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Davenport, Geoff --- "The Regulation of Sports Agents in New Zealand Rugby and Beyond: Is there a Need for Legislation?" [1999] CanterLawRw 8; (1999) 7 Canterbury Law Review 371


THE REGULATION OF SPORTS AGENTS IN NEW ZEALAND RUGBY AND BEYOND: IS THERE A NEED FOR LEGISLATION?

Geoff Davenport[*]

I. Introduction

Anyone can be an agent. Every frustrated jock, every accountant who is bored, every lawyer who is doing pig iron contracts feels that athletic representation could be a lot more exiting, and it offers some vicarious thrills. The Hillside Strangler could be an agent.[1]
The entire industry of sports agency is devoid of systematically enforceable regulations dictating minimum levels of professional expertise. To qualify as a sports agent, an individual need only have a client.[2]
[T]here is one area of the sport that has developed unchecked. The area of players' agents and managers - those Arthur Daley-type creatures whose cigars cost more than their greasy overcoats. They have flocked into rugby union from other sports, from the entertainment industries and from rugby league.[3]

Rugby is, without doubt, New Zealand's national game. It is to New Zealand what baseball is to the United States of America and ice hockey is to Canada. A sport so integrated into the fabric of the country that it forms part of national identity. In the words of a great All Black captain of the past, rugby has truly united a nation:

No other institution has done so much to cross social, religious, racial, cultural and economic boundaries so comprehensively and with so little pretence.4

Rugby used to be about the "love of the game". Top level players juggled jobs and family commitments with training, games and All Black tours. In return they received plaudits and minimal tour allowances. Then, in the 1980s and early 1990s, amateur rugby underwent a gradual revolution. Top level players found it increasingly difficult to balance the need to earn a living with the expanding demands of the modern game. This inevitably led to clubs recruiting players in exchange for gratuities including cars, accommodation, appearance fees and guaranteed jobs, a practise referred to by some as "shameratism".[5]

These domestic developments were paralleled by what occurred at the international level. countries felt pressure to retain talented players in the face of raids from professional codes.[6] In New Zealand, leading All Blacks were lost to rugby league (including John Gallagher, Matthew Ridge, Va'aiga, Tuigamala and Frano Botica)[7] and to professional rugby competitions in Japan (Graeme Bachop and Kevin Schuler, among others).[8] The New Zealand Rugby Football Union (the "NZRFU") sought to stave off these attacks by endorsing initiatives aimed at increasing the financial security of current and future All Blacks.[9] Examples included the All Blacks Club and All Blacks Promotions Limited, vehicles created to channel support and funds to players. As a result of these developments, both international and domestic, the distinction between "amateur" and "professional" in New Zealand rugby became increasingly academic.

In 1995 this revolution erupted. Two events in particular combined to dramatically change the official face of rugby. The first was the launch of the World Rugby Corporation by Ross Turnbull and Kerry Packer, a proposed rival to the traditional rugby "establishment". What followed was nothing short of war.[10] The two organisations entered into a bidding battle for the world's leading players. In order to compete, the "establishment" required financial backing. In the southern hemisphere this took the form of a proposed Rupert Murdoch News Corporation backed international tri-nations series (involving South Africa, New Zealand and Australia) and an international provincial championship (the "Super 12", involving provincial teams from the same countries).[11] With this financial support secured, the NZRFU then sent Rob Fisher, Brian Lochore and Jock Hobbs around New Zealand seeking the support and signatures of leading players,[12] a strategy that ultimately proved successful.

The second, and somewhat belated, development was a report on amateurism commissioned by the International Rugby Board (the "IRB"). It was prepared by the Amateurism Working Party chaired by Vernon Pugh, and considered by the IRB at its meeting in Paris in August 1995. That report recommended the repeal of the IRB's Amateur Regulations and the introduction of financial rewards for players.[13] In subsequently accepting those recommendations,[14] the IRB officially sanctioned what had already become inevitable: the arrival of professional rugby.

The NZRFU and players entered into contracts governing domestic rugby (the national championship) and international rugby (the "Super 12" and games involving the All Blacks). The sums initially agreed upon varied depending upon the player, but in all cases were considerable. According to the NZRFU, annual salaries ranged from $65,000 to $250,000.[15] However, media reports suggested annual payments for "star" players exceeded $250,000, in some cases by a considerable margin.[16] Jonah Lomu, for example, was said to have rejected offers in excess of a million dollars from the Wigan Rugby League Club and the Dallas Cowboys NFL franchise in favour of a multi-year contract with the NZRFU.[17] In a country where the average annual wage in 1995 was in the order of $30,000,[18] these payments represented considerable salaries.

II. SPORTS AGENTS: THE ISSUES

The advent of professional rugby has revolutionised the New Zealand sports agent industry. With huge sums now on offer from different codes and countries the scene has been set for negotiation, leverage, offer and counter offer: a paradise for agents. That is not to say that agents do not represent players in other professional codes in New Zealand. They do and have done so for many years.[19] But by New Zealand standards there are now a large number of professional athletes playing our national game. Due to the number of players involved, and the importance of the sport to the country as a whole, the demand for sports agents in New Zealand has never been greater and their role never as significant.

Thus rugby in New Zealand, with its recent introduction into the ranks of professional sport, presents an apt framework within which to consider the regulation of sports agents.[20] The purpose of this article is to:

i. examine arguments for and against the regulation of sports agents in New Zealand, particularly in rugby;
ii. assess whether the existing regulation in New Zealand is sufficient;
iii. consider the regulation adopted in North American sport and the possible replication of that regulation in New Zealand; and
iv. draw conclusions and make recommendations about the future regulation of New Zealand sports agents.

It will be concluded that the existing regulation of sports agents in New Zealand is manifestly inadequate, and that the introduction of meaningful regulation will require the enactment of legislation.

III. THE ARGUMENTS FOR AND AGAINST THE REGULATION OF SPORTS AGENTS

There is presently no legislation or regulation in New Zealand specifically governing the conduct of sports agents in rugby (or in any other sport). To date, agents have been free to act as they wish subject only to the common law, a code of conduct (if they are lawyers) and legislation of general application to those in business. This raises the issue of whether all sports agents ought to be required to meet minimum standards of competence and expertise, an issue that is not without controversy.

Is Sports Agency Important Enough to Warrant Regulation?

New Zealand has a population of under four million people. Approximately 150,000 New Zealanders play rugby and of those only 160 or so have professional contracts with the NZRFU.[21] Arguably, at least from an international perspective, the number of participants in professional rugby in New Zealand is insufficient to warrant the regulation of sports agents. Parliament should, it could be said, concern itself with more important issues of broader application.

"Importance" in this context cannot, however, be measured solely in terms of player numbers. Agent regulation is an important issue, for any number of reasons. Five in particular will be considered. First, the conduct, or misconduct, of sports agents (and thus, the regulation thereof) is critical because of the importance of the tasks with which agents are entrusted. Players often lack the skills, experience and time to manage the increasingly complex issues which arise during their careers. As one commentator recently noted; "rugby's got much more complex that just scoring more points than the other side."[22]

As a result, sports agents are being called upon to provide expertise on a wide range of issues including contract negotiations,[23] sign on fees, weekly allowances, tax compliance, financial planning, money management, estate planning, endorsements, career and personal development, post-career development, legal obligations and insurance.[24] Issues arising from the NZRFU's new transfer regime, and from international opportunities can

also be added to the list.[25]

Moreover, the input of agents is not limited to the tenure of a sports career. For some players, post-playing opportunities may arise including merchandising and advertising contracts, speaking engagements, coaching appointments, positions on representative bodies, political careers and employment in sports broadcasting.[26] The advice and expertise of agents may be critical if players are to secure and maximise the benefits of these opportunities.

These various issues ought not to be dismissed as peripheral, nor the associated input of agents considered inappropriate. Indeed, it can be said with confidence that sports agents are here to stay, and for good reason. The resolution of many of these complex issues directly impacts on players' financial well-being, and, derivatively, on their playing performance. As such, it is imperative that they receive sound, independent advice.[27] As players increasingly turn to agents for that advice, the need for competent and ethical agents also increases.

The second principal reason for advocating agent regulation derives from the nature of the agency relationship in the sporting context. Sports players are particularly vulnerable to agent misconduct, for a number of reasons. In the first place, many players lack the business experience and skills to supervise their agents' actions.[28] Nor do players generally possess the time or inclination to do so, preferring instead to concentrate on performing in their particular sport. As a result, players tend to place considerable trust in their agents, many of whom assume the role of mentors, and personal as well as business advisors.[29] Unfortunately, unscrupulous sports agents may look to take advantage of such inexperience and inattention.[30]

The potential for manipulation of this kind is most acute in relation to young inexperienced players looking to turn professional. As Richard Nichols describes:

To the student-athlete (and, often, to the parents), the agent is the perceived holder of the ticket to the good life. Often times, the agent becomes the only person to whom a student- athlete will listen and accept advice. Despite, in many cases, having nothing more than a flashy car, prodigious smile, and thousands of dollars in cash, agents have the full attention of the 1 percent of student-athletes with professional sport prospects. Unfortunately they have the same grip on the remaining 99 percent.31

The vulnerability of young players has also been noted in New Zealand. According to one report, young Wellington rugby players have been tempted by "unofficial agents" to move to other provinces, with offers of cash payments, some totalling thousands of dollars.[32] Similarly, the New Zealand Secondary Schools Sports Council has expressed concern at the:

[G]rowing number of instances where talented school athletes in a growing number of sports are being approached, and in some cases, put under considerable pressure to sign contracts either to sports clubs and other sports organisations, or to an agent who offers to handle their business affairs. [And] there are some cases where the agent is a schoolteacher working in his/her own school or a number of other schools for a personal financial advantage.33

Vulnerability is not, however, limited to the young. All sports players are vulnerable to agent misconduct because of the potential brevity of their careers.[34] The playing days of many athletes have been, and will continue to be, abruptly ended by injury or a loss of form or confidence. While an effective agent can assist in prolonging a career, an unethical or incompetent agent can ruin a career before it starts or cause it to end prematurely. One can imagine, for example, the difficulty a player would have in maintaining form if also faced with impending criminal charges for tax evasion or litigation over a disputed merchandising contract. While sound advice ought to minimise the likelihood of such occurrences, the converse must also be true. As Brian Burke[35] advised those attending a seminar on sports agency:

[A]thletes have short careers. They depend on their agents almost exclusively for their ability to earn income during those careers. If you are not going to go into this with fervour and zealousness, then do something else. Do wills, patents, or whatever other attorneys do, but do not enter this area of practise. These athletes deserve a better shake than that.36

A third reason for advocating minimum standards relates to the money now in professional rugby. Although the number of participants in the professional code may be relatively small, the dollars are not.[37] The notion

of attainable riches (however misplaced that may be in most cases) will lure unscrupulous agents. Certainly the North American experience has been that with "the advent of ever more lucrative player contracts during the past two decades, there has been a proliferation of both qualified and unqualified, ethical and unethical sports agents."[38] As one local agent has pointed out, similar developments are occurring in New Zealand (albeit on a smaller scale):

There will be some casualties because there are some shonky managers around dabbling in the industry. They are only in there to make a quick buck.39

Agent regulation can also be justified on the basis of protecting the welfare of other players, teams and the game as a whole. From the perspective of other players, if an agent is incompetent and fails to negotiate a contract which reflects the true worth of his or her client, that can set a detrimental precedent for the salary of others. From a team's point of view, an effective agent can manage a player's affairs in such a way as to keep the "player in a frame of mind where he can perform best for himself and his team".[40] And from the perspective of the game of rugby, it is important to remember that agent misconduct is not just about the professional code and the 160 or so people who are paid to play. Professional rugby is inexorably intertwined with the amateur game, a game played by 150,000 New Zealanders and followed by many more. What occurs in the professional code will impact on the amateur code and vice versa.

To take an example, All Blacks are the heroes of many. Youngsters aspire to emulate their achievements. If top level players are perceived as being involved in or condoning unethical behaviour by their agents, their attraction as role models could well be harmed. As has been noted in North America, "the irrefutable fact is that the unethical activities of sports agents are severely damaging the integrity of both college and professional sports."[41] This is significant, for the future success of professional rugby will depend greatly on the continuing entry of young players into the amateur game. Indeed, without the development of new talent, the professional code would cease to exist.

On a financial level, greed or short sighted decisions by those involved in the professional game will also harm the sport at a grass roots level. There will only be so much money to go around. If those at the top demand too much of the available revenue, at the expense of the funds made available to local clubs, the sport over all will suffer. Importantly, agents will have considerable influence over the financial demands made by top level players.

The fifth, and final point to be made in support of agent regulation relates to the broad scope of the issue. The relevance of agent regulation extends beyond the rugby field. Players in other sports, models, musicians, entertainers, actors, celebrities and the like may all require the services of an agent if they are to realise their potential and maximise the benefits of their careers. Like a number of professional rugby players, many of these individuals will lack the business skills and time to protect themselves from agent misconduct. Regulation could, then, serve a valuable function in a number of fields.

In sum, the regulation of agents, and sports agents in particular, is an important issue, and ought not to be dismissed on the basis of player numbers.

Can the Market Regulate Itself?

Given the limited number of professional players in rugby, one might be tempted to leave agent regulation to the market place. Arguably, players would learn which agents perform and which do not, and those who are unethical or incompetent would fall by the wayside. After all, a good reputation is invaluable, a point emphasised by Burke:

Please remember that your integrity is only for sale once. Once your integrity is sold, it no longer has any value, and you do not have any value in the eyes of the industry you are in. Word spreads around very quickly and your career will be short. If you think that you can compromise your integrity and have a long life in the business, I would suggest that you are wrong.[42]

It can also be argued that players are not without the means to protect themselves and to sue to recover losses they may suffer. It is, for example, open to a player to negotiate a contract with his or her agent that expressly stipulates required standards of behaviour and competence. Breach of such provisions or of the common law or fiduciary duties of agents would provide a player with grounds for taking legal action.[43] It is also open for a player to take out fidelity insurance to cover loss caused by agent misconduct.[44] And finally, there is always the self help remedy of withholding agency fees. There would be little point in an agent who has breached the required standards of competence suing to recover fees, when litigation would serve only to further damage his or her reputation.[45]

Yet simply leaving players to fend for themselves in the market place can be problematic. In terms of learning who to trust and who to avoid, information is often incomplete, inaccurate and slow to reach players, particularly those who are entering the market for the first time. According to Donald Fehr:

[R]eputation spreads whether it is good or bad, right or wrong, or indifferent. The most common recommendations as to whom to hire or whom not to hire as an agent come from another player. Although sometimes those opinions are informed, very often they are not.[46]

In short, players' careers could well be ruined before an unscrupulous or incompetent agent is sidelined by anecdote and rumour. The loss of one career is arguably one too many, particularly if you happen to be the player in question.[47]

As for self help, the negotiation of express standards of conduct in an agency contract may not occur to many players, particularly those with limited business experience.[48] Moreover, the option of withholding fees is of little or no value when a player's losses exceed the fees due or when fees are paid up front. And as for the ability to sue, this assumes players have the resources for litigation, and ignores the fact that legal action can distract a player, thereby further harming his or her career. Suing to recover damages may also fail to deliver an effective remedy. As Giulietti has noted, for some the harm caused will be irreparable:

As indicated by the Probus case, and the circumstances surrounding the prosecution of Richard Sorkin, legal remedies were inadequate because the damage had already been done and could not be effectively repaired. Athletes may find that the courts agree with their claims but cannot provide any restitution.[49]

The protection afforded by insurance may also be more apparent than real. A player first has to find an insurer willing to accept the risk of covering the conduct of a sports agent, and then pay the premiums, which may be considerable. Standard policy requirements may then negate much of the value of insurance cover. For example, in order to successfully claim under a policy, a player may have to demonstrate that he or she took all reasonable steps to avoid loss by, for example, ensuring the agent engaged was reputable and competent. As noted, the very reason many players engage agents in the first place is because they lack business skills and expertise: how then are they to judge an agent's reputation and competence? In reality, clients of professionals:

[T]ypically rely upon relative strangers, to whom they stand in relationships of considerable inequality of expertise, for things of importance, when they cannot reliably assess the diligence or expertise of the professional.[50]

Recovery under an insurance policy may also depend on a player fully participating in all available prosecution rights. The difficulty with, and distractions of, litigation have already been noted. And finally, as hard as it may be for an unscrupulous agent to accept, the game of rugby and players' careers are not just about money. Many of the benefits of a successful career cannot be measured in terms of dollars, and thus cannot be compensated for by an insurance or litigation award.

What is there to Regulate?

There has to date been no reported litigation in New Zealand involving professional rugby players and agent misconduct.[51] Why then regulate for a mischief that does not appear to occur in practise?

One answer is that the absence of reported litigation may not accurately reflect the conduct of agents. A player might not have the resources to sue an agent. An agent could be bankrupt or leave the jurisdiction. What point is there spending money on litigation if there is no prospect of recovery?

Moreover, numerous disquieting reports regarding the conduct of sports agents have already appeared in the New Zealand media. These include reports of agents representing clients without written contracts,[52] of people in authority (such as teachers) using positions of influence to pressure athletes,[53] of schools and provinces seeking to "poach" players from one another,[54] of untrained and unskilled family members and friends acting for players,[55] and of agents enticing players and sponsors into contracts through the use of deception and fraud.[56] As Logan reports:

There are stories around of cow-boys and fly-by-nighters coming into the industry. They're on the sidelines at training ready to give out their cards to players once they've finished. They ring firms and potential sponsors proudly announcing they've got exclusive rights to a player, who in fact he has barely met. Then there are those who arrange a deal, and fall well short of their end of the bargain.[57]

The notion that agent misconduct is not an issue of currency in New Zealand also conflicts with a number of statements recently made by lawyers, agents, clubs and administrators. A number of rugby clubs, for example, have expressed the fear that:

[T]he activities of self-styled agents threatens to undermine club rugby, wrecking club loyalties and introducing a financial form of survival of the fittest.[58]

Agents themselves have echoed these comments. As Kahu Barron- Afaeki, a practising lawyer and sports agent, describes:

Because we don't have a system of accreditation in this business, there are still a lot of cowboys out there.[59]

According to one recent article, a number of agents have called for this deficiency to be remedied:

New Zealand's top sports managers want a system of accreditation to rid them of the cowboys plaguing the industry. ... [Brian] Alaelua would like to see accreditation decided by a board of six to 10 people comprising leading lawyers, accountants, sports administrators and past players. "It'll help streamline the whole process and give the industry some much needed credibility. The board can decide by looking at their experience, their general knowledge on a wide range of topics concerning the athlete, and their own networking system".[60]

Even the NZRFU has identified agent misconduct as a source of concern:

The Rugby Union is concerned about the quality of some agents acting for players, but believes it can't control them, chairman Richie Guy said yesterday. Consideration had been given to placing agents under some sort of register or license. "We have looked at that possibility," Guy said. "We are concerned at the number of people who have no skills who are setting themselves up as agents. But I don't think we can control who a player wishes to use as an agent. That's his prerogative."[61]

If New Zealand players and administrators need any reminder of the conduct of which sports agents are capable, they need look no further than North American law and media reports. Numerous references are made to sports agents who have absconded with or embezzled client funds,[62] committed fraud,[63] furthered their own interests at the expense of their clients' interests,[64] charged excessive fees,[65] ignored client instructions,[66] and acted unethically to sign up student athletes.[67] Some suggest deliberate misconduct is, in fact, on the increase.[68]

Moreover, the concern in North America is not only with deliberate misconduct. Commentators suggest that more damage is caused through incompetence and inexperience than fraud and dishonesty.[69] Certainly there are numerous reported instances of players suffering loss through agent negligence and incompetence.[70] Given the intense competition to secure representation of professional athletes, particularly "stars", agents will inevitably feel pressure to offer and provide services which may be outside their realm of expertise.[71] Eugene Parker, an American attorney who acts for a number of NFL and major league baseball players, alluded to this in an interview with Barrister Magazine:

As a lawyer, I'm used to handling legal-related problems. But once a person gets used to you ... they want to trust you with everything. It was a challenge trying to resolve that in my mind. But the competition is so stiff, that if you don't provide it, someone else will.[72]

Players and administrators in New Zealand ought to pause before dismissing the North American experience. Although it is accurate to say that the money involved in North American sport is vastly more than that on offer in New Zealand sport, and that the misconduct which occurs overseas arises in a different social and economic climate, is there any reason to expect that sport agents in New Zealand are or will be any different to their American counterparts? The media reports to date suggest not. The lure of money will attract those prepared to exchange ethics and honesty for potential riches. The pressure to secure and retain clients will force others to over-extend.[73] In either case, without minimum standards of conduct, player abuse is all the more likely to occur.

Fostering a Closed Shop?

Regulation of sports agents in North America has been criticised on the basis that it creates a "closed shop", serving to protect from competition those who meet the qualifying standards. Stiglitz refers to this argument in support of her call for the removal of the rule against player solicitation, which presently applies to American attorneys:

In truth, Steinberg, as an established agent, is not going to be at a competitive disadvantage. Prospective clients will seek him out. But young attorneys who want to break into the business are at a disadvantage. If they do not already know an athlete, there is virtually no legitimate way to break into the business ... .[74]

It is true that mandatory standards may have the affect of excluding some potential agents from the sports agent market, and of making entry more difficult for others. But, as noted, such restrictions may well be necessary for the protection of players and the game as a whole. Mandatory standards should also be acceptable to those who value prudence, competence and ethics. It can hardly be viewed as ethical or prudent for an agent to offer or perform services outside his or her area of competence. To do so exposes a player to unnecessary risk and ignores the "best interests of the client", to which an agent is duty bound to accord paramount importance. Indeed, it might be argued that those who oppose the setting of reasonable standards of competence and ethics on the basis that they will be excluded from the sports agent market are the very agents who should not be in the market in the first place.[75]

The Merits Summarised

There is persuasiveness in the argument that New Zealand should not wait until instances of sports agent misconduct become widespread before setting in place regulation. Not all will agree. But waiting until harm occurs or becomes public before acting can not be in the best interests of players or our national game. Rugby and players' careers are too important to leave agent regulation to the marketplace. Nor can we afford to dismiss the need for regulation simply on the basis of limited player numbers or because of misplaced notions of a closed shop.

There is also merit in considering all-encompassing regulation that would apply to all agents who seek to promote and develop the careers and interests of others. Rugby players do not own a monopoly on vulnerability to agent misconduct. Actors, musicians, artists and the like will continue to suffer at the hands of incompetent and unethical agents unless effective regulation is implemented. Why should the selling of one's house or shares, or the selling of liquor (all of which require an agent to be licensed) be viewed as more important than the development and success of one's career?

IV. EXISTING SOURCES OF REGULATION IN NEW ZEALAND

Sports agents in New Zealand do not have an entirely free hand to operate as they wish. Various aspects of the existing law serve to impose some restrictions on their conduct. The question is whether those restrictions are sufficient.

Common Law and Equity

At common law the notion of "agency" describes a body of rules under which one person, the agent, has the power to change the legal relations of another, the player (in this case).[76] An agent must exhibit such a degree of skill and diligence as is appropriate for the performance of the duties he or she has accepted.[77] Accordingly, a sports agent acting for reward must exercise the degree of care expected of his or her profession. For example, an agent for reward is obliged to adhere strictly to the terms of his or her instructions (provided they are lawful),[78] and where an agent has a discretion, it must be exercised with due care and in the interests of the player.[79] A failure to satisfy these common law standards of conduct will expose an agent to potential liability.[80]

Sports agents contracted to perform professional services are also fiduciaries and as such owe a number of strict duties, including a duty to disclose all potential conflicts of interest, a duty to prefer the player's interests to their own, and a duty not to make any secret profit from their position as agent.[81] Breach of these fiduciary duties will also expose an agent to risk of suit.

The Fair Trading Act 1986 (The "FTA")

The FTA prohibits "misleading or deceptive" conduct "in trade".[82] An agent who secures the representation of a player through misleading statements, for example, or who persuades a client to authorise unnecessary services could face liability under sections 11 and 13. Section 11 provides:

No person shall, in trade, engage in conduct that is liable to mislead the public as to the nature, characteristics, suitability for a purpose, or quantity of services.

Section 13 is more specific, providing, in part:

No person shall, in trade, in connection with the supply or possible supply of ... services...
b) Falsely represent that services are of a particular kind, standard, quality, or quantity, or that they are supplied by any particular person or by any person of a particular trade, qualification, or skill;...
c) Make a false or misleading representation concerning the need for any ... services.

In instances of established breach, the presiding court has the power to impose fines,[83] avoid or vary a contract, order the refund of payments (such as agency fees) previously made to the transgressor, and award damages.[84]

The Contractual Remedies Act 1979 (The "CRA")

The CRA provides that any party who is induced to enter a contract by a misrepresentation, whether innocent or fraudulent, shall be entitled to damages,[85] and may cancel the contract provided the misrepresentation is substantial.[86]

The Consumer Guarantees Act 1995 (The "CGA")

The CGA applies to the provision of goods and services to consumers by suppliers in trade. Depending on how a player structures his or her affairs, he or she may fall within the definition of a consumer.[87] The CGA stipulates certain guarantees. Section 28, for example, provides that "where services are supplied to a consumer there is a guarantee that the service

will be carried out with reasonable care and skill." In instances of breach of guarantee, the CGA provides for a range of remedies including cancellation of a contract and a right to claim damages.[88]

Duress, Undue Influence, Actionable Mistake and Non-est Factum

There are other statutory provisions and common law and equitable doctrines which could conceivably avail a sports player seeking redress for agent misconduct. However, cases of actionable coercion, duress, mistake or non est factum will probably be rare.[89]

The Crimes Act 1961 and The Secret Commissions Act 1910

Agent misconduct could also fall within the scope of certain provisions of the Crimes Act such as the sections dealing with fraud,[90] obtaining property through false pretences,[91] and theft by a person required to account or by a person holding a power of attorney or by a person misappropriating proceeds under direction.[92] In addition, the Secret Commissions Act prohibits corruptly offering, giving, or accepting secret commissions.[93]

Legal Rules, Codes and Review Procedures

Many sports agents in New Zealand are lawyers. This provides their player clients with a number of protections:

i. All practising New Zealand lawyers have been admitted as barristers and solicitors of the High Court.[94] As a result, any undertakings given by a solicitor in the course of his or her practise are enforceable by order of the Court.[95]
ii. All practising lawyers are subject to the New Zealand Law Society's Rules of Professional Conduct For Barristers and Solicitors[96] (the "Code of Conduct"). The Code of Conduct contains core provisions dealing with reasonable fees,[97] obligations of trust and confidence,[98] conflicts of interest,[99] advising on investments,[100] advertising and solicitation,[101] custody of client funds,[102] undertakings,[103] and secret commissions.[104] A lawyer who is guilty of misconduct, conduct unbecoming a barrister and solicitor, negligence or incompetence may be disbarred and struck off the roll.[105] This is a meaningful sanction against those wishing to practise law because it is unlawful for a person who is not currently enrolled to conduct the business of a lawyer.[106]

iii. The Law Society operates a Solicitors' Fidelity Guarantee Fund (the "Fidelity Fund") to which every solicitor who is a partner or who acts on his or her own account must contribute.[107] The Fidelity Fund is applied to the reimbursement of persons who have suffered pecuniary loss by reason of the theft by a solicitor (or by his or her employee or agent) of money or property entrusted to that solicitor.[108] Depending on the nature of the theft, this fund may be available to a player who has been defrauded.[109]
iv. Some law firms carry professional indemnity insurance which may provide a source of funds in cases of loss caused by, for example, negligent advice.
v. In the event of a dispute regarding a fee rendered by a lawyer, a review procedure is available involving the appropriate District Law Society and the High Court.[110]

The NZRFU, RUPA[111] and ANZSLA[112]

None of these organisations provide a source of agent regulation. As noted, the NZRFU's view is that representation is a matter of choice for individual players.[113] The RUPA does not have a process of agent certification, and ANZSLA does not appear to have published a code of conduct nor does it have enforceable procedures for policing agent competence and ethics.

Conclusions on Existing Regulation

The above assessment summarises the extent of existing sports agent regulation in New Zealand. This regulation is far from complete and contains numerous deficiencies:

i. Anyone can be an agent. There are no mandatory standards of expertise or competence. All an "agent" needs to start business, is a client.
ii. Based on North American experience, avenues of legal redress (such as the common law action for negligence or suits under consumer focused legislation) do little to deter misconduct. Moreover, as noted earlier, litigation may also be less than effective in resurrecting a ruined career.

iii. Whilst those agents who are lawyers are covered by the Code of Conduct, duties to the High Court and review procedures, these standards have no application to agents who are not admitted as barristers and solicitors. Uncertainty can also arise when lawyers represent players through management companies.[114]
iv. The protection afforded to clients of lawyers is, in any event, incomplete. In terms of competence, there is no guarantee that a practising lawyer has all the skills and experience necessary to competently represent a player. Income investment, intellectual property and taxation, for example, are not compulsory subjects in the current law school curriculum.[115] Indeed, the move by Parliament in 1993 to limit the scope of the Fidelity Fund (by excluding claims connected with money given to lawyers to invest) sent a clear message to the general public that lawyers ought not to be in the investment business.
v. Importantly, the Fidelity Fund has no application to loss caused by negligent advice. Nor is there any guarantee that a law firm will have filled this void by taking out professional indemnity insurance.[116]
vi. Finally, it must be noted that disbarrment does not prevent a person continuing to act as a sports agent. He or she is simply prevented from practising as a lawyer.

Given these deficiencies, it is of value to consider ways in which agent regulation might be enhanced. In terms of the regulation of professional sport, North America has had considerable experience. Various types of sports agent regulation have been attempted in collegiate sport and the four leading professional codes; baseball (MLB), ice hockey (NHL), football (NFL) and basketball (NBA). While some of these attempts have been more successful than others, all can provide useful lessons for New Zealand.

V. NORTH AMERICAN GENERAL LAW

North American courts have held that agents must exercise the utmost degree of good faith, honesty and loyalty towards their clients.[117] This standard applies to all tasks assigned to an agent including investing money[118] and negotiating contracts.[119] Agents must articulate all potential conflicts of interest and obtain prior informed consent before continuing to act.[120]

Agreed services must also be competently performed according to a reasonable professional standard.[121] A failure to discharge these requirements will be actionable at the suit of a player.[122]

In addition, there are criminal statutes which may cover agent misconduct. Actions have been commenced against agents under the Racketeer Influenced and Corrupt Organizations Act[123] and the Mail Fraud Act.[124] There are also criminal provisions prohibiting the corrupt payment and acceptance of secret commissions.[125]

Application to New Zealand

The principles of agency and fiduciary duties, and the criminal sanctions, applicable in North America, are similar to those which apply in New Zealand. However, as is the case in New Zealand, these criminal sanctions and avenues for civil redress are retrospective, and have proven largely ineffectual in preventing abuse occurring in the first place.[126]

VI. Legal Codes of Conduct

North American bar associations have developed rules of conduct which apply to their members. The American Bar Association approved a Model Code of Professional Responsibility in 1970 ("MCPR") and Model Rules of Professional Conduct in 1983 ("MRPC").[127] Lawyers in each state are regulated by their State Supreme Courts or State Bar Associations, each of which have adopted the MCPR and/or the MRPC in whole or in part.[128] Similarly, lawyers in Canada are governed by provincial codes of conduct such as the Ontario Law Society of Upper Canada Professional Code of

Conduct ("PCC").[129]

While there are discrepancies between the various jurisdictions, these codes generally include core provisions on integrity,[130] competence,[131] honesty,[132] maintaining client confidentiality,[133] conflicts of interest,[134] fees,[135] the safekeeping of client property,[136] and solicitation.[137]

Although there has been debate as to whether these rules apply to lawyers when they act as sports agents,[138] the predominant view is that they apply to all practising lawyers irrespective of the nature of their clients.[139]

Application to New Zealand

While effective within limited boundaries, the North American legal codes of conduct face the same limitations that restrict the Code of Conduct in New Zealand. Legal ethics provide valuable protection, but only go so far.

VII. THE ASSOCIATION OF REPRESENTATIVES OF PROFESSIONAL ATHLETES (THE "ARPA")

The ARPA is a voluntary organisation formed in the United States of America in 1978.[140] It comprises agents from various sports and its stated purpose is to provide for competent and honest representation of professional athletes.[141] Its code of ethics includes provisions on competence, dignified representation, fees, confidentiality, integrity, and management responsibility.[142] The body is self regulating and conducts seminars on these topics aimed at maintaining and increasing standards of agent competency and behaviour.

Whilst membership is used as a marketing point (in that agents are able to promote their services on the basis that they belong to the Association and have agreed to comply with its standards), the ARPA has generally been viewed as a "toothless" organisation.[143] This is principally because its membership is voluntary. As is often the case with voluntary regulation, those most likely to join this kind of association are the agents who are ethical and competent. Unfortunately, the converse is also true; unethical and incompetent agents can simply ignore it.[144] As a voluntary organisation, the ARPA also has no effective enforcement mechanism. Violation results only in expulsion, an irrelevant penalty for those who refuse to join in the first place and for those who continue to work in the field despite receiving this sanction. Criticism has also been levelled at the breadth of the ARPA rules because they fail to specify detailed standards of agent conduct.[145]

Application to New Zealand

There is nothing to stop sports agents forming an association in New Zealand whether as an incorporated society or otherwise. ANZSLA is an example. However, the ability of voluntary associations to implement effective regulation and industry standards is debatable. Much would depend upon the willingness of agents to join and of players to engage only agents who are members.[146]

The North American experience is clear. Regulation through voluntary organisations does not work. It is, therefore, disconcerting to read the recent urgings of the editor of Rugby World, an international publication based in the United Kingdom:

In order to protect the players - Rugby World is urging the leading agencies to unite and form a self-regulated body before things get out of hand. They need to include a code of conduct, and offer help and support to new agents, as well as protecting against the unscrupulous. Then clubs need to emphasise, in their professional advice to players, that it is vital for them to seek out an agent who is properly registered with this body.[147]

The failings of voluntary associations in North America must also be kept in mind when one assesses the calls that some commentators in New Zealand have made for the introduction of a system of accreditation.[148]

VIII. The National Collegiate Athletic Association ("NCAA")

The NCAA is a private unincorporated association composed of over 800 colleges and universities engaged in athletic competition in the United States of America.[149] Its major purpose is to regulate competition among its members. American College sport is a multi-million dollar business. The NCAA's budget for 1995-1996 was $220,650,000.[150] NCAA television contracts are worth billions of dollars,[151] some university coaches are receiving six and seven figure annual salaries,[152] and teams are receiving millions for reaching championship finals.[153]

Given the value of the product, and the excesses of agents such as Norby Walters and Lloyd Bloom[154] and general managers such as Pete Rozelle,[155] it is little wonder the NCAA moved to regulate sports agents. It did so by introducing rules prohibiting an athlete entering into a representation contract with an agent[156] or accepting any benefits from an agent[157] while he or she is eligible for intercollegiate sport.[158] Violation exposes a player to risk of expulsion from intercollegiate sport[159] and his or her college to possible sanctions.[160] The rules do not, however, provide any direct sanctions against infringing agents - nor could they - they do not have the force of law.[161] Nor can "expulsion" be utilised as a sanction, as sports agents are not members of the association.

In 1984 the NCAA also adopted an agent registration programme.[162] This was a voluntary programme under which agents applied to register. Applications had to be accompanied by details on the agent's educational and occupational background. By registering, agents agreed not to undertake any activities which would jeopardise a player's NCAA eligibility and also to notify a college's athletic director before contacting a coach or a player.[163] Those who were registered had their names entered on a list which was then made available to NCAA members. Breach of the applicable rules resulted in the removal of an agent's name from that list.

This system proved ineffectual. Registration was voluntary, so very few agents applied. Moreover, other than deletion of an agent's name from its list of registered representatives, the NCAA had no mechanism for sanctioning agents guilty of misconduct. In the end result, the NCAA's rules and registration system were largely ignored. As one agent stated:

The NCAA rules are not the laws of the United States. They're simply a bunch of hypocritical and unworkable rules set up by the NCAA. As an agent, I absolutely was not bound by them. The NCAA rules are meaningless. The coaches themselves, the people who are supposed to be bound by them, don't abide by them either. Hell, nobody follows
the NCAA rules.[164]

Not surprisingly, the NCAA's agent registration programme was abandoned in 1990.[165]

Application to New Zealand

The ability of New Zealand schools, colleges and universities to directly control the conduct of sports agents is very limited, even if the drawbacks of the NCAA registration system are put to one side. University sport in the United States is an enormous business. Whilst not the exclusive feeder system for all professional sports, the majority of athletes pass through the collegiate system before turning professional (particularly in football and basketball). In contrast, university sport in New Zealand does not have the financial base nor the connection with professional leagues enjoyed by its North American counterpart. Most rugby players, for example, are selected for the highest honours without having attended university. The emphasis for rugby players is to be selected for regional and then national teams. Selection for university teams may or may not be a step on the way for some. The introduction of effective agent control through rules promulgated by an association of universities and colleges is then, very unlikely to occur in New Zealand.

Moreover, doubts must arise as to the ability of secondary schools to control agent abuse. While there has been talk of schools addressing this issue,[166] any rules or procedures put in place by a school would obviously be without the force of law. Agents could simply ignore them, and the only parties likely to be punished in instances of transgression would be students, the very people requiring protection from agent abuse.

That said, the educational role which universities, colleges and schools can and do play is extremely important.[167] Sports related courses are ideal vehicles for conveying to those students who are, or may become, agents or professional players, what can and ought to be expected from sports agents.

IX. PLAYERS' ASSOCIATIONS

A more effective source of agent regulation in the United States has stemmed from the players' associations (unions) which operate in each of the four main professional sports. For example, the National Football League Players' Association (the "NFLPA") adopted an agent regulation scheme[168] because:

[O]f the growing concern among NFL players about the quality of representation offered in the past by lawyers, agents, and others in individual contract negotiations with NFL clubs.[169]

similar schemes have subsequently been adopted by the National Basketball Players' Association,[170] the Major League Baseball Players' Association [171] and, most recently, by the National Hockey League Players' Association.[172]

These schemes regulate the conduct of sports agents primarily by limiting access to the sports agent market. By way of example, the NFLPA regulations provide that "only the NFLPA or its agents" can negotiate individual NFL player contracts.[173] In order to be covered by this clause, a prospective agent must apply to the NFLPA for certification. Each applicant is required to provide details of expertise which are then considered by the NFLPA. Once certified, an agent must follow NFLPA rules on various matters including the form and content of representation contracts, maximum fees, attendance at seminars, player inducements and conflicts of interest.[174] Violation can result in various penalties including fines, reprimands and de-certification.

The NFLPA regulations derive their effectiveness in two ways. First, the NFLPA prohibits NFL players engaging non-certified agents.[175] And secondly, the NFL Management Council has (on behalf of team owners) agreed with the NFLPA that teams will not negotiate with non-certified agents.[176] Registration is then, in effect, compulsory and de-certification is an extremely effective sanction as it prevents an agent from representing any NFL players.[177]

While this source of regulation has proven to be more effective than the voluntary approach adopted by the NCAA and the ARPA, it has not escaped criticism. Each system of regulation applies only to its particular sport, and there are inconsistencies between them. Critics also argue that the regulations fail to provide specific, objective criteria for granting or denying certification. One agent has gone as far as stating that:

The (NFLPA) regulations are a farce because everybody gets certified. No objective criteria means everybody gets in and can stay in as long as they go to a seminar once a year.[178]

Application to New Zealand

As the law presently stands in New Zealand, there are two fundamental impediments to a players' association (such as the RUPA) adopting enforceable agent regulations. The first will arise if professional rugby players in New Zealand are held to be employees,[179] and relates to the status of unions. Union-based regulation works in North America because the four player unions are the exclusive bargaining agents in each of their sports. They alone can negotiate on behalf of players in each of the league bargaining units, and, supposedly, they alone can chose to whom they will delegate portions of that right (i.e., the portion relating to the negotiation of player specific terms of employment).

Conversely, unions in New Zealand no longer enjoy any right to exclusive representation.[180] Each employee in New Zealand is now free to choose whether to be represented[181] and, if so, by whom.[182] A union represents only those employees who have specifically authorised it to represent them and any contract it negotiates binds only those employees whom it represents at the time of ratification.[183] Thus, a players' association is unable to compel all players to join its ranks.[184] Nor is there any way a players' association can compel any employee (whether a member of the association or not) to use only agents which it has certified. A provision in any collective agreement or membership rules to this effect would conflict with the free choice guaranteed to each employee by the Employment Contracts Act, and, as such, would be unenforceable.

The second impediment arises from competition law, and would cause difficulties whether or not professional rugby players are viewed as employees. The Commerce Act 1986 prohibits certain anti-competitive practices including any contract or arrangement or understanding which substantially lessens competition in a market.[185] In order for any association based agent regulation to be effective, the association in question would have to obtain from the employer/principal (in this case the NZRFU) an agreement that the NZRFU would not deal with any non-certified agents.[186]

Depending on the court's view of the applicable market, a contract, arrangement or understanding of this kind could be viewed as lessening competition. Whilst parties can seek Commerce Commission authorisation for an arrangement (for example) that would otherwise contravene the Act,[187] the likelihood of authorisation being granted in this instance is extremely remote. If professional players are employees, authorising this restriction would conflict with an employee's statutorily protected right to choose whether to be represented and, if so, by whom.[188] In any event, upholding such an arrangement between the NZRFU and an association would be tantamount to imposing the will of a voluntary (and potentially unaccountable) organisation on all professional players, irrespective of whether they were members, something which is unlikely to be viewed as in the public interest.[189]

As the sole employer/principal the NZRFU could, in theory, unilaterally impose standards by refusing to deal with agents who did not meet certain criteria. However, this would also probably be viewed as unlawful. If the NZRFU is held to be an employer, it is statutorily required to recognise any bargaining representative an employee selects.[190] Whether or not the NZRFU is an employer, such a stance could well breach the prohibition on a person (including an entity) using its dominant position in any market (in this case the market involving the employment or engagement of professional rugby players in New Zealand) to restrict the entry of any person into any other market (the market involving the representation of those players).[191]

X. STATE LEGISLATION

More than half the states in the United States of America have enacted their own legislative regulation of sports agents.[192] While there is little point in canvassing each of these statutes separately (as most contain similar features), there is value in reviewing the core provisions which have been included in many of these enactments.[193]

Registration, Certification, and Licensing

At least fifteen states mandate certification as a prerequisite to a person acting as a sports agent and most of these states oblige applicants to pay a registration fee.[194] Various statutes require the person or body considering the application to take into account the education, training, experience and character of the applicant.[195] Others require references.[196] Florida goes as far as obliging applicants to pass a test on the law and rules applicable to sports agents.[197] In addition, sports agents in a number of jurisdictions are required to post a bond which is then available to compensate an athlete for damage caused by that agent's misconduct,[198] while other jurisdictions accept either a bond or evidence of an equivalent level of liability insurance cover.[199]

Reporting Requirements

A number of states require an agent to file with a central entity all representation agreements entered into with players,[200] and the agent's fee schedules.[201] Various statutes also require agents to keep complete financial and business records and to make them available for inspection when requested.[202]

Fees

Some states limit the fees agents can charge. Various approaches have been taken including limiting fees when an agent fails to secure a contract for his or her client,[203] prohibiting fees above a certain percentage of a player's total yearly earnings,[204] and capping fees on multi-year contracts.[205]

The Form and Content of Representation Contracts

Various statutes mandate the use of standard form representation contracts,[206] and require such contracts to include fee schedules.[207] The majority of statutes also require representation contracts to include an express disclaimer that registration or certification of an agent is not to be taken as state endorsement of the agent.[208]

Prohibited Activities

Most statutes include a list of prohibited activities such as the co-mingling of an agent's assets with the assets of any player, financial mismanagement, bad faith or dishonesty, performing professional services that an agent knows or should have known were beyond his or her areas of competence,[209]

dividing fees with or receiving compensation from a professional sports league or franchise, offering inducements to college or university athletes, giving any false information or making any false promises or representations concerning any employment of any person, and publishing or causing to be published any false, fraudulent or misleading information, representation, notice or advertisement.[210]

Enforcement Mechanisms

Various approaches have been taken to enforcement, including suspension or revocation of an agent's licence or certificate,[211] forfeiture of any payments made or bonds deposited by an agent,[212] fines,[213] and imprisonment.[214] A number of statutes also expressly provide for the recovery of civil damages.[215] In addition, some states specify time periods within which student athletes can rescind representation contracts,[216] while others expressly provide that contracts entered into in violation of the applicable statutory provisions are void and unenforceable.[217]

The Overall Effect of State Legislation

Viewed collectively the various state statutes are comprehensive. Those difficulties that have arisen, have stemmed primarily from inconsistencies between different statutes and jurisdictions. This has resulted in some agents deliberately locating their operations and contracts "out of state" so as to avoid the operation of particular regulations.[218] Critics have also identified deficiencies in the coverage of particular statutes, including, in some cases, the absence of specific guidelines against which applications for registration can be considered.[219]

Application to New Zealand

These statutes provide valuable examples of approaches New Zealand could take to legislative regulation. Problems of scope and ineffective application guidelines are far from insurmountable, and concerns with inter- state jurisdiction would obviously not arise in the New Zealand context.

XI. CONCLUSIONS AND RECOMMENDATIONS

Professional rugby in New Zealand faces an important challenge. Waiting until careers are ruined or until misconduct becomes widespread before addressing the issue of agent regulation can not be in the best interests of our national game. Many have noted with concern the increasing occurrence of unethical and incompetent representation, but most appear unwilling to take the initiative, preferring instead to leave the issue to someone else. If the best interests of rugby are to be safeguarded, the issue of agent regulation needs to be treated as a priority.

The right to sue under common law and the existing consumer orientated statutes are not pro-active. They do nothing to prevent unethical and incompetent agents entering the marketplace. As many players may discover to their peril, the right to sue to recover losses already incurred may be of little or no value.

Those players who engage lawyers will receive a degree of protection. Because of this, some commentators have suggested that the sports agent market ought to be restricted to lawyers.[220] There are any number of reasons why this suggestion ought not to be adopted in New Zealand. Admission as a barrister and solicitor does not necessarily mean a lawyer will have all the skills and competence necessary to act as a sports agent. Restricting the market to lawyers would also have the practical effect of denying players access to agents with diverse and valuable experiences.[221] That the Fidelity Fund is limited and that not all lawyers carry professional indemnity insurance is also material, for it means that the notion of "client protection" in the legal profession is far from complete. And finally, the unfortunate reality is that lawyers lack the necessary track record to claim that their profession is free from misconduct.[222]

Even if these significant limitations were put to one side, restricting the sports agent market to lawyers is unlikely to meet with public approval. As Dare has noted:

Sadly, there is a widespread and ancient perception that they [lawyers] are grasping, callous, self-serving, devious, indifferent to justice, truth and the public good.223

Rather than seeking to restrict the sports agent market to certain types of agent, steps should be taken to ensure that all agents meet acceptable standards of competence and ethics. Thus, while the Code of Conduct provides valuable protection, it is far from a complete answer.

Regulation through players' or agents' associations would be problematic. The voluntary nature of such arrangements undermine their effectiveness and any attempt to impose compulsion would likely contravene existing

competition and employment laws. Different sources of voluntary regulation can also lead to inconsistencies and duplication of resources. Similarly, universities, colleges and secondary schools are not strategically placed to implement enforceable standards of agent competence and conduct.

In sum, if New Zealand sport is to benefit from effective and enforceable agent regulation, legislation will be required. In terms of the form and content of that legislation, much can be learned from the North American experience. By way of example, the following features could be considered for inclusion in any legislation passed:

i. A mandatory certification process. This ought to require all applicants (including lawyers) to fully and accurately detail their educational, occupational and practical experience, and to provide references. In terms of the scope of the certification requirement, one of two approaches could be taken. Either certification could be made compulsory for all sports agents, or compulsory only for those agents who wish to promote themselves as "registered". Under the first approach, it would be an offence for any non-certified individual to act as a sports agent; under the latter, anyone could act as an agent, but only those who were certified could promote and describe themselves as "registered agents". [224]
ii. A requirement that a fee is paid for filing a certification application so that tax payers are not required to meet the costs of the process.
iii. Clear, reasonable and objective criteria against which applications can be considered by a panel of independent and qualified assessors.
iv. A requirement that the assessing panel conduct background checks.
v. The use of entrance examinations in cases where an applicant's knowledge or expertise appears marginal.
vi. The setting up of a central register containing the contact details of those agents who are certified, which is able to be accessed by coaches, players and teams.
vii. The payment of a bond or evidence of insurance cover to a specified level.
viii. The inclusion of specific standards of competence and ethics (to which all certified agents would be required to adhere); a list of prohibited actions and conduct; and limits on agency fees in certain instances (i.e., the percentage payable where a multi-year contract is signed).
ix. A requirement that all representation agreements contain certain core provisions (such as a dispute resolution procedure).
x. And finally, the inclusion of effective and enforceable sanctions, including de-certification. Contracts entered into with non-certified agents should also be unenforceable against the player concerned.[225]

Legislative change in New Zealand can take time and energy, particularly in the environment of MMP. Those with an interest in sport need to lobby for agent regulation, or it may never occur. Organisations such as the NZRFU, the RUPA and the various bodies which control other professional codes in New Zealand all have an interest in preventing agent misconduct and protecting the integrity of their sport. As such, they ought to be calling for proactive, enforceable and effective standards.[226]

In the interim, steps can and should be taken to protect players from abuse. The key is education, both of agents and players. Agents should be informed of their duties and obligations and players given advice about what to request and expect from agents. Guidance could usefully be given on a range of issues relating to agency relationships, including:

i. The need for an agent. A professional career is beyond the reach of the vast majority of players. Players need advice about the possible costs and benefits of representation, before they spend money on engaging an agent.
ii. The degree of representation required. The representation needs of many professional players will be limited to certain core functions. For example, many players will not be able to secure lucrative merchandising deals. Care needs to be taken in advising a player on the type of representation services he or she should realistically be paying for.
iii. The type of agents available. There are a number of options, including lawyers, financial consultants, ex-players and the like. What are the advantages and disadvantages of selecting one type of representation over another?
iv. Agent fees. What fee structures are available (i.e., an hourly rate, commissions, up front fees or deferred payments due only when player contingencies are realised)? Does the agent propose charging different fees for different services? What rates are reasonable? Should an agent receive a commission on a merchandising deal secured directly by a player?
v. Insurance and liability. Does the agent carry professional indemnity insurance? What does it cover? Does the agent have limited liability (through a company or a limitation contract, for example)?
vi. Representation contracts. What are the terms to look out for? Are there, for example, dispute resolution procedures to which an agent and player can turn to resolve difficulties, so as to avoid litigation?
vii. Conflicts of interest. For whom does the agent work? Is it, for example, prudent for an officer of a players' association to also represent an individual player in contract negotiations?[227] What other players does an agent act for? What procedure is to be followed for the disclosure and resolution of potential conflicts?

Access to this information is critical. Coaches, teams, clubs, educational institutions and the entities which govern the various sporting codes must take a responsible approach and ensure that players receive sound objective advice on these issues.[228] However, it must be remembered that information disclosure and education is only a start, and is no substitute for effective regulation.

Professional sport (and rugby in particular) is in a unique position to take the initiative on agent regulation. Yet, with the appropriate support, effective regulation need not be limited to sports agents. There would be much to commend legislatively based regulation which applies to all agents who seek to develop and promote the careers and interests of others. This will, however, require the participants in the relevant industries (such as entertainment, music, art, modelling and the like) to lobby for, and support, the call for minimum standards of agent competence and expertise.

In terms of rugby in particular, some will say that calls for agent regulation are an "over-reaction". These critics should, perhaps, consider this issue from different perspectives. First, from the perspective of an up and coming player. Turning professional is far from easy. Very few will have the opportunity to try. Those who try will need all the help they can get, and much of that help may be sought from agents. Incompetence and misconduct on the part of agents has destroyed, and will continue to destroy, careers before they even start. And for those with the luck and talent to turn professional, their careers will be perilous. A professional player will usually have only one sports career, and it will probably be short. Incompetent advice or agent misconduct will make it that much shorter.

Second, from the point of view of sports agents. Those who are guilty of misconduct tarnish the sports agent industry as a whole.[229] Minimising the likelihood of misconduct will assist the industry without unduly burdening those competent and ethical agents who will meet the required standards in any event.

And finally, from the perspective of the sport of rugby. It is our national game. It is a fundamental component of our recent heritage and our present- day culture. It is a sport to which we continue to devote significant time and resources, not the least of which is the creation of a rugby institute. That we do so is no coincidence - rugby is very important in New Zealand. Threats to the continuing development of this sport in our country should not, then, be treated lightly. Agent misconduct quite clearly presents such a threat, and not just to the professional code.

Those who represent players should be required to meet appropriate standards of competence and ethics and be held accountable for their actions.[230] If minimum standards are not instituted, and enforced, New Zealand rugby as a whole may well suffer.


[*] Labour Law and Relations Specialist, International Labour Organisation, Geneva

[1] R Ruxin, An Athlete's Guide to Agents (Bloomingdale: Indiana University Press, 1983), p 22.

[2] R. Nichols, "Agent, Lawyer, Agent/Lawyer ... Who Can Best Represent Student Athletes?" (1996) 14 Ent & Sp LJ 1 at 24.

[3] A Kervin, "No Room in Rugby for 'Arthur Daleys'" [1997] Rugby World, September, 6.

[4] Wilson Whineray, in R Chester, & N McMillan, Men in Black, 75 Years of New Zealand International Rugby (London: Pelham, 1978), p 16.

[5] I Stafford, "The Money Game" [1994] Rugby World, September, 19.

[6] Fans often referred to other codes "stealing" players, a term which reflected the way in which many viewed the loss of leading players. See for example, G Campbell, "A Game Under Attack" [1994] Rugby World, December, 32.

[7] Ibid at 32. All the players noted received considerable salaries from their respective English and Australian clubs. John Gallagher, for example, signed with the Leeds Rugby League Club in May 1990 for £340,000. (See "The 1£ Million Man" [1997] Rugby World, May, 28 at 35).

[8] I Williams, "Samurai Rugby" [1994] Rugby World, December, 40.

[9] See D Cameron, "All Blacks Bring Bucks to the System" [1993] Rugby World and Post, August, 67.

[10] Many in existing rugby circles referred to the World Rugby Corporation as the "rebel" league. (See for example, "The Death of Amateurism" [1995] Rugby World, September, 27). One veteran rugby writer in New Zealand, TP McLean, was moved to write: "God save rugby. Assuredly no one else can." Quoted in "The Death of Amateurism", at 28.

[11] News Corporation pledged NZ$750 million over 10 years in exchange for television rights during that period. See G Campbell, "Held to Ransom" [1996] Rugby World, June,

[61] .

[12] The World Rugby Corporation did likewise with its own negotiators. See "The Death of Amateurism", op cit n 10, at 27.

[13] "The Report That Changed the Game" [1995] Rugby World, October, 13. These were two of a number of recommendations made.

[14] See " Review of the Year: 1995" [1996] Rugby World, January, 39.

[15] "Professional Queries" (Undated). Release by the NZRFU. [On file with author].

[16] Some players were reportedly offered in the order of $300,000 per annum. See "The Death of Amateurism" op cit n 10, at 28.

[17] Lomu was reportedly offered £500,000 by Wigan and £1.25 million by the Dallas Cowboys. See "Attack of the Giant Jonah" [1997] Rugby World, January, 30 at 33.

[18] New Zealand Official YearBook 1996, 99th ed., (Wellington: Statistics New Zealand,

[1996] ) at 300.

[19] A wide range of professional sports are played by New Zealanders, both at home and abroad, including rugby league, tennis, golf, cricket, squash, boxing, softball, motor racing and the like. New Zealand based sports agents act in many of these sports.

[20] Many of the points made in this paper are, however, applicable to any agent who seeks to promote and develop the careers and interests of others, whether in professional sports or other industries such as entertainment, acting, modelling, art or music.

[21] Figures released by the NZRFU, November 1997. [On file with author]. See also G Morley, "Security Key to Keeping Players" (1998) The Evening Post, 18 June, 32.

[22] R Palenski, "There's More to Rugby Now than Just Scoring More Points" (1996) The Dominion, 19 October, 60. This view has been endorsed by at least one player, who reportedly stated that NZRFU contracts are "not the bed of roses people think." See "Rich, NZRFU in Dispute Over Contract" (1997) The Dominion, 30 July, 48.

[23] Agents can, for example, shield a player from the "exaggerated criticisms" that often form part of the "negotiating ritual" (see G Uberstine, Law of Professional and Amateur Sport (Deerfield, Ill. Clark, Boardman and Callaghan, 1988), para. 1.02(1)(a)), and can also serve to balance the negotiating skills and tactics of professional clubs and leagues. See for example, Los Angeles Rams Football Club v Canon (185 F.Supp.717 (S.D. Cal. 1960)) which involved a dispute over whether Billy Cannon, a senior all-American football player at Louisiana State University, would be required to honour a contract he signed with the Rams. In permitting Cannon to rescind the contract, the court was influenced by the fact that Cannon was not represented in the contract negotiations. of interest was the court's view that the presence of a sports agent could have altered the outcome of the case, for an agent could have countered the sophisticated negotiating tactics of the club's general manager.

[24] W Champion Jr, "Attorneys Qua Sports Agents: An Ethical Conundrum" (1997) 7 Marq SLJ 349 at 352; S Beattie, "Taking Care of Business in Rugby's Rich New Era" (1996) The

[25] Evening Post, 19 September, 29; L Cleave, "It's the Lomuburger" (1996) The Sunday News (Auckland), 28 April, 4.

[25] See for example, M Hinton, "Frankie has Few Regrets" (1998) The Sunday Star Times, 28 June, 7; P Lampp, "Hurricans Players Look to England" (1998) Evening Standard, 13 May, 32; "Brooke Stays Focused on Tour" (1997) The Press, 6 November, 40; M Campbell, "Pay To Stay" (1996) The Sunday News (Auckland) 1 December, 1996, 64.

[26] See for example, M Alexander, "Fitzy Hooks Ad Dollars" (1998) Sunday Star Times, 3 May, 5; "Gatland Faces Near Impossible Task" (1998) Waikato Times, 26 February, 10; J Mitchell, "All Black Prepares England for All Blacks" (1997) The Press, 19 September,

[23] .

[27] In this regard, it is disquieting to see that the NZRFU and the Inland Revenue Department are purporting to offer advice and guidance to players on issues such as income protection insurance and taxation (see for example, P Taylor, "ACC Payments for Pro Sports Cause Headaches" (1996) The Dominion, 29 January, 11; "Tax Laws Tightened for Sport" (1997) The Press, 24 July, 33). Clearly there exists the potential for conflicts of interest to arise between player and employer/principal (and between player and Government Department) in respect of these and other issues. Recent examples include the conflicts over boot sponsorship deals (see A Sanders, "Another Boot, Another Battle" (1998) Sunday Star Times, 22 February, 1), and the NZRFU's player transfer system (see "Players' Association Loses Transfer Appeal" (1997) The Press, 15 August, 24). Given the potential for conflicts of this nature, it is vital that players obtain independent advice.

[28] Players find themselves in a conundrum, for a lack of business experience is often the very reason for engaging an agent. See M Greenberg, Sports Law Practice (Charlottesville:

Michie Co. 1993), p 891.

[29] See for example, M Hinton, "Its Not All Wheeling and Dealing" (1997) Sunday Star

Times, 9 March, 2.

[30] See for example, the cases of sports agent misconduct in North America referred to below, nn 62-71 and accompanying text.

[31] Nichols, op cit n 2, at 22. See also L Hanson, "The Florida Legislative Revisits the Regulation and Liability of Sports Agents and Student Athletes" (1996) 25 Stetson LRev 1067, on the importance of regulation in relation to young players.

[32] S McMorran, "Player Payments Concern Chairman" (1996) The Dominion, 8 March,

[21] .

[33] New Zealand Secondary Schools Sports Council 1997 Directory, noted in G Dalton, "Anger at Agents Luring Talented School Athletes" (1997) The Sunday Star Times, 27 April, 11. See also D Ogilvie, "Keeping the Eye on the Future" (1995) The Evening Post,

[13] April, 33.

[34] There has not yet been sufficient time to assess the average career length of a professional rugby player. However, the North American experience is that the average career in professional football, baseball and basketball ranges from 3.5 to 4.5 years. See G Kohn, "Sports Agents Representing Professional Athletes: Being Certified Means Never Having to Say You're Qualified" (1988) 6:3 Ent Sp LJ 1 at 15.

[35] An American attorney, who was formerly the disciplinary officer for the National Hockey League ("NHL"), and is now general manager of the Vancouver Canucks NHL franchise.

[36] B Burke, "Negotiations Involving Agents and General Managers in the NHL" (1993) 4 Marq SLJ 35 at 41.

[37] While the salaries available to leading All Blacks approach or exceed $250,000 per annum, the payments available overseas are, in some cases, significantly greater. Frank Bunce was reported to have accepted a contract for approximately $400,000 per year to

play in France (see Hinton, op cit n 25), while Zinzan Brooke's contract with Harlequins in England was said to be worth closer to $500,000 per year (see "Brooke Stays Focused on Tour", op cit n 25). Nor should it be forgotten that sport in general generates $1.75 billion dollars for the New Zealand economy each year. See D Johnson, "Sport Worth Billions to NZ Economy" (1998) The Sunday Star Times, 24 May, 2.

[38] G Schubert et al, Sports Law (St. Paul, Minnesota: West Publishing, 1986), sec. 5.1.

[39] Andy Haden, reported in S Beattie, "Taking Care of Business in Rugby's New Era" (1996) The Evening Post, 19 September, 29.

[40] Ruxin, op cit n 1, at 21.

[41] Kohn, op cit n 34, at 17.

[42] Burke, op cit n 36, at 39. A similar sentiment has been expressed by Wellington sports agent, and lawyer, David Howman. See Ogilvie, op cit n 33.

[43] One American lawyer has gone as far as suggesting that the only effective way to regulate against agent misconduct is to sue. See E King Jr, "Practical Advice For Agents: How to Avoid Being Sued" (1993) 4 Marq SLJ 89 at 96. Not surprisingly, King makes his living from litigation.

[44] Cover can be obtained for misconduct such theft, embezzlement, fraud, dishonesty, negligence and wilful default. See European Assurance Society v Bank of Toronto (1875) 7 Rev Leg 57; MacGillivary & Parkington, Insurance Law, 8th ed. (London: Sweet &

Maxwell, 1986), p 974.

[45] This self help remedy does, of course, carry with it the risk that an agent will successfully establish compliance with the required standards of competence (see for example, Zinn v

Parish, [1981] USCA7 280; 644 F. 2d 360 (7th Cir. 1981)). A player then faces the prospect of paying the fees in question together with interest and court costs.

[46] D Fehr, "Union Views Concerning Agents: With Commentary on the Present Situation in Major League Baseball" (1993) 4 Marq SLJ 71 at 71-72. It is interesting to note that the NZRFU arranged a seminar, held in Auckland on 25 February 1996, entitled "Professional Rugby - The Opportunities and Responsibilities", at which various issues related to professionalism were discussed, including the merits or otherwise of agents and managers. Significantly, the number of players in attendance was limited to 46. See L Smith, "The Dizzy Pace of Pro Rugby" (1996) The Sunday News (Auckland), 11 February, 48.

[47] Grosse & Warren assert that unethical and incompetent agents continue to gain new clients long after they begin their pattern of abuse. See W Grosse & E Warren, "The Regulation, Control, and Protection of Athlete Agents" (1991) 19 NKYL Rev 49 at 55. Richard Sorkin certainly bears testimony to this. See below, n 49.

[48] There are reports, for example, of players engaging agents without any written contract at all. See for example, Hinton, op cit n 29; I Logan, "Managing All Right" (1996) The Sunday Star News, 7 April, 52.

[49] J Giulietti, "Agents of Professional Athletes" (1980) 15 NEng LRev 545 at 572. In the cases to which Giulietti refers, the agents were bankrupt and the players recovered little of

[50] their loss. One player, Dennis Duval, was himself forced into bankruptcy because of his agent's actions. See R Ruxin, "Unsportsmanlike Conduct: The Student, The NCAA and

Agents" (1981-1982) 8:8 JColl & U L 347.

[50] T Dare, "Legal Ethics and Legal Education" (1997) NZLJ 311 at 314.

[51] There has, however, been a case where Jonah Lomu found himself involved in litigation over a merchandising deal which his agent negotiated. See Magic Merchandise v Lomu (Unreported, Barker J, 3 March 1997, HC, Auckland, CP 38/96); A van Melle, "Sports Personality Merchandising" (1997) NZLJ, August, 260. Although this claim has now been settled out of court, it nevertheless represented a player becoming embroiled in distracting litigation.

[52] Op cit n 48.

[53] Op cit n 33.

[54] G Dalton, "Anger at Agents Luring Talented School Athletes" (1997) The Sunday Star Times, 27 April, 11; D Ogilvie, "No Approaches Says White" (1998) The Evening Post,

[28] May, 27.

[55] See Hinton, op cit n 29.

[56] Logan, op cit n 48.

[57] Logan, op cit n 48.

[58] See McMorran, op cit n 32.

[59] See Hinton, op cit n 29.

[60] See "Call to Adopt Accreditation" (1996) The Sunday News, 7 April, 53.

[61] See "Union Concerned by Quality of Agents" (1996) The Dominion, 25 September, 44.

[62] See for example, J Millea, "Sports Agent's Secretary gets 28 Month Sentence" (1998) Star Tribune (Minneapolis) 10 February, 5C ($580,000 US embezzled); A Maki, "To Catch A Thief - Special Few See it Through To Finish on Eagleson" (1998) The Houston Chronicle, 11 January, 13. See also the claim in 1986 involving Abdul Jabbar and his suit for $57 million against his former agent Tom Collins which was settled out of court (see M Gould, "Further Trials and Tribulations of Sports Agents" (1993) Ent Sp LJ 9 at 12); and the cases of Burrows v Probus Management, Inc., Civil No 16840, N.D. Ga, Aug 9 1973 (losses to players in excess of $150,000 US) and People v Sorkin, No 46429, Nassau Country, N.Y.Ct, Nov. 28, 1977 (losses of $997,000 US).

[63] "Sports Agent Sentenced in Fraud Scheme" (1997) UPI, Austin, Texas, 4 April; "Scouting Phoney Sentenced" (1996) The Atlanta Constitution, 22 October, 11D; "Adviser to Stars Gets 12 Years" (1989) The Sporting News, 23 January, 35; "Players Versus Agents: A House Divided" (1986) Sport, August, at 11-12.

[64] See for example, Detroit Lions and Billy Sims v Jerry Argovitz, 580 F. Supp. 542 (E.D.

Mich 1984).

[65] See for example, Brown v Woolf, 554 F.Supp. 1206, S.D.Ind 1983; P Weiler & G Roberts, Sports and the Law (Minnesota: West Publishing, 1993), pp 309-310.

[66] See for example, "49er Rice Sues Former Agent" [1987] San Francisco Chronicle, July, 75,

Col 1.

[67] See for example, "Pen State Wants Agent Prosecuted" (1998) Star Tribune, 7 January, 2C; R Scott, "Agents Remain a Major Problem for Football Coaches" (1997) The Houston Chronicle, 14 September, 8; C Barnes, "Grand Jury Indicts Adviser Linked to FSU" (1996) Sun-Sentinel, 4 October, 6C; "Three Ex-Sports Agents Draw Prison Terms For Paying Players" (1990) The NCAA News, 16 May, 5; "Sex, Drugs Enter Probe of Sports Agents" (1987) San Francisco Examiner, 23 August, G9, Col 2; "Fulwood Testifies Agent Threatened

[68] to Commit Murder" (1987) San Francisco Examiner, 15 July, F7, Col 1.

[69] Dunn refers to an increasing "epidemic" (see L Dunn, "Regulation of Sports Agents: Since It Hasn't Succeeded, Try Federal Legislation" (1988) 39 Hastings LJ 1031 at 1065, 1078). See also M Gould, "Further Trials and Tribulations of Sports Agents" (1993) Ent

Sp LJ 9 at 9; Kohn, op cit n 34, at 1.

[69] See for example, Gould, ibid at 9.

[70] See for example, M Freeman, "Pro Football: Protecting Players From Their Agents; Misconduct Leaves NFL Union Fearful of Incompetence and Greed" (1998) The New York Times, 26 July, section 8, 1; "Funds Mis-Managed, Dickerson Suit Says" (1987) San Jose Mercury News, 20 May, E 12, Col 1. See also, Luchnick v Levingston, No 3-86-0967- R (N.D.Tex 1987); Barkley v Luchnick, No CV 89-2666 (Cir. Court, Jefferson City, Ala); Ruxin, op cit n 1, at 22.

[71] There are in North America more "sports agents" than there are professional players. See R Scott, "Agents Bane of Coaches Existence" (1997) Rockey Mountain News (Denver) 21 September, 22C; Greenberg, op cit n 28, at 821-822; K Shropshire, "Sports Agents, Role Models and Race-Consciousness" (1996) 4 Marq SLJ 267 at 271-272.

[72] C Cheski, "E Parker, The Life of a Sports Agent" (1993) 20:1 Barr. 24 at 33.

[73] This pressure will be considerable in New Zealand where the professional player market is limited and lawyers are increasing in numbers. Over the seven year period from 1989 until 1996 the number of practising lawyers in New Zealand increased by thirty percent from 5704 to 7413. See New Zealand Law Society Annual Reports, 1989-1996 (Wellington).

[74] J Stiglitz, "A Modest Proposal: Agent Deregulation" (1997) 7 Marq SLJ 361 at 371.

[75] There are ways for those with limited experience to enhance their competence without deceiving clients or exposing them to unnecessary risk. There is a plethora of sports agency and sports law courses taught at colleges, universities and the like. (See for example , the New Zealand Institute of Sport in Upper Hutt). Bodies such as the Association of Representatives of Professional Athletes (in North America) and the Australian and New Zealand Sports Law Association hold seminars and issue material of assistance to sports agents. Numerous writers have also published material which sports agents can read to enhance their expertise. See for example, "The Law of Sports: Papers Presented at a

[76] Seminar Held by the Legal Foundation at Auckland on 13 May 1993" (Auckland: The Legal Foundation, 1993).

[76] A Guest et al , Chitty on Contracts, 27th ed (London: Sweet & Maxwell, 1994) Ch. 31 at 1.

[77] Commonwealth Portland Cement Co v Weber [1905] AC 66 (PC).

[78] J Northey, Commercial Law in New Zealand, 7th ed (Wellington: Butterworths, 1982), p 209]

[79] Chitty on Contracts, op cit n 76, at 68.

[80] Ibid.

[81] Ibid at 69-70.

[82] A sports agent providing services for reward would be held to be acting in "trade".

[83] FTA, section 40. The maximum fine is $30,000 in the case of an individual and $100,000 in the case of a body corporate.

[84] Ibid, section 43.

[85] CRA, section 6(1).

[86] Ibid, section 7.

[87] Defined as "a person who acquires from a supplier goods or services of a kind ordinarily

acquired for personal, domestic or household use or consumption". (CGA, section 2).

[88] CGA, sections 32(b) and 32(c) respectively.

[89] Although see the reports of pressure being applied to young players. See op cit n 33.

[90] The Crimes Act 1961, sections 250-257.

[91] Ibid, section 246.

[92] Ibid, sections 222, 223 and 224 respectively.

[93] Secret Commissions Act 1910, sections 3 and 4.

[94] Law Practitioners Act 1982, sections 43 and 50.

[95] See for example, Countrywide Bank v Kingston [1990] 1 NZLR 629 (HC).

[96] 4th ed (1996). Section 17(2)(d) of the Law Practitioners Act 1982 provides the Law Society with the power to make rules and regulations in respect of the legal profession.

[97] Rule 3.01.

[98] Rules 1.01, 1.08, and 4.05.

[99] Rules 1.03, 1.04, 1.05, 1.07, 2.03 and 8.08.

[100] Rule 1.06.

[101] Rules 2.02, 4.01, 4.02, 4.03.

[102] Rule 5.01.

[103] Rule 6.07.

[104] Rules 3.02 and 4.04.

[105] Law Practitioners Act 1982, sections 92, 93 and 112.

[106] Ibid, section 54. See also ADL v Dempster [1995] 1 NZLR 210 (HC).

[107] Law Practitioners Act, Part IX. This fund was first enacted in 1929. See the Law Practitioners Amendment (Solicitors Fidelity Guarantee Fund) Act 1929.

[108] Ibid, section 169.

[109] However, it is important to note that the Fidelity Fund does not apply to money a solicitor has been asked to invest after 30 April 1993 (see section 169A, inserted by section 5 of the Law Practitioners Amendment Act 1993). Lawyers are duty bound to advise clients of this limitation. See Rule 5.04 of the Code of Conduct.

[110] Law Practitioners Act 1982, Part VIII.

[111] The Rugby Union Players Association, which was formed by a number of players with NZRFU contracts, to consider and represent their collective interests. See communication from the NZRFU dated 3 November 1997. [On file with author]. See also A Sanders, "Rugby Stars Get Choice of Unions" (1998) The Sunday Star Times, 29 March, 1.

[112] The Australian and New Zealand Sports Law Association, which was formed on 18 December 1990. See J Stark, "Current Topics" (1991) 65 ALJ 123 at 125.

[113] See op cit n 61. See also Communication from the NZRFU dated 3 November 1997. [On file with author].

[114] There have been instances internationally where lawyers have utilised management companies to 'finesse' bar association rules against touting and conflicts of interest. See for example, R Yasser, Sports Law (Lanham: University Press of America, 1985), p 347. Under Rule 2.03(3) of the Code of Conduct, lawyers are prohibited from becoming shareholders in companies practising professions other than law. There is not, however, any blanket prohibition on a lawyer acting as an employee or director of such a company.

See Rule 2.03(1).

[115] B Coote, "Qualification for Admission to the Legal Profession in New Zealand. A Brief History" (1996) 17 NZULR 140.

[116] Professional indemnity insurance is not compulsory. It is, however, a prerequisite for firms who seek to limit their liability through contracts of limitation. See Rule 1.12 of the Code of Conduct.

[117] Champion, op cit n 24, at 352.

[118] Ibid.

[119] Zinn v Parish, [1981] USCA7 280; 644 F. 2d 360 (7th Cir. 1981).

[120] Detroit Lions and Billy Sims v Jerry Argovitz 580 F. Supp 542 (E.D. Mich 1984).

[121] J Barnes, Sports and the Law in Canada, (3rd ed, Toronto: Butterworths, 1996), p 244.

[122] Ibid.

[123] 18 USCS § 1962, et seq (1994). This Act provides both criminal and civil sanctions. King, for example, estimates that by 1993 he had represented sports players in the vicinity of 100-150 legal claims brought on basis of fraud or the Racketeer Influenced and Corrupt Organizations Act. See King, op cit n 43.

[124] 18 USCS § 1341 (West 1984). This Act makes it a crime to use the mail to defraud or obtain money or property by means of false or fraudulent pretences, representations or promises.

[125] See for example, the Canadian Criminal Code, RCS 1985, C-46, section 426.

[126] See for example, the cases referred to at notes 62-79, and accompanying text.

[127] N Millich, "Ethical Integrity in the Legal Profession: Survey Results Regarding Law Students' Veracity on Resumes and Recommendations for Enhancing Legal Ethics Outside the Classroom" (1992) 24:3 Ariz SLJ 1181 at 1182.

[128] D Shneidman, "Selected Issues of Client Representation By "Sports" Lawyers under the

Model Rules of Professional Conduct" (1993) 4 Marq SLJ 129.

[129] Law Society of Upper Canada Professional Conduct Handbook 1992.

[130] PCC rule 1.

[131] PCC rule 2; MRPC rule 1.1; MCPR canon 6.

[132] PCC rule 3.

[133] PCC rule 4; MRPC rule 1.6; MCPR canon 4.

[134] PCC rule 5; MRPC rules 1.7-1.9; MCPR 5-101(A), 5-105.

[135] PCC rule 10; MRPC rule 1.5; MCPR 2-106. There are also procedures for fee reviews. See for example, Re Rappaport [1977] USCA2 576; 558 F. 2d 87 (2nd Cir. 1977); Re Sullivan 494 S.W. 2d 329 (Missouri, 1973).

[136] PCC rule 7; MRPC rule 1.15; MCPR 9-102(B).

[137] PCC rule 13; MRPC rule 7.3

[138] Champion, op cit n 24, at 353-359.

[139] Ibid at 359; Grosse & Warren, op cit n 47, at 54; Nichols, op cit n 2, at 24; Barnes, op cit

n 121, at 244.

[140] Dunn, op cit n 68, at 1040.

[141] Association of Representatives of Professional Athletes, Directory and Code of Ethics (1985) at 1.

[142] Ibid at 3-8.

[143] Dunn, op cit n 68, at 1041-1041.

[144] As at 1988, membership of the ARPA was less than 200. see Dunn, op cit n 68, at 1040. Contrast this with estimates of the total number of sports agents in the United states (11,000 as at 1993, according to Gould). See Gould, op vit n 68, at 10.

[145] Dunn, op cit n 68, at 1041.

[146] Any arrangement (for example, between an association and the NZRFU) which sought to limit the sports agent market to those who joined or were certified by a particular association would likely be unlawful. See infra, notes 180-192, and accompanying text.

[147] Kervin, op cit n 3.

[148] See op cit n 60.

[149] Law v NCAA, 902 F. Supp. 1398 (D. Kan 1995).

[150] P Woody, "When NCAA Meets, Bolt the Doors and Keep an eye on your Wallets" (1996) Richmond Times Dispatch, Jan 14, at D4.

[151] The television contract for the NCAA Basketball Championship provides $1.72 billion for the Association and its member schools over a seven year period. See C Goplerud, "Stipends for College Athletes: A Philosophical Spin on a Controversial Proposal" (1996) Kan JL & Pub Pol'y 125 at 131.

[152] Ibid at 132.

[153] Nebraska and Florida each received $12 million for their participation in the 1996 Fiesta Bowl. See S Kelly, "Fiesta Time to Celebrate College Football" [1996] Seattle Times, January 2, at C7.

[154] See Norby Walters and Lloyd Bloom v Brent Fulwood, 675 F. Supp. 155 (S.D.NY. 1987).

[155] Los Angeles Rams Football Club v Canon 185 F.Supp. 717 (S.D. Cal. 1960). See op cit n 23

[156] NCAA Bylaws, art 12.3.1, 12.3.1.1, reprinted in 1996-1997, NCAA Manual 100-101

(1996).

[157] Ibid, art. 12.3.1.2.

[158] A number of commentators have challenged the stated purpose of these rules. While the rules purport to protect amateur sport, many suggest they in fact place athletes at an academic disadvantage; that they prevent students making informed decisions about their careers; and that they serve only to maintain the income colleges derive from their athletic programmes. See for example, Goplerud, op cit n 151, at 132; J Stiglitz, "NCAA-

based Agent Regulation: Who Are We Protecting?" (1991) 67 NDLRev 215.

[159] Goplerud, op cit n 151.

[160] Such as being barred from post-season play and/or television appearances, being placed on probation, or being forbidden from participating in a particular sport for up to two years. See Gould, op cit n 68, at 12.

[161] Greenberg, op cit n 28, at 876.

[162] J Leavens, NCAA Memorandum to Individuals Acting in the Capacity of Player Agent (1984).

[163] Ibid.

[164] Mike Trope, Necessary Roughness (Chicago: Contemporary Books, 1987), p 72.

[165] Greenberg, op cit n 28, at 877.

[166] See for example, J Kayes & R De Gregorio, "Young Heads Turn to the Money" (1995) The Evening Post, 23 October, 7.

[167] see below, n 228 and accompanying text.

[168] National Football League Players' Association, NFLPA Regulations Governing Contract

Advisors, s 1-8 (1983), effective 3 September 1983.

[169] Ibid at i.

[170] National Basketball Players' Association, NBPA Regulations Governing Player Agents

(1986), effective 7 March 1986.

[171] Major League Baseball Players' Association Regulations Governing Player Agents (1988), effective 1 February 1988.

[172] National Hockey League Players' Association Regulations Governing Agent Certification

(1996), effective 20 January 1996.

[173] Op cit n 168, at 1. [Emphasis added]. What happens in practice is that the NFLPA negotiates the core collective agreement on behlf of all players, and then, subject to any

[174] restrictions in that agreement (such as salary caps and the like), individual players negotiate player specific terms (salary and bonuses, for example) with their clubs. It is in respect of

these latter negotiations that the services of agents are sought.

[174] Op cit n 168, at sections 4-5.

[175] The NFLPA can dictate this because it is the exclusive bargaining agent of all NFL players (by virtue of section 9(a) of the National Labor Relations Act (29 USCS § 159)). In this role, the NFLPA has negotiated a collective agreement which expressly prohibits the use of non-certified agents (originally article XXII, section 2 of the NFL Collective Agreement dated 11 December 1982), a prohibition which is, by virtue of the exclusive representativeness of the union, binding on all players. The NFLPA takes the view that the anti-competitive nature of this prohibition is immune from attack by virtue of the anti-trust exemption given to unions by section 6 of the Clayton Act (15 USCS § 17). See also H A Artists & Assocs v Actors Equity Association [1981] USSC 108; (1980) 451 US 704 (US SC). Cf, Lefferts, for example, who maintains that the NFLPA regulations may not be immune from anti-trust scrutiny. See L Lefferts, "The NFL Players Association's Agent Certification Plan: Is it Exempt from Anti-trust Review" (1984) 26 Ariz L Rev 699. See also Dunn, op

cit n 68, at 1046.

[176] See "The Agents Club: Just About Anyone can Join" [1987] Gannett Westcher Newspapers,23 August, D7, Col 1.

[177] The regulations adopted by the NBPA, the NHLPA and the MLBPA differ in some respects but follow the same general approach. See Kohn, op cit n 34, at 1.

[178] Shapiro, noted in Dunn, op cit n 68, at 1046, note 114.

[179] An issue that has yet to be finally resolved. Contrary to the view taken in North America (that professional players are employees covered by the National Labor Relations Act), the NZRFU has taken the stance that its contracted players are contractors, not employees. The standard player contract is expressed as a "Contract for Promotion Services" between "All Black Promotions Limited" and "X, the Contractor". However, the New Zealand Inland Revenue Department challenged this stance, by claiming that All Blacks are employees of the NZRFU and, as such, should have PAYE deducted from their salaries. See for example, D Ogilvie, "Union Tackles Tax Assessment" (1996) The Evening Post, 16 May, 24; B Gilchrist, "NZRFU to Launch Tax Counter Attack" (1996) The Dominion, 17 April, 26; B Gilchrist, "IRD Tackles All Blacks" (1996) The Dominion, 7 February, 15.

Apparently, the NZRFU has now agreed to deduct tax at source, although the issue of the status of the All Blacks has yet to be conclusively addressed by the Courts.

[180] The system of exclusive coverage granted to registered unions under the Labour Relations Act 1987 was abolished by the Employment Contracts Act 1991.

[181] The Employment Contracts Act 1991, sections 9 and 10. Any employee can, for example, represent himself or herself in contract negotiations.

[182] A bargaining agent can be any individual, group or organisation subject only to the right of the other negotiating party to object to an agent who has committed certain prescribed offences. See the Employment Contracts Act 1991, section 11. Thus, unions are only one type of possible bargaining agent.

[183] Unlike the position under the National Labor Relations Act, the concepts of "bargaining units" and "majority will" are irrelevant to representation in New Zealand. Representation is a matter of choice for each individual employee. In addition, those who have authorised a union to negotiate on their behalf can revoke that authority at will.

[184] As it turns out, the RUPA appears to be struggling for membership. See Sanders, op cit n 111; Morley, op cit n 21. Indeed recent reports suggest that RUPA may be surpassed by a players' association set up by the NZRFU. See M Hinton, "Clear Run for Rugby Union's Union" (1999) Sunday Star Times, 14 March. Should this prove to be the case, issues might arise as to the independence and impartiality of such an association.

[185] Commerce Act 1986, section 27.

[186] A requirement in an association's rules that its members use only certified agents would be ineffectual without this agreement, for in its absence a player and the NZRFU would be free to do as they wished. A player could engage a non-certified agent and while the player would probably be expelled from the association for breach of its rules, this would not stop the player's agent negotiating a contract with the NZRFU.

[187] Commerce Act 1986, section 58.

[188] There is a competition law exemption for contracts, arrangements or understandings that relate to the remuneration, conditions of employment, hours of work, or working conditions

[189] of employees (see the Commerce Act 1986, section 44(1)(f)). In effect, this exemption protects collective employment contracts from challenge under the Commerce Act.

However, this section has no relevance to an employee's freedom of choice as regards representation.

[189] The test applied in any authorisation application relating to a section 27 violation is whether the arrangement (etc.) would, in the circumstances of the case, result, or be likely to result, in a benefit to the public which would outweigh the lessening of competition that would result, or be likely to result, or is deemed to result, from the arrangement. (See the Commerce Act, sections 61(6), (7) & (8)).

[190] Employment Contracts Act 1991, section 12 (subject only to the exception noted previously, see op cit n 182).

[191] Commerce Act, section 36(1)(a). While subsection 3 exempts from the coverage of section 36 any practice or conduct undertaken in pursuance of arrangements (etc) which have been authorised by the Commerce Commission, given the limited prospects of Commerce Commission authorisation being granted for an arrangement (etc.) which seeks to limit entry into the sports agent market, the defacto protection afforded by section 36(3) would also be unlikely to avail the NZRFU.

[192] Champion, op cit n 24, at 349. These include Alabama, Arkansas, California, Connecticut, Florida, Georgia, Iowa, Louisiana, Maryland, Mississippi, North Carolina, Oklahoma, South Carolina, Texas and Washington. While there have been numerous calls for federal legislation (see for example, A Powers, "The Need To Regulate Sports Agents" (1994) 4 Seton Hall JSL 253 at 268-274) there has yet to be a proposal adopted. For example, in 1985 the National Sports Lawyers Association drafted the Professional Sports Agency Act, legislation which was never enacted.

[193] For a comprehensive review of a number of these statutes, see Greenberg, op cit n 28, at 892-904.

[194] Ibid.

[195] See for example, The Oklahoma Athlete Agent Act, Okla. Stat. Ann. Tit. 70, section 821.62(C)(3) (1997); Ark. Stat. Ann. section 17-16-201 (1995).

[196] See for example, Tex. Rev. Civ. Stat. Ann. art. 8871, section 2(b)(4) (1997); and the Georgia statute, O.C.G.A. section 43-4A-5 (1997).

[197] Fla. Stat. section 468.453(1)(c) (1996).

[198] See for example, Ark. Stat. Ann. section 17-16-202 (1995). The level varies but some are set at $100,000 (Texas, Mississippi, Arkansas), and others at lesser amounts ($25,000 in California and Iowa; $50,000 in Alabama). See Powers, op cit n 192, at 270, note 133.

[199] See for example, Oklahoma. See Okla. Stat. Ann. Tit. 70, section 821.62(G) (1997). California is phasing out the bond requirement in favour of insurance cover. See Cal. Lab.

Code, section 1519 (1996).

[200] See for example, Okla. Stat. Ann. Tit. 70, section 821.63(E) (1997); Tex. Rev. Civ. Stat. Ann. art. 8871, section 5(c) (1997).

[201] See for example, Okla. Stat. Ann. Tit. 70, section 821.63(C) (1997).

[202] See for example, Fla. Stat. section 468.4565 (1996).

[203] See for example, Ala. Code, section 8-26-35 (1996).

[204] See for example, Ala. Code, section 8-26-24(b) (1996).

[205] See for example, Okla. Stat. Ann. Tit. 70, section 821.63(D) (1997); Tex. Rev. Civ. Stat.

Ann. art. 8871, section (5)(d) (1997).

[206] See for example, Tex. Rev. Civ. Stat. Ann. art. 8871, section (5)(a) (1997); Fla. Stat.

section 468.454 (1996).

[207] See for example, Cal. Bus. & Prof. Code, section 18897 (1996).

[208] See for example, Okla. Stat. Ann. Tit. 70, section 821.63(B) (1997); Tex. Rev. Civ. Stat.

Ann. art. 8871, section (5)(b) (1997).

[209] All actions which are, for example, prohibited under Florida legislation. See Fla. Stat. section 468.456 (1996).

[210] All actions which are prohibited under Oklahoma law. See Okla. Stat. Ann. Tit. 70, section 821.64(1)-(8) (1997).

[211] See for example, Okla. Stat. Ann. Tit. 70, section 821.66 (1997); Conn. Gen. Stat. section 20-557 (1997); Cal. Bus. & Prof. Code, section 18897.93 (1996); O.C.G.A. section 43-4 A-8 (1997).

[212] See for example, Ark. Stat. Ann. section 17-16-102 (Supp. 1989).

[213] See for example, Ala. Code, section 8-26-41 (1996); Okla. Stat. Ann. Tit. 70, section 821.66 (1997); O.C.G.A. section 43-4A-8 (1997); Cal. Bus. & Prof. Code, section 18897.93 (1996).

[214] See for example, O.C.G.A. section 43-4A-8 (1997); Okla. Stat. Ann. Tit. 70, section 821.66 (1997); Ala. Code, section 8-26-24(b) (1996); Cal. Bus. & Prof. Code, section 18897.93 (1996).

[215] See for example, O.C.G.A. section 43-4A-8 (1997); Tex. Rev. Civ. Stat. Ann. art. 8871,section 8 (1997); Fla. Stat. section 468.4562 (1996); Ala. Code section 8-26-36 (1996); Cal. Bus. & Prof. Code, section 18897.8 (1996).

[216] See for example, Cal. Bus. & Prof. Code, section 18897.77 (1996). See also Grosse & Warren, op cit n 41, at 62.

[217] See for example, Tex. Rev. Civ. Stat. Ann. art. 8871, section 8(4)(b) (1997); Fla. Stat.section 468.454 (1996).

[218] See for example, Dunn, op cit n 68, at 1051.

[219] See for example, Dunn, op cit n 68, at 1058.

[220] see for example, Nichols, op cit n 2.

[221] For example, agents who are not lawyers but who have played professional sport can and do bring valuable experience to their work. A notable local example is Andy Haden.

[222] over the period from 1990 to 1996, thirty eight practising lawyers were struck off the roll in New Zealand. Twenty three others were disciplined to a lesser extent (suspended or instructed not to practise on their own account or not to employ others). See statistics released by the New Zealand Law Society in November 1997 [on file with author]. A recent report suggested the legal profession in New Zealand is facing an ethical crisis. See B Cotter & C Roper, Education and Training in Legal Ethics and Professional Responsibility

(Wellington: New Zealand Law Society, 1996).

[223] Dare, op cit n 50, at 311.

[224] Both approaches currently exist in New Zealand in respect of various professions. See below, n 230.

[225] Or, if the certification requirement is limited to those wishing to promote themselves as "registered", contracts entered into with individuals who falsely represent themselves to be registered, should be unenforceable.

[226] Perhaps an appropriate legislative enactment could take the form of an amendment to the existing Sports, Fitness and Leisure legislation (1987-1992). It is interesting to note that one of the functions of the Hillary Commission for Sport, Fitness and Leisure (which is formed under this legislation) is to "promote attitudes and behaviour that are conducive to good conduct and fair play among all persons involved in or associated with sport, fitness and leisure." [Emphasis added]. Administering legislative procedures for ensuring

the competence and ethics of sports agents and the like would appear to be consistent with this function.

[227] Something the English Rugby Union Players' Association appears to be comfortable with (see "Player Power" [1996] Rugby World, July, at 34), but which has been the subject of conflict of interest litigation in North America (see Gould, op cit n 68, at 11).

[228] In Canada for example the Inter-University Athletic Union has promoted general education about agent selection in a published guide entitled The Amateur Athlete's Guide Book/ Guide de L'athlete Amateur (Ottawa: CIUA, 1986).

[229] A consequence which sports agents themselves have acknowledged. See for example, Logan, op cit n 48.

[230] It is of interest to note the extensive range of professions in New Zealand which presently require certification or licensing. See for example, dentists (registered under the Dental Act 1988), lawyers (admitted under the Law Practitioners Act 1982), share brokers (licensed under the Sharebrokers Act 1908), optometrists (registered under the Optometrists and Dispensing Opticians Act 1976), auctioneers (licensed under the Auctioneers Act 1928), doctors (registered under the Medical Practitioners Act 1995), motor vehicle dealers (licensed under the Motor Vehicle Dealers Act 1975), real estate agents (licensed under the Real Estate Agents Act 1976), pawn brokers (licensed under the Pawnbrokers Act 1908), surveyors (licensed under the Survey Act 1986), second hand dealers (registered under the Second Hand Dealers Act 1963), wine makers (registered under the Wine Makers Act 1981) and publicans (licensed under the Sale of Liquor Act 1989). There are numerous other professions which require registration in order for a person to promote themselves as "registered". See for example, architects (registered under the Architects Act 1963), chiropractors (registered under the Chiropractors Act 1982), engineers (registered under the Engineers Registration Act 1924), pharmacists (registered under the Pharmacy Act 1970), psychologists (registered under the Psychologists Act 1981), valuers (registered under the Valuers Act 1948), veterinarians (registered under the Veterinarians Act 1994), dietitians (registered under the Dietitians Act 1950), quantity surveyors (registered under the Quantity Surveyors Act 1968), occupational therapists (registered under the Occupational Therapy Act 1949), physiotherapists (registered under the Physiotherapy Act 1949), plumbers, gasfitters and drainlayers (registered under the Plumbers, Gasfitters and Drainlayers Act 1976) and nurses (registered under the Nurses Act 1977). Still other


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