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Striking Out Into the Unknown

 



LOS ANGELES — As Hollywood's writers hoisted picket signs this week, attorney Anthony Segall's days got even longer.

"My existence is pretty schizophrenic," said Segall, an attorney with L.A.'s Rothner, Segall & Greenstone. "I haven't been to my law office in days."

What's keeping Segall and other lawyers on the front lines so busy is an attempt by the Writers Guild to secure residuals, the royalty payments vital to most working writers, for their work when it is transmitted over the Internet or in other new media applications. The studios are resisting the writers' demands for this and a bigger cut of DVD revenue, and arguing that newer media are unproven.

What the industry is grappling with is "a lot of unknown," said Douglas Wood, an entertainment lawyer with Reed Smith.

It may be hard to predict how new media will develop and how they'll be monetized. Wood said he can picture DVDs and TiVo becoming irrelevant as more content becomes easily available on demand.

"History tells us that as the media become more sophisticated, they will become revenue streams," said Wood, who is also the chief negotiator for the industry in bargaining with the Screen Actors Guild and the American Federation of Television and Radio Artists. "If you live in a world where residuals are the Holy Grail, it's natural for you to follow the money."

The two key outside firm lawyers involved in the strike are Segall, who is representing the Writers Guild as its general counsel, and William Cole, a labor and employment partner at Mitchell Silberberg & Knupp representing the Alliance of Motion Picture and Television Producers. But as the strike deadline loomed, entertainment and labor attorneys throughout the Southland heard their phones start to ring.

Clients on both sides of the table fired questions about strike rules and their legal implications.

Lawyers involved pointed to firms such as Manatt, Phelps & Phillips; Akin Gump Strauss Hauer Feld; and Loeb & Loeb. Smaller entertainment boutiques representing talent — such as Ziffren, Brittenham, Branca, Fischer, Gilbert-Lurie, Stiffelman & Cook — are also involved, though they often consult with outside labor experts about their talent clients' concerns.

Some of those lawyers involved, such as Loeb's Ivy Kagan Bierman, an entertainment-focused labor partner, are being called on by both companies and talent. Her clients include production companies such as Fremantle Media North America and the Cartoon Network and talent such as Patrick Tatopoulos, the director of "Underworld 3."

"I am having to be really objective, telling both sides what their rights and obligations are," she said. "I haven't been uncomfortable because my advice is consistent on both sides."

"There is a tremendous amount of work now," said Alan Brunswick, a labor and employment partner with Manatt. "This hasn't happened in 18, 19 years, so everyone wants to know: 'What can we do? What can we not do?'"

RULING ON THE RULES

While much of the country is wondering whether their favorite shows will be sidelined, lawyers say some compelling legal questions are more deserving of the spotlight.

"They're interesting, but they're being overplayed by the practical stuff," said Manatt's Brunswick.

For instance, a section of the strike rules requires members to give the guild copies of the most recent literary materials they've provided to the studios. The idea is that the guild can monitor any changes made after the strike's inception.

But the studios argue that the material belongs to them, and that writers don't have the right to give studio-owned scripts to the guild.

"It's a tough problem — there's a lot of soul searching and a lot of attorneys and agents getting frantic calls," Brunswick said.

He's advising writers that if their employer sends a letter advising them not to turn over the materials, they're obliged to go along: "I think, under copyright, it belongs to the company."

Another interesting debate surrounds the so-called hyphenates, the writer-directors or writer-producers. The Writers Guild has instructed those individuals not to perform their writing services, even if they're doing them in the capacity of a director or producer. That means no tweaking a line of dialogue to a pre-strike script while shooting during the strike.

This has studios — and some directors and producers — protesting. The strictest interpretation of the rule could hurt multimillion-dollar productions whose scripts were finished months ago.

"That could be a legal fight," Brunswick said. "The producers have always warned the guild not to push on that one, which is catnip in front of them."

It's also putting producers and directors in a tough spot, Loeb's Bierman said.

"Many of our hyphenated clients want to make sure they do what's appropriate vis a vis-a-strike, but, on other hand, they want to be able to direct and produce," Bierman said.

FUTURE THOUGHTS

Even those lawyers not directly involved in the strike are closely monitoring its outcome, and pontificating on the best model for the future.

"Instead of throwing out the old paradigm and starting all over, the studios seem to be hanging on to an old structure that is no longer relevant," said entertainment lawyer Stanton "Larry" Stein of Dreier Stein & Kahan.

Stein said the studios should throw out the division between revenue streams — such as Internet and other new media, and throw it all into a pot, giving writers a percentage of total revenue: "It doesn't matter where it's coming from, really."

One thing is clear: The current economic structure is doomed, said Reed Smith's Wood, so it makes sense that writers want to know where the revenue is going to come from — and make sure they're a part of it. The studios are used to just tweaking the old model, which won't work this time, he said.

But either way, Wood predicted, all of this new media movement is a huge opportunity for lawyers.

"It's going to get increasingly complicated and the number of people participating more divergent," he said.

"We, as lawyers, have a lot more clean-up to do, and the deals are going to get more challenging," Wood said. "It's a more complicated world, and the more complicated, the better it gets for lawyers."