By Gary Rice, Beauchamps Solicitors
Agents owe a fiduciary duty to their principal (client) to act in his or her best interests. As Lord Justice Jacobs said in the case “an agent’s own personal interests come entirely second to the interest of his client…You must act for him as if you were him.”
This case is one that all agents in all sports should heed. Dual representation by agents of players and clubs is something that clearly flies in the face of this judgement.
Any agent who takes an undisclosed sum from the club as part of his dealings on behalf of a player could lose the right to any fees received from the player and could be held liable to pay his player the ‘secret’ amount he received from the club.
There is evidence that some football clubs and agents had become accustomed to these ‘secret’ payments. Agents like to receive their payment from clubs so as not to be seen to be taking commissions off their clients, but obvious conflicts and the potential for shady dealings arise in this context. In the case of Newcastle United PLC and the Commissioners for Her Majesty’s Revenue and Customs (Decision 19718), Newcastle revealed that it often approached a player’s agent and asked him to persuade the player to join the club on terms favourable to the club. The agent would of course receive payment for this and all the while the player would be unaware what was going on behind the scenes.
The Kelvin Jack case involved a different and less obvious conflict. The agent procured an employment contract for Jack, for which he received 10% of the player’s wage as his fee. At the same time, the agent was hired by the club to obtain Jack’s work permit to play in Scotland. While the agent claimed he informed Jack of the fact that the club hired him to obtain the work permit, the Judge in the case did not believe him. Critics have argued that there is no obvious conflict. While that may be the case, the case law in this area is very clear and stretches back over 140 years. The agent and principal relationship is one that must be protected. An agent owes a fiduciary duty to his or her client and must not make secret deals behind his or her client’s back. The punishment for doing so is severe – for public policy reasons the case law establishes that not only will the agent be liable to the player for the monies made in the secret deal, he or she will also forfeit the commission or fees to which he or she would have been entitled from the player.
FIFA now has Player Agent Regulations and the FA now licences agents. In rugby, IRB Regulation 5 allows each Union to have its own regulations regarding agents, but there are certain principles set down which must be incorporated into Union rules. This is an area in which governing bodies need to be careful, and continuous updating of the regulations and supervision of the licensing regime is required to protect players, to stop abuse of the system by clubs and even to protect agents from themselves.
Article obtained from www.beauchamps.ie, the website of Beauchamps Solicitors. Article reproduced with their kind permission.
For more information, contact Gary Rice
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