Tag Archives: writers guild

The Negotiation Culture: The Approach That (Might Have) Resolved The Strike

negotiator-lbv.jpg


As of this writing, news outlets are cautiously optimistic that striking writers will be able to close a deal with the AMPTP within the next few days
.

But what broke the impasse? Writers’ dwindling bank accounts? The studios’ mounting revenue losses? The Oscar telecast? While all of these elements were contributing factors, there’s no doubt that the addition of studio principals to the negotiations made all the difference.

Several weeks ago, Alfredo Barrios, a former corporate lawyer turned writer and WGA strike captain, posted a missive on a pro-WGA blog, unitedhollywood.com urging that studio principals become directly involved in talks in order to restart negotiations. Regardless of which side you’re on, and despite Alfredo Barrios’s obvious bias in favor of striking writers like himself, Barrios eloquently describes the “psychology” of the deal for both sides; a mindset that ultimately required the principals to take the lead in strike negotiations.

The following is an edited version of Barrios’s post. You can read it in its entirety here.

* * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * *

BASIC RULES
First, understand the relationship between Nick Counter and the studios. It’s essentially a lawyer-client relationship. The AMPTP is run by lawyers like Nick Counter and Carol Lombardini. Think of it as an in-house law firm. Their goal is to “negotiate” deals with unions on behalf of their clients – the studios.

As lawyers, Counter and Lombardi have to justify their paycheck. What does that mean? They have to add value. They’ve promised to deliver a more favorable labor deal than the studios would get without them. Otherwise, there would be no point in hiring them (or more aptly, keeping them around). So our loss is their gain. And the bigger our loss, the bigger their gain.

Now here’s the thing to remember, fairness and reasonableness have NOTHING TO DO with their approach. No corporate lawyer I’ve ever known has ever met with a client and promised to get them the most “fair and equitable deal” possible. That’s not their goal. Instead, they promise to save them a lot of money – remember, added value. If the studios were genuinely interested in reaching a fair and equitable deal, the CEOs and their CFOs would talk directly to our negotiating committee and financial people, and a deal could be reached today – by the way, this is what we’re driving towards. We will know we will have won when the CEOs and their CFOs talk to us directly. [Editor's Note: as we all know now, this is what happened here].

CEOs hate uncertainty. They run their businesses based on long-range plans that are based on long-range assumptions. So as a lawyer, you do your very best to put their mind at ease when faced with an inherently unstable situation – be it a lawsuit, a takeover deal, or a strike. You say to them, “You don’t have to worry about a thing. We have this under control.” Then you spell out what you believe (more often hope) is the most likely outcome. “We feel confident that we can get this suit dismissed at the pre-trial stage;” “ get this deal closed by Christmas;” “resolve this strike by_______ on ________ terms.” The CEOs nod their heads happily, confident that their well-heeled, well-paid lawyers are looking out for their interests, and then go about their business.

* * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * *

Going back to CEO peace of mind. This comes in a couple of forms. First, lawyers tell their clients that they won’t have to get their hands dirty. Lawyers will be the bad cops on their behalf. They’ll serve as a shield for their clients. Lawyers always want their clients to feel comfortable – that’s part of what’s promised. “Go about your life. Don’t worry about a thing.” Second, it comes in the form of laying out how things will play out. “You can expect that the plaintiffs will engage in several months of discovery;” “the company you’re hoping to acquire will seek a white knight;” “the strike will lose steam and the writers will fragment.” All things that have a very good chance of happening. And when they do, the lawyer looks like a genius, and his client thinks, “Man, I’m in really good hands. I have nothing to worry about.” It’s about managing expectations.

THE LAWYER’S STRATEGY

Lawyers try to do three things to their adversaries: (1) get them to doubt the validity of their position; (2) undervalue whatever cards they’re holding (in other words, underestimate whatever leverage they have); and (3) kill their resolve.

How does a lawyer get an adversary to doubt his position? Well, in litigation, it comes by spinning the facts. In transactional deals, by spinning the financial numbers. And in a strike situation, by spinning both. One common technique is making a nonsensical argument so many times that it begins to take on the air of a legitimate one and eventually some people (judges, jury, the public in general and sometimes even your adversaries) begin to accept it as truth. Lawyers are masters of this. Think of these doozies: “If the glove doesn’t fit, you must acquit;” “Smoking doesn’t cause cancer;” and my personal favorite, “We don’t have a business plan for or any real revenue from the Internet.” Or how about that $130 million offer that the studios supposedly made us several weeks back? The one that didn’t actually add up. Facts and numbers are spun every day in the courtroom, in the negotiating room and in the press by lawyers.

Now, here’s the thing to remember. It’s the lawyer who does the spinning. No CEO wants to do it. Why? Because so many of them want to be known as “straight shooters” – i.e., guys who don’t lie. Plus, they like to be liked. And going out and spinning facts and numbers… well, that’s like acting like a lawyer. Like Nick Counter. That’s why they hired him to do it. They want to be comfortable. Notably, neither Counter nor any of the CEOs has actually done any real press interviews to defend their position. Not hard to see why: it’s utter nonsense. So they spin in press releases or “leaked” stories that are regurgitated by mouthpiece trade papers and other seemingly “unbiased” but wholly bought off parties.

And how does a corporate lawyer gets an adversary to lose confidence in whatever leverage he has? One way is to engage in positional bargaining. That means anchoring your negotiating position to an extreme and unprincipled number over such a long period of time that your adversary starts to doubt the cards he’s holding and eventually moves off of his number and gets closer to yours. That’s what the AMPTP has been attempting to do with its new media proposals – or actually, lack of proposals. They’ve anchored to basically zero payments for new media in the face of our fairly principled new media proposals. They’re hoping that doubt will creep into our psyche – “Wow, man, those companies are really holding to that number, maybe our bargaining position isn’t as strong as a I thought. Maybe we should take whatever the DGA gets.” And so on…

Once you start down that path, you’re losing your resolve. The corporate lawyer knows you’ll start to rationalize why you should take a really bad deal. And you start to buy into the arguments he’s making – “That lawyer of yours isn’t doing you any favors.” “I hate to tell you this, but you’re wasting a lot of time and energy with this case. It’s a loser.” “As a guy who knows, you should take what we’re offering you because it’s not going to get better.” Sound familiar? It’s the sort of stuff being put out by the AMPTP’s PR guru, Chris Lehane, who, by the way, is also a lawyer – and a classmate of mine from law school. Small world, huh? Couple this psychological warfare with the increasing expense of fighting… and people will crack.

Posture and overwhelm with superior power – or the semblance of power. That’s Corporate Lawyering 101.

So… how do we win?

OUR STRATEGY

In my experience, the guys that win against corporate lawyers and their clients – and believe me, I’ve seen it happen – are the guys that (a) never lose sight of their cards – in other words, aren’t fooled into believing that they’re holding garbage, and (b) play lots of offense.

I’ll begin with playing offense. That means taking the fight to the other guy’s client – the decision makers – the CEOs. Remember, THEY LIKE TO BE COMFORTABLE. That’s what their lawyer promised them they would be. So how do you take the fight to them? Well, in litigation, you bring them into the game by making them the target of discovery – you depose them, go through their papers, ask them all sorts of question. You take them out of their comfort zone. You make them the focal point of the case… they’re the bad guy. In transactional matters, say a takeover attempt where you represent the buyer, you go after the “entrenched management” that wants to deprive the shareholders of the real value of their holdings… they’re the bad guy. In a strike, you hold the CEOs accountable. Why? Because they are ultimately the bad guys… the buck stops with them, and they need to be reminded of that always. Counter is just their hired gun.

And by taking the fight to them. I mean, maintaining picket lines at the studios at peak levels, relentlessly picketing locations, continuing to put out creative videos that entertain and inform people about the strike, denying waivers to award shows and picketing those shows, seeking alternative ways to put out creative work on the Internet for pay, etc.

Playing this kind of offense serves a couple of purposes. First, when a CEO drives through the studio gates, or hears about how a location shoot was impacted by picketing (like for example, when an actor leaves the set or a day has been added to the schedule), or sees how his untenable bargaining positions are being ripped apart on websites, or is told about how his award show is falling apart, or reads how Google is about to form a competing entertainment powerhouse, it all collectively begins to call into question the promise that Counter made – i.e., that we would crumble. It’s a daily reminder that we are not losing our resolve. It makes him worry. His expectations aren’t being met. Things are uncertain again. And it begins to chip away at Counter’s credibility as the guy who could resolve the strike with minimal inconvenience to the studio CEOs.

This last point is important. Why? Because the way you win is by taking the lawyer out of the equation. Deny him the promise that he made to his client – i.e., that he would add value by battering all of us down. Once the CEOs begin to believe that we’ll stick to our guns until we get a fair and equitable deal, that’s when we’ve won. That’s when the CEOs and their CFOs will step in and begin to deal directly with us. Why not Counter? Because his job wasn’t to deal with real and fair numbers; it was to screw us. Once he fails at that, it’s time for others to step in. Trust me, it happens.

But it requires believing in the cards you’re holding – your leverage – and sticking it out. The bigger the show of resolve, the faster the CEOs will dispatch Counter. As profit losses mount and their share prices take bigger hits, the studios will realize that holding out for Counter’s promise looks increasingly like a fool’s game.

But the CEOs will only step in if they believe a fair a reasonable deal can be reached. That’s why it’s important to always maintain principled bargaining proposals on the table – as I believe we have throughout. Unlike Counter, I don’t believe we’re engaging in the positional bargaining. Having said that, I think we made one very serious mistake in continuing to keep our DVD proposals off the table. Bad faith bargaining – like the type that Counter has engaged throughout – can never be rewarded, and I have heard no compelling reason to keep our DVD proposals off the table.

* * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * *

As for acting like “nicer” and “more accommodating” guys and gals… Well, let me just say that in all of my years as a corporate lawyer, “nice” and “accommodating” adversaries who never stuck to their guns and didn’t bring the fight to us never got better deals. They only get worse ones. So don’t buy into the our leadership’s too militant line of argument. They’re not. They’re being appropriately tough. Trust me, you wouldn’t want it any other way. Now it’s up to the rest of us to hang tough with them.

London Calling For Outsourced Writing

wllondoncalling1.jpg

With the WGA strike two weeks old tonight, the demand for quality writers (or near-acceptable substitutes) is getting acute.

The Guild only has jurisdiction in the US; making Canadian or UK writers a potential writing resource during the strike. In other words, Canadian and UK writers living and working in their respective countries should be able to write for the studios and networks without retribution. However, reps with writing clients overseas – myself included – are advising caution.

As far as the Guild is concerned, the less writing anywhere, in any media, the better negotiating leverage they have with the studios.The Guild’s Strike Rules threaten non-union scribes with denial of future Guild membership if they’re caught scab-writing for struck companies. The Writers Guild of Canada made it clear it would turn in any Canadian writers caught working for struck companies during the strike. Although UK resident writers could likewise write during the strike, there is mounting pressure for them to stand down as well. Could India be next?

Here in Los Angeles, rep confusion abounds. I’ve debated with several agents and lawyers over what constitutes permitted writing for Guild members and non-members during the strike. For instance, can a WGA member: work for a non-struck company? work on an Internet-based project? work in animation? go to meetings for the writer’s optioned property? Not really, it depends, maybe and probably not. Not exactly a bright line.

The WGA Strike Rules prohibit its members from working for “struck companies;” typically companies that are signatories to the now-expired Minimum Basic Agreement. The distinction between struck (signatory) companies and non struck, non-signatory companies is a fallacy since WGA members are prohibited from working for non signatory companies. Although the Guild encourages its members to contact them for clarity, anecdotal evidence suggests otherwise as the Guild has yet to return any of my clients’ calls.

In the days ahead, I suspect that reps, writers and producers will step up efforts to clarify the confusion. In the meantime, caveat scriptor.

The Waiting Game

Good morning! It’s November 1st, the sun is still shining and the world is still spinning. As of this writing, hell has yet to break loose from a writers strike. As noted in earlier posts, Nikki Finke seems to have the most up to date (and inside) information on where things are going. You can also find a “pro-WGA” blog here. I’m not aware of any pro-AMPTP blogs. Please let me know if there are any. In the meantime, like many reps in town, I will continue to work on deals that have yet to close.

Apparently, talks fell apart early last night when the studios/nets refused to consider modifying the current residual formula for DVD sell-through. The 1985 formula, under which DVD and video residuals are paid on the basis of 20% of wholesale revenues (i.e, the writers will receive four cents for each DVD or video “unit” sold). The WGA wants to double that rate, arguing that the Guild only agreed to a discounted deal to kick start the video business. The studios/nets oppose any increase, maintaining that the current formula is a crucial element to recouping their skyrocketing production costs.The WGA also wants to increase the residual calculation on electronic sell-through revenue from 1.2% of the licensing fee for each downloaded picture to 2.5%.

I really don’t have skin in the game here. Unlike some agents, my clients will continue to pay my legal fees; strike or no strike. Nevertheless, I agree with the Guild on this issue. There’s enough money in electronic DVD sales for everybody. The studios/nets’ response to this issue is draconian and overly aggressive. Rep translation: they’re being chazers.

On the other hand, if the WGA calls a strike just days after the parties engaged a Federal mediator to help resolve this dispute, the Guild risks appearing to have acted in bad faith without regard to progress in union negotiations.

Both sides hopefully appreciate that their actions are being closely watched by their respective constituencies who expect their representatives to act in their best interests. Whether each side will conduct itself accordingly remains an open question.