Question for FilmTVLaw.com:

I’m starting up a talent management company but I’m concerned about the Talent Agencies Act. Is that just for “agents”, or do I need to worry about the labor commission now too?

Answer by Brandon Blake, Entertainment Lawyer:

A lot of things are changing quickly in the entertainment industry these days, and probably no single change that is more important to film and television producers than the shift away from traditional agencies to talent management. Overall I think it’s going to be a great thing for the industry, but there are going to be some hurdles to overcome, and the Labor Commission is going to have to embrace this new creativity and working model. In addition to this article, I share more than a hundred in depth entertainment industry articles on my website at https://filmtvlaw.com/entertainment-lawyer-qa.

How Did Agencies Get To This Place?

To be fair, the past two years have been unrelenting for the talent agencies. First the WGA action against agents destabilized the core of many larger agencies, which was packaging. Then, as if that was not bad enough, COVID came along to batter physical production. Most agencies primarily rely on actor commissions for operations, so this meant that both packaging fees and actor commissions had ended, wiping out all sources of income for the agencies. Along the way the California Labor Commission threw in AB5, to shut down lots of indie productions in California, and a perfect storm emerged.

Agencies Versus Managers

Talent management is not a one-to-one replacement for talent agency representation. The reason is because of the Talent Agencies Act, of which there are similar versions in California and New York and many other states.

The California Talent Agencies Act (Cal. Lab. Code, S 1700 et seq.) requires that talent agents in California pay a bond and register with the state before they can “solicit employment” for clients.

I draft talent management agreements, so I know that at the core of every talent management agreement is a provision which requires that the client agree to also maintain agency representation throughout the course of the management contract term.

The reason for that is because technically the manager is only “advising” on career decisions, but the talent agency is actually “soliciting employment” on behalf of the client.

The other reason is because typically managers are also doing other things for the client, like acting as producers and executive producers on projects, and this would create a conflict of interest under the Talent Agencies Act.

No Unsolicited Materials

The other issue, outside of the Talent Agencies Act, is how production companies, studios and networks will treat submissions from the new crop of talent managers.

There’s no doubt that the super star agents who have left CAA and WME will have no problem submitting projects to their pre-existing contacts at the studios and networks, but how will studios and networks treat the new crop of lesser known managers?

That is going to be entirely an issue for internal policy making at the studios and the networks. But the reason for the “no unsolicited materials” rule is supposed to be to allow for a somewhat uninterested third-party to make and document the submission.

But with most talent managers serving as producer and executive producer on the projects they represent, can they still be considered as unbiased and neutral as the established talent agencies were?

The Percentages

There is also the issue of the percentages that talent agents and managers take. I am the first one to point out to clients how much work talent managers do. This is not a “two phone call” situation, and that whole myth needs to be cleared away. It’s a ton of work to represent and package a film or television series.

However, the issue is that talent agencies are taking 10%, on top of the talent managers fee of 15%, so from the client’s perspective, that is 25% off the top. And when I say, “off the top”, that means that the agent and/or manager actually is paid first 100% of funds, and then the remainder is sent to the client.

Is it worth it? I would say 100%, but the question is, if the manager is doing all the work, why is the agency taking 10% of the deal? If the purpose is to simply satisfy the Talent Agencies Act requirements, then the manager could use an entertainment law firm like ours instead, save the commissions and instead pay a low monthly fee for exactly the same representation.

Solutions: Repping the Reps

The California Labor Commission needs to start realizing that the entertainment industry in California is a fragile, precious resource that needs to be nurtured and supported, the way every other nation, and practically every other State in the country treats their own entertainment business.

Unless something changes, the Labor Commissioners are going to wake up one morning in Sacramento and realize that they have literally wiped out the entertainment industry in California, and they have no one to blame but themselves.

In the meantime, the work around will have to be that managers are either represented by entertainment law firms, or that “name only” agencies will be on board for the purpose of papering over the requirements of the Talent Agencies Act. However, that certainly doesn’t seem to accord with the spirit of the deal that the Agencies made with the WGA regarding packaging.

Feel free to contact our firm about film or television packaging and representation services. As with all complex entertainment matters, please seek experienced entertainment legal counsel before making legal and financial decisions. This article is for informational purposes only and does not represent legal, accounting or tax advice. Do not act on this article without hiring legal representation.

- By Brandon Blake, Entertainment Lawyer