Agents have been around since the snake spoke for the Devil in Eden, and remember that John Alden, while negotiating a marriage contract, walked off with the bride. The fact that agents can cause trouble,even though they may be representing the principles best interests, has caused them to be regulated or licensed from very early times. The form of the regulation conforms to the interests to be protected, either the state's, a union's, or a team's.

    The most common regulation, and those with which we are most familiar, are those that require licensing of doctors, lawyers accountants and other professionals. This involves state action aimed at protecting the principle, who relies on the license to be assured that the agent has the minimum qualifications for its role, and benefits the state by creating a cadre of skilled practitioners that can promote the interests of the state by improving economic activity. Agent regulation, therefore, has both a public and private purpose.

    In the sports world, agents, as the term is known today, came on the scene very late. It was the 1960's that saw the first of the modern agents come on the scene, although Babe Ruth had been represented by agents for theatrical gigs and mercantile endorsements, and other agents had been representing players in various off the field activities. Agents had been around for , but did not negotiate contracts. It is the advent of the agent negotiator that has given birth to the genre, and, because of the money at stake, the troubles.

    In the 1970's, the advent of big salaries in all sports, free agency, and complex salary negotiations lead to the rapid growth of agents. In the beginning, agents were unregulated by unions and only the professional accountants and lawyers among them were regulated at all. During this period, several agents caused severe damage to players by stealing money or involving the player in failed financial transactions. These actions caused the various players associations to begin programs that required the registration of agents that has grown so that now the NFLPA, for example, administers tests to determine agent's familiarity with the basic agreements. These agreements have grown from the small booklets of the mid 1960's that slid into shirt pockets to the spiral bound tomes that take their place next to tax codes and case books on our office shelves.

    The complexity of the business, agents past abuse of principles and the potential injury to college programs has created a environment of total regulation. First, states, now twenty- seven⁽¹⁾ or so in one form or another, then unions, both the National Conference of Commissioners of Uniform State Laws, and congress have gotten into the act with actual or potential regulation. I will look at the area of state regulation, and because, this is self serving regulation fraught with procedural problems, spend little time on this. I will review the Uniform Act as it is currently situated and then discuss union regulation of agents. The state and the union have very different views of agents and their efforts to regulate them indicate this divergent view.

    It appears that state effort to regulate agents is based on the principles of NCAA Regulations as set out in NCAA Bylaw 12.01.2 et.seq. The general principle is that:

NCAA Bylaw 12.01.2 states that the member institutions athletic programs are designed to be an integral part of the educational program and the student-athlete is considered an integral part of the student body, thus maintaining a clear line of demarcation between college athletes and professional sports. In this regard, an amateur student-athlete is one who engages or may engage in a particular sport for the educational, physical, mental, and social benefits derived therefrom, and for whom participation in that sport is an avocation.

    State law regulation takes NCAA rules and codifies them. Where this raises interesting philosophical and legal issues, the most troubling of these are the commerce clause issues raised where a state seeks to apply its statute law to activities in other states. For this reason, state laws regulating agents are burdensome for those who comply, fraught with peril for those who fail to comply and who are latter found in the jurisdiction. For a number or reasons, state laws regulating agents are invalid. As is well understood, legislatures are limited in their ability to legislate beyond their borders by attempting to apply a substantive law, criminal or civil , on anyone, not inside its borders or where there is a direct effect on the state. Article one section 8 of the Constitution grants congress the sole authority to regulate commerce among the several states and this furthermore limits the state in its ability to place restrictions on interstate commerce.

    The basic test of a state's ability to legislate beyond its borders is that: "the State must have significant contacts or significant aggregation of contacts , creating state interests, such that choice of its law is neither arbitrary or fundamentally unfair." This test is applicable to "due process matters" as well as "full faith and credit" issues. Phillips Petroleum v. Shutts, 474 US 797, 818 (1985).

    In the field of agent regulation, we must look at the general rule that states may not make laws that condemn conduct outside its borders. Although this general rule is decided upon, courts have differed in its application. A state's criminal laws must focus on an action or effect that occurs within its borders. This subjective rule of territoriality is now modified by the theory of objective territoriality whereby legislative reach extends to where the injury occurred without regard to the defendants location. The Supreme Court has limited the application of this theory to acts that are intended to have an effect within the state's jurisdiction. If a person performs an act that is intended to have an effect across a border, the effected state can seek redress. A state the seeks to regulate an agent's contracting with a player can only seek recovery if that contract is made in the state. A contract entered into in another state cannot be attacked simply because the player is a player for a college team from that state. Similarly, if a Wisconsin citizen murders a Minnesota citizen in Wisconsin, Minnesota has no jurisdiction. If that Wisconsin citizen shot the Minnesotan in Wisconsin, and that wounded person returns to Minnesota where he dies, then Minnesota has a claim to prosecute the crime. If the Wisconsin actor shoots across the border or crosses the border to shoot, clearly Minnesota has jurisdiction. For athlete agents, the penalties can be very severe as many state agent regulation laws call for gross misdemeanor or felony penalties for the agent who breaks that law.

    Many state laws and the Model Act allow civil actions against agents. The territoriality rules concerning agent regulation differ somewhat from the criminal rules. A court will look at the relationship between the contract and the state. If the contract is not made in the state or performed in the state, jurisdiction is lacking. As an example, I am working on a case now that has a New Mexico company that entered into an equipment lease with a California supplier. Sometime later, after failing to pay, the company was sued by a Minnesota company that had acquired the lease from the supplier. I hope to convince the learned judge that there is a basic lack of jurisdiction in this matter.(Case dismissed for lack of personal jurisdiction, January, 2001 )  Clearly, if my client had spent a lot of time in Minnesota so that the "meaningful contacts" standard is applied the outcome could be different. So to for the agent who visits a state and violates the athlete agent regulation by entering into a prohibited contract in the forum state, jurisdiction is established. However, if those contacts were by telephone or email, and no meetings occurred in the forum stare, jurisdiction is doubtful.

    Finally, it is the federal government that regulates interstate commerce. Economic matters that cross borders are federal matters. States have some latitude, however, where they are protecting some significant matter within the state. Here, it is the state's intercollegiate athletic team's games that are being produced. All agents are being restrained so the state has some argument for jurisdiction in a commerce clause argument. However, the existence of twenty-seven laws gives rise to a cumulative burden over interstate commerce that is proscribed. The Model Act attempts to get past this hurdle by allowing registration in one state to be submitted to another state. The receiving state must accept the certificate if it substantially the same form. Renewals are handled the same way. Such reciprocal registrations must occur within six months, however.

    Lastly, commerce clause analysis allows for a balancing to occur where where the state statute protects or advances an important state issue and the effect on interstate commerce is merely incidental. Under these terms, its validity is likely. Similarly, validity is likely if the burden on interstate commerce is minor compared to the local benefits. The local benefits claimed by the states are usually that the player's education will be adversely effected, that the states team will be adversely effected, that professional sports is poorly portrayed, and that the people of the state are adversely effected if their teams are injured. The target of the statutes are agents only. Where the actws of academic officials, as has been proven dramatically with regard to the men's basketball team at the University of Minnesota, can have equally dramatic and adverse effects as listed above, but are not included in the legislation, the obvious conclusion is that the state's regulation is designed to protect the schools revenue stream only. For this and other reasons, state regulation of agents fails as an appropriated regulatory scheme. Also, it is very easy to bypass the rules. A player must merely renounce his scholarship and then seek an agent to avoid the reach of the statutes. No statute has ever suggested that the athlete be sanctioned for turning pro of his own accord under the rules of the various sports leagues. The NCAA allows basketball players to try out for pro teams, in fact.

    The Model Act follows the most aggressive state laws. It will have the same problems of the state statutes currently in place, although it attempts to override them. State regulation is simply not the place for regulation of agents and the federal government has not acted in the area, although two attempts have been made. Neither law has progressed past committee review.

    The most effective regulation of agents has and will come from unions. The history of agent activity reveals many cases of unscrupulous agents bilking players, outright theft, and mere negligence. The initial inquiry is whether unions can require registration of agents under the antitrust laws. The answer is that the non-statutory exemption from antitrust shields such activity as long as the union is acting in its best interest and does not join with a non-labor organization.

    The four major sport unions require registration. Such registration is required before the agent holds himself or herself out as such. To widen its scope as much as possible, unions describe agents as contract advisors and the activities covered are advice, counsel, information or assistance, the handling of a player's funds, providing tax counseling and preparation services, financial advice, and investment services. Rules requiring contract advisers to register under various federal securities laws is being considered now at the federal level.

    Contract advisers are required to make all records available to the union and careful scrutiny of fee schedules and payment is conducted by the union. Finally, the union strictly controls the means by which the contract advisor may contact the payer. Section3B of the NFLPA document shows twenty-two proscribed activities. Among them are the offering of monetary inducements to sign with the contract advisor, providing false information, avoidance of conflicts of interest, (the Argovitz rule) accepting money from a club, and maximum fees provisions.

    Other unions provide for the same sort of control.  It is the union that has the ability to rein in agent abuse. All of the regulation we have discussed here is focused one way or the other on the player's becoming a professional. The NCAA, all state regulators and the putative federal laws all focus on that event. To perform effectively in that arena, the agent must be certified by the prospective union and that union has the power to regulate that agent's business. Furthermore, having the right to revoke certification is the right to banish the agent from the field. This right is supported by federal antitrust and labor law, and no law suit challenging the revocation of certification will be successful. This is, of course, unless the union is using the process for reasons of its own and rejects the application of a prospective contract advisor who is otherwise qualified.

    In a nutshell, agent regulation is best done by unions and should be abandoned by the states and federal government. Unions have the law on their side and are created to provide for the best interests of the players.