Jayson Werth, Scott Boras, and Fiduciary Relationships

Newly retired outfielder Jayson Werth was honored by the Phillies in early August for his contributions to the 2008 World Champions. He made news that weekend for comments that derided “super nerds” as “killing the game.” (It’s worth noting, of course, that Werth was a sabermetric darling back in the day, standing out for his plate discipline.) Of more interest to me, however, was this statement he made on the Howard Eskin podcast:

“I had offers in November, and I was advised by my former agent to wait; ill-advised, I guess.”

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“Some guys were surprised to hear from me – they didn’t know that I wanted to play. Which was surprising, because I wanted to play. I let my agent know I wanted to play. And they said they either hadn’t heard from him, hadn’t heard from me, just didn’t know that I was available. So that’s one of the reasons why I’m no longer with that agent.”

That raises eyebrows for two reasons. First, because Werth is essentially accusing his agent of a breach of contract, and potentially a breach of fiduciary duty as well. (Keep that term in mind – it’ll be important later.) And second, because the agent in question is Scott Boras, who has been recognized by Forbes as the industry’s most powerful and who, thanks to Eric Hosmer, has now negotiated no fewer than 15 deals of $100 million or more. Accusing Scott Boras of not doing his job is a bit like accusing Clarence Darrow of malpractice: it gets your attention.

Now, Boras, for his part, denies any wrongdoing. His company, the Boras Corporation, gave the Washington Post’s Chelsea Janes this statement:

Unfortunately, it appears someone has misled Jayson. We contacted all 30 teams numerous times during the offseason on his behalf, and we have phone logs, emails, and other records to back it up. We received no offers for Jayson in November, or otherwise. We are always prepared to support our work against inaccuracies spread by third parties. We understand the frustration and disappointment players can face and wish Jayson all the best.

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What’s perhaps more interesting is this excerpt from Janes’ story (emphasis mine):

The Boras Corporation sends out a list of its free agents to every team at the start of free agency each November. Werth’s name was on that list. Boras Corp. provided that list for verification, as well as date-stamped phone logs that documented dozens of phone calls and emails made to executives on Werth’s behalf. Boras keeps detailed records of every offer and conversation, documentation that protects them against allegations of malpractice — and any litigation that could accompany them.

The reference to litigation isn’t accidental; I’d even wager that it was provided to Janes by the Boras Corporation itself. Boras is a lawyer and, believe it or not, lawyers are very deliberate in how and when they raise the spectre of litigation. This was a shot across Werth’s bow — a warning, if you will, not to pursue the matter further.

On the other hand, it’s not at all conclusive from the information we have that Boras did do his job correctly here. As a preliminary matter, Boras has suffered embarrassing, if scarcely reported, losses before. In a grievance Boras filed against Carlos Beltran, for example, arbitrator Shyam Das once voided a clause in his agency contracts entirely for violating the MLBPA regulations governing agents. (That clause penalized players for leaving his agency.) He’s also taken or threatened to take legal action against Robinson Cano, Edwin Jackson, and others for leaving his agency, and made the rather bizarre legal argument that if players were allowed to leave his agency without penalty it would incentivize agents to negotiate lesser contracts for them. (Nothing ended up coming from it except a rivalry with Jay-Z.)

The reason that’s bizarre — and the reason the Werth issue matters — is because of the term I mentioned before, “fiduciary duty.” A fiduciary duty is a special kind of duty of loyalty owed by one person to another. But it’s more than that, really; it means that a person, called in the law a “fiduciary,” owes a duty to do what is in the best interests of the beneficiary, even if not in the best interests of the fiduciary themselves. Under a case called Detroit Lions v. Argovitz, that legal rule applies to professional sports agents, and a breach of the fiduciary duty can actually result in rescission (a court undoing) of the signed contract.

So, in the context of sports agents, an agent’s fiduciary duty under Argovitz is multifaceted. First, the agent can’t have a conflict of interest; in other words, if Boras was a part-owner of the Yankees, any contract he agreed to with the Steinbrenners or Brian Cashman would be presumptively fraudulent and voidable by the player on whose behalf he was acting. Second, even if the agent reaches a deal that is fair to the player, if he fails to place the player’s best interests first as defined by the player, the contract is presumptively fraudulent and voidable by the player.

From Argovitz:

The question, therefore, does not relate to the mala fides [bad intent] of the agent nor to whether or not a greater sum might have been procured for the property, nor even to whether or not the vendor received full value therefor. The self-interest of the agent is considered a vice which renders the transaction voidable at the election of the principal without looking into the matter further than to ascertain that the interest of the agent exists.

And third, the agent must inform the player “of all facts that come to his knowledge that are or may be material or which might affect his principal’s rights or interests or influence the action he takes.” In other words, Boras, as an agent, was required to tell Werth (1) whom he’d contacted, (2) what their response was, (3) what the negotiations were, and (4) what any offers were.

This sounds like a lot to disclose, but it’s part and parcel of the fiduciary relationship. For example, attorneys have similar requirements. It’s not necessary that Boras supply Werth with verbatim transcripts of every conversation, but he does have to tell Werth that conversations occurred and what was discussed. And it’s this communication issue which is at the center of the Werth-Boras dispute.

Here’s why. From Janes’ reporting, we know Boras sent Werth’s name to all 30 teams, and he made phone calls during which he discussed Werth with at least some team executives. Werth told Howard Eskin, however, that when he contacted teams himself, they were surprised he was going to play. That could just be a product of bureaucracy; teams are large organizations, and it’s entirely possible that whatever executive Boras spoke with merely said “Nope, not interested” and never bothered to pass along to anyone else he’d called.

Except that the question is not so much whether Boras called on Werth’s behalf; the evidence suggests he did that. It’s not even whether telling Werth to wait in November was bad advice; bad advice, by itself, does not constitute a breach of fiduciary duty make, and it’s at least reasonably defensible for Boras to recommend Werth wait out a slow-moving free-agent market. Instead, the biggest question here is what Boras told Werth about what was going on. Boras was required to tell Werth what teams he’d called and what their responses were. He was also required to tell Werth what other steps he’d taken to market him. It’s not clear at all that he did so. And if teams were waiting to hear from Werth about offers that had been extended, and Boras never told Werth about those offers, that is a prima facie breach of fiduciary duty.

It’s entirely possible that, if the scenario I’ve presented here is similar to reality, that it was merely a result of benign miscommunication. That happens sometimes. Sometimes you play phone tag with a client, or a client can’t talk long enough to discuss all of the relevant facts. But it does seem that, somewhere along the line, Boras and Werth had a breakdown in communication. And that fits oddly well with this quote from the Boras during the Beltran proceedings:

“[Das’ ruling] basically makes the agent an at-will employee. Is this what you want?” he said. “You should be responsible for the work you do. We need accountability on both sides.”

And while that sounds reasonable, under Argovitz, Boras is absolutely wrong. Yes, the player should be accountable for certain things — not going over the agent’s head, for example, in order to cut out the agent’s commission. However, the very nature of a fiduciary relationship is that the agent works for the player. Shyam Das was legally right. In most states, if a client wants to fire an attorney, at any time, for any reason, they can. If a player wants to fire their agent, the same rules generally apply. And blurring these lines in a fiduciary relationship is how miscommunications happen, because once you start substituting your judgment for your client’s, that’s when suddenly it doesn’t seem quite so necessary to tell them everything anymore.

This doesn’t mean that Boras did a good or bad job. It doesn’t mean he necessarily did anything illegal, either. But there is a pattern here of Boras elevating himself relative to his clients, and not always to the player’s benefit. That runs contrary to the very nature of the player-agent relationship.