-obsessed talent agencies once were wary of the media attention and potential backlash that might come from suing a former client, the stigma is all but gone -- because, much like the rest of Hollywood, major agencies face increasing pressure on the bottom line. With studios making fewer movies and star talent often being forced to settle for lower salaries, it isn't surprising to see more aggressive collection efforts. CAA and WME, for instance, now are both part-owned by private-equity players TPG and Silver Lake, respectively, which likely view a delinquent actor's commission simply as an account receivable. And whereas the town's top agencies might in the past have agreed to some kind of sharing arrangement to keep a mega-talent like Nolan happy, some say those days are over.
"Amid economic pressure, mergers and management change, agencies are more zealous about potential revenue identification and collection," notes David Ginsburg, executive director of UCLA Law School's entertainment, media and IP law program. "Where they used to make accommodations, they now may choose to fight over it."
Insiders also point to the principle behind the hard-line stance. A top agent explains that he has no problem pulling the trigger on a lawsuit because it sends the right message to the town. "We fight like hell for clients, and we deserve to be paid," says this agent. "It's not wrong to stand up for ourselves. And the rules are pretty clear."
Talent managers, who guide Hollywood careers but don't "procure" jobs like agents do, also have been standing up for their 10 percent. Emmy winner Julianna Margulies' ex-manager Steve Dontanville sued in July, claiming he's owed at least $420,000 for helping her score The Good Wife and a rich L'Oreal deal before being fired in 2011. Melissa Joan Hart was sued earlier this year by her former manager for commissions from ABC Family's Melissa and Joey ("Melissa Joan Hart has no heart," read the lawsuit, which has since settled). Sex and the City author Candace Bushnell this month resolved the second of two cases brought by manager Clifford Streit over profits from the HBO series and films.
Managers, unregulated and often operating without written contracts, tend to have a tougher time in cases against former clients. On Sept. 13, Ugly Betty actor Tony Plana won a jury trial against former manager Tracy Quinn, who had sued for more than $500,000 in commissions. Plana's lawyer convinced the jury that Quinn orally had agreed she wouldn't receive a dime from residuals after she was terminated following the show's second season.
At the same time, Friends actress Lisa Kudrow's long-running legal battle with former manager Scott Howard is being watched closely. Howard says he's entitled to commissions from residuals Kudrow still generates from the sitcom years after she fired him in 2007. In August, a California appeals court ruled that testimony from former UTA president Martin Bauer should be allowed to show that the "custom and practice" in Hollywood is to pay commissions forever -- even after terminating the relationship -- and that people working in Hollywood are familiar with the rule. Accepting that standard could assist reps in future cases where it's not clear what was agreed to years before.
Although in the short term, it won't help Nolan figure out to whom he should write what presumably is a very fat check.