Verve has become the first sizable Hollywood talent agency to sign the WGA’s Code of Conduct, giving the guild a win in its standoff with the largest agencies over the issue of packaging fees and other business practices.
Verve’s decision had been expected. The company founded in 2010 is a literary-focused agency that is largely dependent on commissions from writer clients. Unlike the larger agencies at the heart of the battle with the WGA, Verve does not have a long legacy of profit participation stakes in TV shows and movies to provide ongoing revenue. Nor does Verve have the sizable base of clients with enormous overall deals throwing off six- and seven-figure commission fees.
Verve said in a statement that the decision to sign came after extensive discussions with its writer clients. The agencies’ battle with the WGA has centered on the guild’s goal of barring agencies from taking packaging fees on TV series, arguing that it is an inherent conflict of interest because those fees are paid by the production entities rather than through client commissions.
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“Although there will be modifications to our business practices that are necessitated by today’s decision, one thing that will not change is our commitment to providing long-term, premium service to our clients,” Verve said in a statement.
The WGA’s campaign to ban packaging fees and other business practices has sparked a lawsuit, filed by the guild against the largest agencies, and the directive from the guild to its nearly 15,000 members to terminate relations with agents that refuse to sign the guild’s restrictive new Code of Conduct.
“This agreement is an important step forward in our efforts to realign agency incentives and eliminate the conflicts of interest that have undermined representation of writers,” the WGA West said in a message to members sent Thursday afternoon.
Verve has agreed to abide by the three primary tenets of the WGA’s agency franchise contract reform campaign. Packaging fees and affiliated production efforts are banned. Verve has also committed to provide writers’ contracts, invoices and deal memos to the WGA” and allow auditing.
Verve negotiated modifications to WGA Code that guild members overwhelmingly approved in a membership vote in March. The original agreement allowed the WGA to make modifications with only 60 days notice to the agency. Verve’s agreement runs for three years and gives the WGA a 90-day window prior to the expiration date in 2022 to re-open talks on new terms.
“The back-and-forth with Verve was the most substantive negotiation with an agency we’ve had to date,” the WGA said in its message to members. “Verve was willing to make an agreement that aligns their agents’ interests with their writer clients’ interests. And the Guild was willing to modify the Code, while maintaining the fundamental principle that agencies should neither own production companies nor accept fees from the employers of writers.”
The WGA’s push for contractual data on members has been a lower-profile issue in the fight. The guild has an interest in seeing the earnings of its members who now mostly pay their 1.5% in annual union dues based on only the scale income earned during the year under the minimums laid out in the WGA’s minimum basic agreement with the major studios. There’s wariness in the industry about the level of influence the WGA is seeking over employment terms for its members, which has been a red flag for some of the guild’s highest earning members.
The WGA has maintained that reform is needed to align talent agents’ interests with the earning power of its members by limiting agency income to 10% client salary commissions. Agents counter that diversification is necessary to remain competitive for clients in dealmaking with a shrinking number of media and tech behemoths that control that vast majority of employment for the creative community. The reps also point to the benefit from packaging’s standard practice of waiving the 10% commission for agency clients working on a packaged show, which amounts to substantial savings for writers, actors and directors.
The decision to sign with the WGA could be a boon to Verve’s business if it encourages established writers to sign with the agency. On the other hand, it could make for chilly relations between Verve and the larger agencies that it needs to interact with in serving its clients.
The Verve partners made a point of asserting that it will implement protections to guard against clients joining with Verve briefly in the hopes that the larger agencies will come to a compromise with the guild.
“Verve provides a customized experience for each client and we refuse to dilute our efforts. As a result, we will not take on writers who seek temporary representation and intend to return to their previous agency when a deal is made between the WGA and the (Association of Talent Agencies),” the Verve statement said.
In a statement, the ATA asserted that Verve’s move “will ultimately harm” the agency.
“The WGA leadership has put writers and agents alike in an untenable position,” the statement said. “It is disappointing but not surprising that some of the most vulnerable agencies may reluctantly be forced to sign an onerous agreement. While Verve is not an ATA member agency, their decision to sign the WGA’s Code will ultimately harm their business and the artists they represent on many levels. With 30 days now passed since the agencies provided the Guild’s Negotiating Committee with numerous counter proposals, we’re still waiting for them to respond or return to the negotiating table.”
In response to the ATA statement, the WGA said, “We were pleased to sign an agreement today with Verve. Verve has agreed to put their clients first and to abide by their fiduciary duty and follow the law. This is a good agreement for both writers and their agents. We look forward to reaching agreement with other agencies as soon as possible.”
Members of the WGA overwhelmingly approved the code in late March, with the requirement that agents cannot represent WGA members unless the agents agree to bans on collecting packaging fees on and owning stakes in production companies. The code also requires agents to provide the guild with a copy of the agreement or a summary of essential deal terms of any agreement engaging the writer’s services.
The code went into effect on April 13 after the WGA and ATA saw talks crater over efforts to revamp the 43-year-old rules governing how agents represent WGA members.
Most major agencies have refused to sign the code — resulting in WGA leadership requiring that members fire their agents. The WGA filed a lawsuit against CAA, WME, UTA and ICM on April 17, alleging illegal conflict-of-interest practices, while the ATA has threatened legal action over managers and lawyers who perform agenting tasks of procuring employment.
No new negotiations have been scheduled. Instead, both sides have continued taking potshots at each other during the past month.
By signing with the WGA, Verve will be able to re-sign writers who were required to dismiss their agents, along with writers who have been without an agent.
Verve was formed in 2010 by partners Bryan Besser, Adam Levine and Bill Weinstein, with a focus on representing feature film writers and directors. The agency currently has about 30 agents. Notable clients have included Leah Remini, Jennifer Westfeldt, Howard Deutch, Colin Trevorrow, Gil Bellows and Tasha Smith. Verve is not a member of the ATA, which represents more than 100 agencies, including CAA, UTA, WME and ICM Partners.
Despite the defection of Verve, ATA Executive Director Karen Stuart insisted in a memo that the agencies are winning the war.
“We must remain strong and united,” Stuart said. “Our unity speaks volumes to the WGA leadership.”
Stuart’s memo lavished blame on WGA for the current stand-off and insisted that Verve will become beholden to the guild.
“With this move, Verve clients will be robbed of choice in their own financial decisions – their options will now be dictated by the Guild,” she said. “Furthermore, Verve has locked itself into a static business model that handcuffs their ability to pursue new creative opportunities for their clients in the evolving media landscape.”
“Over the past few weeks, I’ve spoken and met with many of you to ensure you have all of the facts about the WGA Leadership’s position and motivations,” Stuart added. “To be clear, the Code is a unilateral mandate that gives the Guild the authority to control agency business operations and sets a harmful precedent for agencies of all sizes.
She also complained extensively about the details of the Code, which enables the Guild to demand a variety of confidential client information from an agency, even against the clients’ wishes. Stuart also alleged that agencies are required to provide the WGA such information in an “unreasonable” timeframe, including within days of deal commitment and immediate notice of when a job starts.
Stuart also said that agencies will be required to monitor and notify the Guild of all late payments due to a writer, even against clients’ wishes, adding, “Many agencies would need to invest in
additional staffing resources to support these new functions.”
Stuart further complained that the WGA will be able to approve (or disapprove) film finance deals negotiated by an agency on its clients’ behalf; change the terms of the agreement on 90 days’ notice, regardless of the effect it will have on agencies and their business models; and make all disputes subject to Guild-selected arbitrators, with loss of franchise and substantial financial damages determined by a single arbitrator with no appeal.
“While the ball on negotiations remains firmly in the WGA’s court, our Negotiating Committee continues to meet every week, and remains committed to bringing about stability in our industry,” she added. “As always, we will continue to keep you informed and you should always feel free to reach out to me and/or anyone on the negotiating team with any questions. We are happy to meet with you and your leadership team at any time – in your office or ATA’s.”