Wednesday, 26 August 2009

Hollywood Babble On & On #358: Mitigation Litigation & A Sign of Weakness

Welcome to the show folks...

The William Morris-Endeavor Agency recently took a break from laying off employees to start up a shit-storm with some of those laid off employees, and then to run away when the shit started getting slung their way. (H/T Nikki Finke)

It goes something like this. The merger between William Morris and Endeavor racked up a truckload of costs. To save money, pay off those debts, and preserve the bonuses of the top executives the new merged mega-agency starting laying off agents, assistants, and other employees left, right, and center.

Now many of the agents had contracts that had to be paid out, and many of those agents found jobs with other agencies. Now under the terms of the contract, if the laid off agent found a job with another agency, but for less money than their old WME contract, their old employer would "mitigate" their salary by paying the difference for the remaining term on their contract.

Now this is where the shit-storm starts.

The head grand poobahs of WME decided that some of their former employers were gaming the system, getting deliberately paid less by their new employers in order to screw over their old boss. Now instead of doing some work and finding those who are really playing silly buggers with the mitigation system and calling "shenanigans" they sent out a letter to all their former agents declaring that all mitigation would end ASAP and if they didn't like they could go pound sand.

Well, these former WME agents didn't like it, and they weren't going to pound sand for anyone. Their first reaction was to fight back, and fight back hard, getting one of the feistiest litigators in the biz to take their case to arbitration, complete with the blessings of their new employers.

WME blinked. They immediately backed down, and said that their plan to eliminate salary mitigation has been eliminated for fear of litigation.

Now what does this story tell us:

1. WME has made a lot of enemies. I'm sure the other agencies, tired of their rival's bullying tactics saw an opportunity to strike back, and no doubt did everything they could to support their new employees get back at their old boss.

2. Any attempt by WME to call shenanigans on anyone who really is gaming the system has now been hurt by this shotgun approach. If they try to bring anyone to court or arbitration over the issue the accused will in turn accuse them of sour grapes, bullying, and of using the courts for petty vendettas, whether there is a case or not. Hence adding a whole new level of costs and inconvenience to the whole process instead of just carefully targeting any guilty parties and hitting them hard with all their "i"s dotted and their "t"s crossed.

3. These rivals and former employees are not scared of WME anymore, and are quite willing and able to fight back, and in this case, win.

And those three things tell us:

1. That William Morris-Endeavor have a corporate culture relying almost entirely on their size and prestige to scare anyone and everyone into doing what they want. They don't appear to care that they were making a lot of enemies in the heart of an industry that is built upon interpersonal relationships.

2. That WME isn't willing to do the legwork necessary to root out those they honestly believe are playing silly buggers with the system, instead preferring a scatter-shot approach punishing all without proving that even a few were guilty. Again hoping their sheer size and prestige would protect them when a little strategic forethought would have cleaned up any problems without the feces flinging.

3. They seemed honestly surprised by the strength of the counter-attack, and the support their rival's gave to that counter-attack. This is a bad sign, it shows a lack of insight into the effects their tactics have had on their place in the industry. Their plan to rule by fear as the biggest kid on the block is now on the ropes, because the little kids realize that they outnumber the big kid, and can pelt him with enough rocks to make them let their keep their lunch money.

This could mark a major shift in the whole talent agency eco-system.

No comments:

Post a Comment