For years, Hollywood talent managers have grumbled at a California law that puts them in danger of losing their commissions if they’re found to have engaged in activities related to obtaining work for their clients.

The issue relates to the Talent Agencies Act, a licensing scheme that was originally enacted to regulate agents and ensure that they’re acting in their clients’ best interests. The law says that only licensed agents can “procure” work in the entertainment business and that managers caught doing the same can have their contracts voided and commissions forfeited. Although lawmakers’ intent was to prevent unscrupulous business dealings, like conflicts of interests, it grew to be used as a sword largely wielded by talent to sidestep having to pay commissions. At least $250 million in fees have been nullified over the last 55 years, per the trade group representing managers in the entertainment industry.

But in 2020, a former CAA employee recognized a quirk in the law that managers could take advantage of. By his thinking, obtaining a license to secure work opportunities for clients wasn’t required if you could tolerate the risk of getting sued and losing the commission.

“It looks like there is a ‘gray area’ on how managers are supposed to technically procure material since they don’t have a license form the California Labor Commission,” this unidentified ex-CAA employee wrote in an email. “However as long as the artist doesn’t sue the manager … looks like managers are fine?”

The theory outlined in that message became the central business model for Range Media Partners, a management and brand development firm founded later that year by departing partners from a series of agencies, according to a lawsuit filed on Monday in Los Angeles Superior Court from CAA against the company. It seeks a court order blocking Range from further violating the TAA by engaging in activities reserved for licensed agents and representing Writers Guild of America members without permission from the guild, which would effectively foreclose core functions related to securing work opportunities for talent.

The thrust of the complaint is grounded in Range allegedly stealing confidential information to poach clients, but its scope reaches the heart of the firm’s business dealings. CAA claims that Range, which didn’t respond to a request for comment, is actually just a rival talent agency masquerading as a management company, allowing it to skirt laws and guild agreements that give it an unfair advantage over competitors. In practice, Range is performing all the tasks of a talent agency, while also structuring deals in ways that agencies cannot, the lawsuit says. One example: the company can offer high-profile clients the ability to avoid paying a commission in favor of giving it a producer fee or credit on their project.

“The Range Founders told at least some of these CAA clients that they did not ‘need’ a talent agent to procure work for them, because Range could do it all,” states the major talent agency’s complaint, which flags stolen confidential information on client negotiations, revenues, preferences, interests and upcoming projects, among other things.

In a pitch deck to investors, Range proclaimed itself as the “revolutionary” successor to CAA and Endeavor, according to the lawsuit. It touted plans to “recruit high end representatives away from their current incumbent,” and to “rethink the system of representation,” with “production services as a cash cow.”

Since its inception four years ago, Range has surfaced as a competitor — albeit a small one — in a talent agency landscape that’s consolidated into three major players after CAA in 2022 closed its acquisition of ICM Partners. It’s drawn investments from hedge fund billionaire Steve Cohen’s Point72 Ventures, media mogul John Malone’s Liberty Global, TPG founder David Bonderman’s Wildcat Capital, family entertainment company Playground Productions and A+E Networks, which serves as a co-producer on scripted TV projects set up at the company.

Range’s emergence coincides with a time in which talent is questioning whether they even want an agent. After the Writers Guild of America in 2019 sued Hollywood’s four biggest talent agencies in a fight over packaging fees and agency-owned production entities, thousands of writers fired their agents, with some power players, like Damon Lindelof, never hiring them back. Some, including Jennifer Lawrence and Leonardo DiCaprio, haven’t had agents for years. Those two megastars have their interests represented by Rick Yorn of business management firm LBI Entertainment as Hollywood evolves into a business where there’s often overlapping responsibilities between agents and managers. In practice, both provide career advice and engage in activities related to getting clients work.

Amid this shift, agents are increasingly pivoting to management. Theresa Kang-Lowe and Phil Sun have both left WME in recent years to start their own management firms. Dave Bugliari, Mackenzie Condon Roussos, Rich Cook, Michael Cooper, Susie Fox, Sandra Kang, Rachel Kropa, Chelsea McKinnies, Peter Micelli, Mick Sullivan and Jack Whigham all left top agencies to become founding partners at Range. Some of the ex-CAA employees who left for Range are in arbitration with the agency over cancelled equity.

“Before, the agents were the most powerful. Period,” UTA CEO and cofounder Jeremy Zimmer told Vanity Fair last year of the rise of management firms. “Now there might be a splitting of the power.”

Still, the gambit could backfire on management firms engaged in “procuring” work for clients. The Deftones in 1997 filed a complaint with the California labor commission seeking to void agreements with ex-manager Dave Park for violations of the TAA. A commissioner later voided fees on the basis that Park secured 84 performances for the band. Marathon Entertainment owner Rick Siegal later sued the state Attorney General in a lawsuit claiming it’s unconstitutional to enforce the law on talent managers. After he lost that case, nearly 200 talent managers supported his appeal to challenge the TAA, which still stands.

In its lawsuit, CAA argues that the TAA bars Range from engaging in activities related to obtaining work for clients and that civil lawsuits from talent can’t be the only recourse. But it remains to be seen whether the agency has the right to pursue a court order blocking further violations of the law since it may not have been directly harmed by the conduct.

In that scenario, it may be up to the WGA, which didn’t respond a request for comment, to take action against Range if it’s found to have violated rules related to securing work for clients. CAA alleges that the company is violating a guild rule barring agencies from acting as packaging agents or owning a major stake in a production entity.

This article was originally published by The Hollywood Reporter.