You finished the manuscript. You queried umpteen agents and received umpteen rejections. Finally, an agent expresses interest in representing your work. What next? Rush to sign the agency contract?
Not so fast. Not all agents or agency contracts are created equal.
First, make sure the agent you are considering is the best dealmaker for you and your literary work. Do some independent research about the agent and agency. Search out answers to a few hard questions. Once you are certain the agent is right for you, then make an informed decision about what to negotiate in the agency contract before you sign.
Picking an agent is like picking a career partner. An agent has a fiduciary duty to protect and promote your financial interests by selling your work to a publisher, collecting advances and royalties on your behalf, and then, after deducting certain commissions and expenses, paying you what is left. The agent must keep your financial information confidential and avoid acting in conflict with your interests. The agent could, depending on the agency contract, have legal control over your literary rights and bind you to a contract regarding those rights even if you are unaware of the deal. These are huge responsibilities that require a certain level of trust on your part. So it is imperative to vet your agent thoroughly before you choose.
Here are a few questions and points to consider when vetting an agent and finding that perfect business partner for your writing career.
- What do others in the industry think about the agent?
- Research the agent’s current client list.
- How many clients do they represent? Is the agent too overloaded to adequately represent you?
- Contact a few of the agent’s clients. Ask for their opinion of the agent.
- Has the agent had any friction with other authors?
- What is the client’s opinion about the agent’s ability to make deals? Aggressive? Passive? Slow?
- Is the agent able to play a more expansive role in the author’s career other than deal-making? Editorial agent? Confidante? Mentor? Good business partner?
- How quickly does the agent respond to calls? Is the agent attentive to the client’s needs? Does the agent have good communication skills?
- How long has the agent been in business?
- What is the agent’s track record?
- What are the agent’s recent sales? Are there any books like yours?
- Did the agent negotiate decent advances and royalty rates?
- What services will the agent perform for you?
- Research your agent’s agency and the agency’s reputation in the publishing industry. Do they have specialists in the agency who handle subsidiary rights like foreign or film deals?
- Does the agent consult with you on all offers from publishers? If not, what are the criteria for narrowing the offers that are shown to you?
- What expenses from representation are deducted from the author payments? What is the average cost of expenses for an author like you?
- What are the commissions for US and foreign placements of primary rights? Secondary rights?
- How and when are author payments distributed? Does the agent give an accounting of money received on the author’s behalf?
- Are there any facts agent should disclose that might affect the author’s interest? Any conflicts of interest? Any authors that compete directly with you that the agent also represents?
- What is the term of representation?
- How can the agreement be dissolved? Has the agent every dissolved an agreement and why?
- If the agreement is dissolved, are their any obligations that survive the agreement that you will be obligated to follow?
The Agency Agreement
When an agent sends you an agency agreement, the first thing to remember is: the contract terms are negotiable. The agent expects a good author to question the terms. And you should. The contract is written to benefit your agent and the agency’s interests.
To help guide you through the agreement negotiating process and achieve a mutually acceptable contract between you and your agent, here is what you need to know about the provisions of a standard agency agreement provisions. Usually, an agency agreement is simply a letter (one page or multiple pages, email or hard copy), which eventually the agent and author will sign. In some states though, a written agreement is not necessary to create an agency relationship. Oral agreements can bind the agent and author. In order to avoid any ambiguities or discrepancies, written is always recommended when it comes to contracts. We lawyers like things in writing.
- Agents will typically only accept clients on an exclusive basis, i.e. the agent and only the agent represents you. There is some negotiating room regarding what publishing projects the author will represent, but with regards to exclusivity, an agent generally insists on an exclusive relationship with the author. Agents do not want to compete with another agent on the same book.
- Look for language that notes an “exclusive sale” arrangement. This means, if another agent represents you on the same book and obtains a deal for you while you still have an effective contract with the first agent for that book, you still owe a commission to the first agent. Likewise, it means if you sell the book yourself, you still owe the agent a commission.
Scope Of Agency
- Scope of agency defines what works are covered under the agreement and what rights the agent is authorized to sell. Make sure the agreement defines specifically what works are covered.
- An agent may only want to represent one book, or a series of books, or only your new work, or work produced during the term of the agreement, or even all of your work. Sometimes there are good reasons to narrow the scope. For example, you write in different genres and the agent only represents one of those genres. If so, limit the scope as needed.
- If the scope of agency is overly broad (i.e. covers all your work), be aware that the agent could claim commissions for work you produced prior to the agreement that are eventually sold years later even if the agent had no part in selling it to a publisher. The argument is that the earlier work would have never sold unless the agent had not taken over your representation. Tie the commission payments to only works the agent is involved in initiating and negotiating and are ultimately signed. Put a term limit on it like “if signed 90 days (or even 180 days) after the termination of the agreement.” This prevents you from being bound indefinitely to the agent for a commission. It also prevents you from dropping the agent to avoid a commission once the contact has been made with a publisher.
- Agents like to represent you for all your publishing needs (e.g. domestic book rights, print and digital rights, film rights, audio rights, foreign rights, merchandising rights, etc.), but exclusive representation need not be for “all rights owned by author” in a literary work or works. You can specify which rights they have the authority to sell. Often, agents create value in a project when they sell a book to a publisher, and they want to benefit from it when the film rights or foreign rights are sold. But you may only want your agent to sell domestic book rights and another agent to sell film and/or foreign rights. Make sure the agent can adequately represent you in all formats and for all rights before giving an agent the power to represent you for all your bundle of literary rights. Does your agent have experience in print and digital, domestic and foreign, film and audio, and merchandising rights? If not, divide out the rights appropriately.
- Often agents will add language to the contract allowing them to engage co-agents to handle specialize rights or markets. Using co-agents helps an agent in areas they lack proficiency while allowing them to benefit from representing you on other rights and in other markets.
- Be careful about language like “agency coupled with an interest” which gives the agent an ownership interest in your literary work. No agent should have ownership in your literary work unless the agent helps create the work. Only you and your exclusive licensees should have an ownership interest in your literary work.
- The agreement should require the agent to keep you advised as to all negotiations on your behalf.
- Agents would like the longest possible term to represent you. But that may not be to your best advantage. A term limit acts as an incentive for the agent to deliver so make sure the contract specifies how long the agent represents you. Typically, six months to a year or two are standard term limits but open-ended contracts do exist. If you have an open-ended contract, make sure you can terminate the contract at-will, i.e. terminate without reason (see below).
- Rollover provisions are not uncommon, meaning the contract is renewed for another term unless terminated within so many days prior to the expiration of the contract. If your contract contains a rollover clause, make sure you calendar the expiration date in case you want to terminate the contract. Otherwise, you may end up represented by an unwanted agent for another term.
- Industry-standard commissions for agents are 15 percent of all earnings from the work they represent. If a co-agent is used to license other rights like foreign and film, the rate tends to increase to 20-25 percent because the agent splits their commission with the co-agent. The commission usually applies to gross revenues, which means 15 percent off the top. Commissions continue for the life of the publishing contract even if the agent no longer represents you for other work.
- Watch for “interminable agency” language that allows an agent to collect commissions on “all proceeds” from a work not just proceeds from the contracts negotiated by the agent. An agent should only get paid on deals they negotiate.
Royalty Statements, Expenses, and Deductions
- If your agreement has an agency clause (see below), and most do, the agent will receive the royalty statements from the publisher as well as all communications. Agents should keep you informed of all communications and notices and routine correspondence, including royalty statements. If possible, include language that requires the agent to forward to you all communications to and from the publisher. At least make sure the agent is required to keep you advised as to all communications on your behalf.
- Most agents require you to cover minimal expenses associated with representing you. Expenses are deducted from the royalties received from the publisher. The contract should specify which type of general expenses – like photocopies, telephone, postage, online research. The expenses should only be “ordinary and customary.”
- Deductions should come with a limit of no more than $50 to $100 per single expense. Add language with an expense cap that requires your approval before incurring unusual or high expenses above the cap. Sometimes agents will charge all clients a standard yearly fee (like $200) for expenses. This spreads the costs among their clients. Deductions will and should be accounted for on your royalty statements.
- Agents will collect all proceeds from your work from the publisher and make sure the publisher pays on time and correctly. The agency will deduct commission and expenses and pay the balance. Royalty statements should be sent in a timely fashion. The author should have the right to receive an accounting from the agent and be able to inspect the agent’s records if need be. Typically agency contracts must give you semi-annual or annual accounting of monies it received on your behalf. The agency should remit monies due within ten days (or some reasonable time period) after receipt by the agent/agency.
- An Agency Clause is typical boilerplate language in a publishing contract (not the agency contract) that confirms the agent represents the book, that all monies due to the author are paid through the agent, and the agent’s commission is guaranteed. Usually, the author-agent contract allows the agent to include Agency Clauses in the publishing contract on your behalf. This way, the agent becomes a “third-party beneficiary” to your publishing agreement.
- The agency agreement should state that once the agency agreement is terminated, the agency will sign an amendment to any contract (like a publishing contract) with an Agency Clause with respects to the sale a specific work which notes that the agency is no longer representing you and the agents share of the commission should be paid directly to the agent. Any remainder should be paid directly to you.
Power of Attorney
- Some agents will request the right to sign agreements on your behalf. Avoid this. The agency agreement should expressly prohibit such broad authority. Publishers usually want the author to sign the publishing agreement, not the agent. And why give up so much power anyway. You want to stay in the loop and know what your agent is legally binding you to with regards to your work. Often what happens when an agent signs for an author, rights are granted without the author’s approval or knowledge. Stay informed!
- Termination clauses are one of the most important clauses in your agreement because you never know when a relationship will fall apart. Usually, termination clauses are “at-will” meaning you can terminate the contract for any reason (or no reason at all) as long as you give advance notice (usually 2-4 weeks). Termination clauses will specify how the author or agent must provide notice of termination. For example, termination notice may need to be given by certified mail two weeks prior to the end of the contract term.
- As noted above, the agent will still receive payments from publishers on contracts they negotiated during the term of the author/agent contract for publishing projects still in effect. Also, the agent will receive a commission on projects pitched but not officially picked up until after termination, provided the publishing contract was signed within a relatively reasonable time as specified by the contract. As noted above, 90 days (or even 180 days) after the termination of the agreement is reasonable. This prevents you from being bound indefinitely to the agent for a commission. It also prevents you from dropping the agent to avoid a commission once the contact has been made with a publisher.
Rights Surviving Termination
- When a contract is terminated, the agent still is entitled to collect a commission on work placed before the contract ended.
- Sometimes the contract language will extend to work shown to a publisher during the agreement, but not formally picked up until after the agency agreement terminated. If the agent did market the work to the publisher, the agent should be entitled to compensation. It would make sense for the contract to require the agent to provide you with a list of which publishers the agent has submitted to so there is no dispute after the agency ends. This clause is often called a “recapture” of commission.
- Sometimes the recapture commission may need to be negotiated depending on how much marketing work the agent performed. Make sure the recapture commission has a limit, like 4-6 months, so you are not obligated to pay commissions a year later.
Warranties, Representations, and Indemnities
- These are similar to the warranties and representations found in a publishing contract. See my earlier article for more information. Strike these provisions from your agency contract. While a publisher needs to be protected against lawsuits over an author’s literary work, an agent is not exposed to the same risks and does not need these protections. Maybe the only reasonable warranty language is something regarding the agent and author’s abilities to freely enter into and fully perform the agreement and that no one has contract or obligations which conflict with the provisions of the agreement.
- Sometimes agency agreements will allow an agency to assign your agreement to someone else. Strike this language too. Your relationship with the agent and agency is a fiduciary one. The agency should be prohibited from ditching that responsibility to another agency, especially one you do not want representing you. The only assignment language that is reasonable is if the agency wants to assign their commissions.
Below is a sample agency agreement to help you understand and navigate your own agency agreement. As I noted above, the terms of an agency agreement are always negotiable and should be modified to fit your own needs.
Photo Credit: VisualHunt | CC0 1.0 Universal (CC0 1.0) Public Domain Dedication
Legal Disclaimer: This information is provided for educational purposes only. Consult a qualified lawyer in your jurisdiction for all legal opinions for your specific situation.
SAMPLE AGENCY AGREEMENT
Dated as of ____________, 20__.
This Agency Agreement (“Agreement”) is entered into by and between XYZ Agency, LLC (“Agent”) and ABC (“Author”) with regard to the following Work(s):
1. Scope of Representation.
Author hereby appoints Agent as his exclusive literary agent in representing and negotiating the sale, lease, license or other disposition of the rights to Author’s Work or Works. As used here, Author’s “Works” shall refer to:
[List a specific Work or Works or all Works which Author has created or creates during the term of this Agreement, or in which Author has any title or interest, including but not limited to books, articles, plays, screenplays, and any and all rights in and to such work.]
All offers for such sale, lease, licensing or other disposition of Author’s rights shall be subject to Author’s prior, written approval. Author warrants that, during the term of this Agreement, the Author will employ no other Literary Agent to represent the Author for the Works.
Subject to the provisions for termination as hereinafter provided herein in section 10 hereof, the initial term of this Agreement shall be for one (1) year, and for successive one (1) year periods thereafter, unless either party gives the other written notice, at least sixty (60) days prior to the end of the initial term, or any extended term, that the employment is to terminate. “Term,” as the word is used in this Agreement, refers to the full term of this Agreement as it may be extended as described here.
In consideration of Agent’s services hereunder, Author shall pay Agent, and authorizes Agent to deduct and retain as a commission for services rendered the sum of 15% of gross revenue whenever received, due and payable to Author in connection with any and dispositions of rights in the Works (the “Contract” or “Contracts”) resulting from efforts of Agent signed during (or within the six months following) the Term. If Agent should engage a co-agent or sub-agent to assist in the disposition of film, television, or performance rights, or for rights to be exercised outside the United States and Canada, the commission shall be 20% of gross compensation to Author, and Agent shall be responsible for paying such sub or co-agent from Agent’s commission.
Author authorizes Agent to collect and receive on Author’s behalf all gross monies and other consideration due and payable to Author in connection with the Contracts. Agent shall pay over to author all such collections, less commissions and approved expenses as provided in this Agreement, within five (5) business days of the funds clearing Agent’s bank account.
Subject to Author’s advance approval in writing, the Author shall reimburse the Agent for unusual or extraordinary expenses incurred by the Agent. Agent shall not incur more than $250 of expenses on behalf of the Author over the term of the Agreement without Author’s approval.
5. Communication and Statements.
The Agent and Author shall promptly send each other copies of (a) any legal notice under any Contract (b) any important communication from any publisher under any Contract and any material correspondence. In January of each year, the Agent shall provide the Author with an annual statement showing all Author’s Payments, Agent’s Commissions and other itemized deductions for the previous calendar year.
Author or Author’s designated certified public accountant shall have the right to audit Agent’s accounting records, and to make copies and extracts therefrom, with respect to expenses and disbursements incurred pursuant to carrying out the purposes of this Agreement. The Author shall pay for all costs in connection with such an examination unless errors of accounting amounting to 5% or more of the total sum paid to the Author shall be found to the Author’s disadvantage, in which case the cost shall be borne by the Agent. At Author’s option, the records of account may be performed through an examination of photocopies or facsimiles of Agent’s applicable records.
Agent shall not execute or sign any agreement or grant of rights with respect to the Works. Author’s signature shall be required for any such agreement. Notwithstanding the above, Author hereby authorizes and instructs Agent to include a customary “agency clause” incorporating the terms of this Agreement in any Contract(s), which Agent may negotiate, and the parties agree to execute such additional documents as may be necessary to give full force and effect to this Agreement.
In the event Agent enters into proceedings relating to bankruptcy, whether voluntary or involuntary, Agent agrees to furnish, by certified mail, written notification of the bankruptcy (including the date on which the bankruptcy petition was filed, and the name and location of the court in which the petition was filed within five (5) days of the initiation of the proceedings relating to bankruptcy filing.
After the initial term of this Agreement, either party may terminate this Agreement at any time upon thirty (30) days prior notice. Author also may terminate this Agreement immediately in the event of the filing for bankruptcy (whether voluntary or involuntary), insolvency, liquidation, death, or disability of the Agent.
11. Dispute Resolution.
In the event of any dispute under this Agreement, the parties agree that common sense should prevail and that if necessary an independent person or persons mutually agreed upon by both parties shall be called upon to make a decision, which is binding upon both parties. If the parties cannot agree on an arbitrator within thirty days of a written arbitration request by either party, the parties may pursue remedies in law or equity in any court of competent jurisdiction.
12. Entire Agreement.
Agent and Author agree that this Agreement contains the entire agreement between them. and may not be modified or amended except by a writing signed by both parties.
All notices shall be in writing and shall be deemed to have been given when same are sent by first-class mail or delivered to the parties at the addresses set forth below, with the exception that any notice of termination must be given by certified mail, return receipt requested or other means evidencing receipt.