(FORTUNE Magazine) – A decade ago, as head of Creative Artists Agency, Michael Ovitz broke the rules of Hollywood agenting. Today, after a brief stint as president of Disney and a fling with the now-bankrupt Broadway company Livent, he's changing the rules that managers live by--starting with the rule against raiding agents, their traditional partners in client coddling. When Robin Williams and his agent left CAA for Ovitz's Artists Management Group, Ovitz's former colleagues issued an extraordinary public denunciation. Agency president Richard Lovett branded him "a competitor, not a collaborator," as he announced that clients would have to choose: CAA or Ovitz.

It's only natural for an ex-agent to seek reincarnation as a manager. Agents and managers both cater to the whims of talent, but with a crucial distinction: California law requires agents to be licensed and prohibits them from producing shows, while managers can produce but are barred from negotiating contracts. In an ideal world, agents chase deals and negotiate terms for their 10%, while managers charge 15% to 20% to facilitate agonizing career choices, see that the bills are paid, and keep a lid on stalkers and outstanding warrants. One hand washes the other as they both massage the client.

But Ovitz has upset the natural order. First he targeted a rival management firm, Industry Entertainment, poaching Leonardo DiCaprio, Cameron Diaz, and Matt Dillon. Then he signed two of his own former clients, Barry Levinson and Martin Scorsese, while trying to assure his successors at CAA--driven young men he'd molded in his own image--that he was not a predator. They concluded otherwise, and the word "oedipal" has been in hot rotation ever since.

Aside from the melodrama surrounding its birth, two things stand out about Ovitz's new venture. First, it has that most telling of Hollywood affectations, an unlisted phone number. Second, it's clearly designed to transform Ovitz from superagent to supermanager, representing top stars and creating a flotilla of firms that produce in every medium--movies, television, records, concerts, the Internet. Legally Ovitz can't negotiate deals for his clients, but he knows plenty of lawyers who can. And while details have yet to be announced, such an amalgamation could allow Ovitz to usurp the role not just of agents but of studio bosses. With enough big-name talent, it could transform management from a mere money pot to a power base of Ovitzian proportions.

But there's a catch. To most clients, the appeal of managers is that they offer the kind of personalized attention that agents did before Ovitz, without the nagging conflict-of-interest questions that come with a big stable of talent and package deals. What they don't do is engage in public feuds that force their clients to take sides. "Clients hate it," says one ex-CAA exec. Or as Bill Murray said the other night to Charlie Rose, "I don't like to be bullied."

--Frank Rose