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Conflict of Interest? Agents Don’t Want to Know

27 July 2011

Passive Guy received a bunch of emails plus comments on his post – Agents in Conflict with Clients – Issues and Responses.

One of the longer comments criticized the harshness of some of the criticism of the agency in question, Bookends LLC. PG felt the comment merited a detailed response.

Since PG’s response was toward the bottom of a long line of comments and the information may benefit visitors who didn’t make it down that far, here is a slightly shorter version:

I and many other lawyers who have examined the agent as publisher issue see conflicts of interest of a deep and potentially insoluble nature and have discussed these in extensive length. One of the things I try to do on this blog is point out potential problems in the contractual relationships authors undertake with publishers and agents.

I am not the only one who sees significant issues for authors in the “new normal” contracts some publishers and agents are offering or insisting upon. I recently blogged about C.E. Pettit, a long-time publishing and intellectual property attorney, who made a persuasive case that standard ebook royalty provisions mandated by one large publisher and closely copied by other large publishers may be a violation of antitrust laws.

You properly place the obligation to conduct due diligence when entering into any partnership upon yourself.

One of the principal things I try to do around here is provide authors with adequate information so they are able to perform better due diligence on the contracts publishers and agents may ask them to sign. Many authors have shared deep regrets at having signed one or more terrible publishing contracts. As discussed here, authors who signed agency contracts with questionable clauses are reported to be considering litigation against the estate of that agent, who is now dead, so they can move to other agencies.

Since you’re a first-time commenter, you may not have had the opportunity to read any of my “How to Read a Book Contract” posts. I try to make these useful due diligence resources for authors.

As far as Bookends is concerned, I mentioned I was generally an admirer of the agency through its blog posts before their announcement of an agent/publishing business. As far as I know, they seem to be excellent agents. Many of their clients attest to the quality of their agency services.

However, I know enough about doing business online to judge their introduction of a publishing arm as a disaster. Their reputation has taken a severe hit over the last couple of days because of the manner in which they conducted the introduction and responded to the criticisms posted to their blog. Perhaps their publishing arm will provide a valuable service that many authors will use. Perhaps they will take steps to disclose and mitigate conflict of interest issues when they enter into publishing agreements with authors who use them as agents.

I hope so, but am not encouraged by what I’ve seen so far.

Speaking generally about agents who have become publishers for their clients and not about Bookends in particular, it is my impression that they do not want to know and understand the nature and potential severity of their conflict of interest issues.

A lot of people wave off conflicts.

Having litigated some conflict of interest cases on behalf of legal clients in a former life, I can attest that it’s not a hypothetical problem. When a former client comes to believe someone they trusted has abused their trust, that client wants blood. If a court finds a material conflict of interest and betrayal of trust, that court will deliver some blood to the person who was wronged.

Agents