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How to Read a Book Contract – Can I Ever Get Rid of My Agent?

18 August 2011

Passive Guy just hasn’t felt like himself for the last day or so. A little dull and listless. Not much of a sparkling party boy.

What could it be?

  1. Meds? Check. Haven’t cut any pills in half lately.
  2. Exercise? Some. Need to do more, but that’s not it.
  3. Sunshine? Barely a cloud in the sky. Fry your eyeballs if you glance up.

PG considered several more possible causes but discarded each.

Suddenly, the answer appeared. So obvious, he should have thought of it right away.

Passive Guy was suffering from screw-the-author contract withdrawal symptoms. Too much time had elapsed since he dived into some really nasty clauses.

Slimy contract provisions always boil PG’s blood and perk him right up. Way better than a 48 ounce Diet Coke or a double dose of Adderall. His eyes narrow, his ears go back and he’s on the hunt, sniffing the air for the slightest whiff of duplicity.

He didn’t have to look far.

There it was, on his desk, next to the post-it notes reminding him of things he always ignores. A great stinking carcass of an agency agreement. It’s a classic, grabbing for more things than a drunken frat boy.

When PG ran his fingers over the pages, he felt like a cheetah contemplating a limping gazelle.

OK, enough with the mixed metaphors.

Perceptive readers will recognize the inimitable drafting style of a contract we have discussed before. If you haven’t read PG’s previous post about this contract, take a quick look for some useful context underlying today’s dissection.

Today, we’ll examine two clauses that appear in separate parts of the original agreement, but relate to one another in tone and general subject matter.

The first clause talks about termination of the agreement:

This agreement may be terminated by either of us giving a 30 (thirty) day written notice to the other.

Notwithstanding termination, XYZ Agency will continue to be the agency of record and receive commissions on any contract negotiated by XYZ Agency or by its agents on your behalf pursuant to this agreement, and XYZ Agency will continue to be the agency of record and pursue and exploit all secondary rights derived from any and all literary material on which XYZ Agency sold primarily rights on your behalf for the life of that primary agreement.

The second clause talks about what happens if the agent dies or the agency dissolves:

All monies due XYZ Agency, including commissions on royalties and on all secondary sales arising from literary material for which XYZ Agency has sold primary rights, shall remain due and owing XYZ Agency’s heirs even upon the death or incapacitation of all principals of the agency or the dissolution of the agency.

Termination

Look at the top clause first. The first sentence of this clause sounds reasonable. Either party can terminate on 30 days notice. While it does not specifically mention “without cause,” the lack of any reference to “reasonable cause” or “just cause” means either the author or agent can terminate for any reason or no reason. Send a note or a fax or email and the contract is history.

So, it’s simple to terminate. Except it’s not.

Whether the author terminates the contract or the agency terminates the contract, the author is still stuck with the agency forever. PG hasn’t included the contract provision describing how long the agency contract lasts, but it mirrors the length of the publishing agreement, which is the life of the copyright.

For newly-arriving authors, the life of the U.S. copyright for anything you write is the rest of your life plus 70 years. Your grandchildren may die before your agency agreement does.

Hypothetically, how might this clause operate in the real world?

You, the author, suspect your agent is mainlining heroin before she reviews your contracts. You decide you would be better served by getting a new agent.

You may have a new agent, but you also have your old agent and you can’t get rid of the moldy oldie.

“Notwithstanding termination, XYZ Agency will continue to be the agency of record and receive commissions on any contract negotiated by XYZ Agency or by its agents on your behalf pursuant to this agreement.”

This says your fired agent will continue to receive all your royalty reports and all your royalties from the book contracts and every other contract your agent ever negotiated for you.

PG understands the agent’s side of this particular provision. The agent worked hard for the contract and received a piece of your advance. However, since you wouldn’t have the contract without him, the agent should also receive 15% of every dollar that contract produces. For 100 years, maybe 150 years.

Needless to say, PG doesn’t agree, but will concede that honest agents believe this is part of their reasonable compensation. PG says a reasonable time limit – say 3 years – ought to be the end of the agent’s compensation period for the original book sale if the agent is not providing ongoing services at the author’s request.

But Wait! There’s More!

After you fire your agent, “XYZ Agency will continue to be the agency of record and pursue and exploit all secondary rights derived from any and all literary material on which XYZ Agency sold primarily rights on your behalf for the life of that primary agreement.”

Secondary rights? There are a zillion of them – movies, TV shows, video games, board games, action figures, Halloween costumes, and on and on.

What can your fired agent do? Your fired agent can negotiate for secondary rights sales and receive commissions for any books your agent sold before you fired him. So you fire your agent in order to hire a new one who is not strung out on drugs to help you with a movie deal, but you’re not done with the old one. At a minimum, you’ll pay a double commission – one to your old agent plus one to your new agent. But your old agent still has negotiation rights so he might jump into the middle of your new agent’s negotiations with all sorts of proposals.

PG would guess, unless you’re JK or Grisham, no new agent would touch you for secondary rights with a clause like this lurking in the background.

How long does this part of your fired agent deal last? Your grandchildren may be dead before it’s done.

Death

Speaking of death, let’s move to the second of today’s nasties.

Here it is again so you don’t have to scroll up:

All monies due XYZ Agency, including commissions on royalties and on all secondary sales arising from literary material for which XYZ Agency has sold primary rights, shall remain due and owing XYZ Agency’s heirs even upon the death or incapacitation of all principals of the agency or the dissolution of the agency.

We’ve talked about problems for authors when an agent dies before, but this is worse.

Your old agent buys a bag of bad cocaine and snorts death right up into her inflamed sinuses shortly after signing you to the worst book deal your author friends have ever seen. Despite this, you decide it’s only right to send a modest bouquet to the funeral. After all, her family can’t be blamed for her problems.

Shortly after the funeral, you receive a letter:

Dear Author:

You probably know Mom died and to tell you the truth, I’m relieved. We had issues.

Mom never gave me a cent after I got out of prison, so I was stuck in a dead-end waitressing job which was so depressing, I quit going to Alcoholics Anonymous. Mom got a restraining order and my parole officer put me on house arrest with an ankle bracelet that wouldn’t let me get to a liquor store. I couldn’t even go to her funeral.

Anyway, you don’t care about this and why should you since you’re a rich author.

I’m Mom’s only heir, so I own the agency and I’ve decided to keep it going. Before I fired all the agents who worked for Mom, they said they were working on a deal for your movie rights. I don’t know what your book is about, but I met a guy in rehab who is this movie genius or he will be if he ever gets a break and stays sober. Anyway, he’s cute and says he can get me off house arrest if I help him out with his career. He read the first part of your book and thinks it will make a great movie.

So I made a deal with him on your book. I’m the executive producer and he’s going to make a really cool movie starring this grunge rock band he used to play with.

All your royalties are still coming to Mom’s address and the new owners promised to hold her mail until get rid of my ankle bracelet. I’ll let you know if I need any help figuring out what to do with the royalties.

I don’t have a phone, but you can leave messages with my parole officer.

My official name is Sara, but my friends call me Goddess of the Underworld because I have that tattooed on my forehead.

Your primary rights were sold and the agency continues so, under the contract clause, not only does the new owner of the agency continue to collect royalties for your books and (hopefully) send the balance to you after deducting the agency’s 15% plus “expenses,” the agency also has the right to negotiate secondary rights sales and, whether sales are negotiated by them or someone else, receive secondary rights royalties.

And how long are you in business with Goddess of the Underworld and her offspring? You guessed it. Your grandchildren may be dead before your contract is finished.

Some of you may think Passive Guy is dealing with the wildest speculation and may, in fact, be off his medication. However, PG would refer you to the case of the Ralph Vicinanza Agency and how Ralph’s daughter sister, who had no agency experience, took over the agency after Ralph died and informed the authors she would be handling their royalties thenceforth. PG has taken a peek at a Vicinanza agency agreement and it is much looser than the language he has quoted in this blog post.

Both of these provisions are terrible and unfair, but the second is worse than the first.

In order to clarify our analysis of this contract, let’s back up and look at it from a broader perspective.

Agents regard themselves as professionals. Why don’t we transfer this agency clause to another profession to see what happens?

When you have your next visit with your doctor, she asks you to sign an agreement with her that says she will continue to be your physician and you will pay her standard fees. The agreement also says that when your doctor dies, her heirs will become your doctors and receive the same fees their mother did.

Fortunately for you, despite such an agreement, if your doctor’s heirs weren’t licensed to practice medicine, they couldn’t be your doctor. Since no one needs a license to be a literary agent, anybody can become your agent under today’s contract.

Of course, contract or no contract, you can always fire your doctor or your lawyer or your accountant. You owe them money for services they’ve performed up to the day you fire them and not one cent more.

Passive Guy is of the opinion that the services provided by a literary agent are personal by their very nature, invariably tied to an individual or group of individuals, not to a corporation, partnership or LLC.

Why did you query your agent? Because he had the personal reputation of being an effective agent who obtained good contracts for his clients. Because you thought he would be a good working partner for you based upon what you heard about him. Because he had helped several successful authors build good careers. You might have had the option of querying another agent in the same agency, but you did not because the other agent didn’t have the same reputation.

Perhaps you queried an agent because of the general reputation of the agents in his agency, but your decision was still tied to specific individuals, their reputations and their relationships with authors and publishers. To some extent, junior agents trade on the reputation of senior agents because an author assumes the junior agents will be mentored and supervised by senior agents or, at a minimum, the junior agents will be able to walk down the hall and ask an experienced senior agent for help with a problem or question.

If all the agents left the agency and were replaced with new people, it wouldn’t have the same reputation. In reality, a literary agency, like a law firm or a medical practice is just a shell that gains virtually all its value from the reputation of the professionals who work there. For an author, all the useful assets of a literary agency walk out the door at sixish each day.

PG has said before he believes the current length of copyright protection – life plus 70 years – is too long and causes all sorts of weird distortions of reasonable contract principles.

Between 1909 and 1976, the term of a U.S. copyright was 28 years. The copyright holder had the right to file for an extension of the copyright for another 28 years for a maximum total of 56 years of protection. The underlying thinking was that most copyrights would expire after 28 years with only those of real value being extended. That length sounds reasonable to PG. If value can’t be extracted from a book within 56 years, let it go into the public domain.

As persuasive as Passive Guy’s arguments may be, however, 28×2 will never return.

What are a few PG contract principles we can derive from today’s clauses?

1. In the agency contract, provide that agency agreements may be terminated by either party at any time.

2. After an agreement is terminated, the agent has no further rights to act on behalf of the author.

3. If an agent is to receive commissions after termination, those commissions should have an end date that happens at a reasonable time. Five years after termination sounds like the longest reasonable time to PG. Three years would be better. If an agent would like a lifetime annuity, he/she can purchase one with their share of the advance. The agent earns ongoing commissions by providing ongoing services. If the services stop for any reason, the commissions stop.

4. In the publishing contract, provide that royalties will be split on an 85% – 15% basis with the author receiving a separate check and royalty statement directly from the publisher. Insert similar provisions in any contracts for secondary rights. If the author needs someone to help him/her with money matters, the author can request that the check be sent to an accountant or financial manager or nannie. If the agent has reimbursable expenses, the agent can send the author a bill.

5. The agent cannot assign the agency agreement to anyone else without the consent of the author.

PG could go on, but he won’t.

The cheetah has feasted on the gazelle and contentedly gazes across the Great Rift.

UPDATE: So PG doesn’t raise the righteous ire of honest agents, clauses worded like these aren’t found in every agency agreement. Some agents work the traditional way – the author or agent can terminate the relationship at any time with no ongoing entanglements.

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Agents, Contracts, PG's Thoughts (such as they are)

34 Comments to “How to Read a Book Contract – Can I Ever Get Rid of My Agent?”

  1. The more I hear of these contract clauses, the more I wonder if I’ll ever be offered a publishing or agency contract that I’d actually be willing to sign? (Other than the default ones for uploading to Amazon, etc.)

    It feels like agents are asking for half your immortal soul in return for brokering a deal to sell the other half to a publisher.

    • To be fair, Zelah,this is not a typical agency agreement. The person who gave it to me described it as the worst seen in 30 years in the publishing business.

  2. Oh, my.

    I’ve thought of several tasteless things to say about indentured servitude, but honestly, none of them are as bad as these clauses appear to be.

  3. Nice contract. – I would get the money. 😉

    Any chances to get out of this without buying… eh – sponsoring enough politicians to change the rules?

    • Chasm – Actually, this contract is so poorly written that I think there are several ways out.

      If you look at my first post about it, you’ll see that when I first read it, I had doubts about whether it was written by an attorney.

  4. And the really scary part? Two ATTORNEYS that spoke to a writer’s group I belong to say these type of clauses are OKAY!

    • Suzan – To be fair, there are clauses, then there are clauses, but what basis did the attorneys give for their approval?

      • The first one (a contracts attorney, not an IP attorney) said it was the new industry standard when I asked. He followed with a comment to the effect that as a writer I shouldn’t have to worry my pretty little head about the business side of things.

        The second one was an IP attorney who worked for a literary agency. One of the other writers asked the same questions I had in the previous encounter. He kept dodging her generic questions. Then he finally mumbled something about he couldn’t give legal advice about a specific contract to non-clients.

        These type of clauses aren’t new though. Six years ago, when I still practiced, a friend asked me to look at an agency agreement with the first clause you mentioned (thank god, not the second though!) I gave my friend my personal opinion with the caveat that she really needed to talk to an IP attorney. She’d already spoke to IP attorney I recommended, and the IP attorney had told the same thing I had (maybe not as vehemently), but my friend signed the agreement anyway.

        This is probably one of the reasons I had a problem with high blood pressure before I was forty. *grin*

        • Suzan – These are pretty lame attorneys IMHO. PG is most definitely not looking for unpaid writers group speaking gigs, but he would have been way more informative and colorful.

          Regarding your blood pressure, I assume you’ve always been precocious.

          • Parents and teachers used a different word than precocious when referring to me.

            Then there was the third word commonly used by opposing counsel. *grin*

  5. Thank you for finding these clauses and explaining them. I’m glad I’ve given up looking for a literary agent. If I were as desperate now as I remember being in years past, I might not have paid attention to my unsettled conscience as I signed away my career.

    The whole practice looks more and more like a marriage that one will never be able to end. The agent gets you a sale and a contract and then you’re bound together forever (on that book project at a minimum). If I were about to walk down the aisle under such ugly circumstances I’d hope a friend or family member would tell me what kind of mess I was about to start. Assuming they knew how bad things could get.

    Agents-as-necessities aren’t that new an idea (starting in the 1980s or so), but for a long time all the valuable information stayed with the publishers and the agents. (What was a fair contract? What was a fair arrangement with an agent? Where did the tricky clauses hide and how could you avoid them?) If a writer sold just one book a year, it’d take a long time to learn the ins and outs of publishing agreements at that rate. Slowly and painfully. Who was going to serve as a reference on what to do, other than an agent (or a lawyer who had a fair amount of publishing experience, assuming you could find one in the days before the Internet)?

    I’m glad we’re getting more transparency into all these agreements, especially now that publishers and agents are more desperate and grabby than ever.

    • As mentioned above, James, this is a particularly nasty version of an agency agreement. Not all are this bad.

  6. Fascinating and educational. But very, very scary.

    MEW is glad PG is on the writers’ side…

    • PG has always had a propensity for representing non-wealthy underdogs in disputes with the large and rich which is probably a bad business strategy, but is good for his psyche.

  7. Oh baby…a cheetah? You are more like a hyena – an intelligent, ruthless, opportunistic predator. Cheetahs are cute and cuddly and can be tamed.
    You’re a beast!
    Keep it up.

    • Hey, Julia, I’m glamorous in my own special way. I don’t know if I see myself as a hyena. Would you go for leopard? 🙂

  8. Beautifully written, PG. I laughed out loud. On the flip side, it sounds like signing up for a tumor.

  9. After a day of struggling with workplace safety regulations regarding confined space hazards, this is exactly what I needed to crack up, fall out of my chair, and break my hip 🙂 thank you.

    Although there are some eerie similarities between the confined space scenarios and this contract.

  10. PG, I don’t think Ralph’s daughter (did he even have one?) took over the agency. His sister is the executor of the estate, and my contact with what survives of the agency has been with a fellow who has the same last name as the sister, so I assume he’s Ralph’s brother-in-law.

    There’s a point on which I disagree with you. I see nothing wrong with the agent who sells a book receiving commissions ever after, even if fired (but I mean just the commission on that sale, not comissions on secondary sales that might happen later via a new agent). That just seems fair to me.

    • Patricia – You’re right, it is a sister. I relied on my memory, always a dangerous thing. Got that fixed.

      As far as lifetime commissions, I still have a problem with 100 year contracts for anything. One issue I haven’t written about is whether having an agency clause with the agent as a third-party beneficiary puts a cramp in how the author can renegotiate the contract.

      As indicated in my post, I also have a problem with who knows what relative starting to handle or mishandle author royalties that are flowing into the agency after the original agent dies or retires.

  11. I’m just wondering if the agency required the author to sign this contract in blood at midnight under a full moon.

  12. The first clause is evil. The second clause is, perhaps, the contractual equivalent of someone taking a big steaming load right in front of you and then telling you it’s chocolate.

    I’m appalled that anyone would ever even sign something that horrible. They really need to start teaching things about contracts to high-schoolers. Not that I think it would help much, but everyone has to sign contracts in their lifetime. People should at least know enough to understand what they sign and think through the consequences before signing it.

    • Jean – My understanding is that lots of people have signed this agency agreement or one of its equally-nasty predecessors.

  13. Great article, PG. It made me sit back and ponder as to whether I’d ever been at a point where I’d have been desperate or clueless enough to sign a contract with clauses like that. Hanging my head here, because yes, there have been times.

    You can’t know how much I appreciate these posts. I’m making notes for the “perfect” contract terms. Should I ever enter an agency agreement again or for my next pub contract, I know where I’m drawing my lines in the sand (and where to erect the concertina wire barriers).

  14. My previous agent is no longer in the business. I have a long-running series (19 books so far). She/we kept the “computer rights” on the first 4. My new agent has negotiated a deal with the publisher for ebook rights and is willing to forgo her share of the royalties, but the publisher won’t go ahead without the OK of the original agent.
    Whom I can’t contact.
    So I’m stuck with books 5 through 19 on Kindle and Nook, but the first four are in limbo.

  15. I happened upon your site and this article through a friend’s Facebook link…so glad that I did! You cut right to the chase with an interesting and quirky sense of humor. As a writer and an aspiring author, there isn’t a doubt that I will be a frequent visitor here :o)

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