Home » Agents, Contracts » How to Read a Book Contract – Can I Ever Get Rid of My Agent?

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

15 March 2012

A reprise of an earlier post.

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’sdaughter 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.

Agents, Contracts

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

  1. Contracts (and many other legal documents not usually written in English) make my eyes glaze over, so I am delighted that someone of your eagle eye (cheetah eye?) actually enjoys devouring them and spitting out the bones.
    And I find that, after you have done that, they even make more sense.
    Question: do those long lists of comma-separated semi-English words in things like wills really make the intent of the signer clearer to the judge, eliminating problems at probate, or do they actually confuse things? And what happens when a list that should have had twelve items is missing one?
    I am happy to leave to the lawyer what belongs to the lawyer – but do have a penchant for clear English.
    And, as you have probably pointed out, if these agency contracts were written in clear English, no one would ever sign them.

    • ABE – Typically, the long lists you mention are designed to be comprehensive catchalls that omit nothing.

      However, you’re right that if such long lists omit something, the implication is that the omitted item was not intended to be included because the list was so comprehensive.

      While long lists may not always be avoidable, I usually try to use simpler language because it’s harder for someone to claim he/she didn’t understand it or it meant something different than I intended it to mean. It’s also easier to see mistakes in shorter sentences.

  2. I love this piece with its rolling metaphors and wild hypotheses (I have recently been studying its earlier posting for reasons of my own).

    Just today I was told by an agent that all reputable agencies include the perpetuity clause in their author/agent agreements.

    With apologies, PG, I’m blaming the lawyers for this sorry state of affairs.

    • PG never met a metaphor he couldn’t mix, Lexi.

      Lawyers only put things their clients request into contracts. If an agent tells his/her lawyer to take a perpetuity clause out, it’s gone.

      The lawyer might suggest it or say all the agents are doing perpetuity clauses, but, ultimately, it’s the agent’s call.

      If an agent is too intimidated by his/her own attorney to order the removal of the clause, that agent is never going to be able to do serious negotiation with a publisher.

  3. *forwards the link to a friend who is getting some nibbles from an agent*

    (Not that it wouldn’t be a great thing if she could net one, for various reasons primarily grounded in things like “there aren’t a lot of ebook-sellers overseas.” But so she’ll know what to watch out for. Best to go into such a business relationship with eyes open.)

  4. Thanks for bringing this up. An offer for representation was withdrawn from me because I asked to have a perpetual rights clause removed from an agency contract. But admittedly, up to that point I had asked a lot of questions, done my due diligence and it must have been irritating that I was not passive, quiet and accepting. It is a HUGE issue, the rights termination thing. I remain, your faithful reader, Anon A. Mouse

    • KHC, good for you! I wish every single writer looking for an agent right now would make a decision (and stick to it) not to sign such a clause. Agents can get away with this sh** because writers GO ALONG with it. No other reason.

  5. The little bit of direct experience I have, coupled with what I see here and other places around the Web, suggests to me that agents and publishers — as a rule, with honest exceptions — are now primarily interested in signing people who are ignorant and/or stupid enough to sign such contracts, essentially without reading them.

    If you do even minimal due diligence they’re likely to drop you like a hot rock. This is not the behavior of people who even intend to work for your interests.

    Regards,
    Ric

  6. PG wrote: “the length of the publishing agreement, which is the life of the copyright.”

    Well, no, only really BAD publishing agreements tie up the rights for length-of-copyright.

    A well-negotiated agreement spells out when the book is eligible for reversion of rights and thus can be terminated by the author. Working pros (including me) who are self-publishing our backlists are self-publishing previously published books whose rights have reverted to us. Some of my deals remained in effect for over a decade, some for only 3-4 years.

    The notion of “out of print” and “eligible for reversion” is indeed more complicated with the advent of digital rights, and more books will NOT revert under the terms (even well-negotiated ones) of contracts being signed in the digital age. But reversion certainly hasn’t vanished from our landscape or from our future. The solution is either to negotiate a time-limit to the digital license, or else a sales floor (i.e., if the ebook doesn’t sell at least “x” copies per sales period, it’s eligible for reversion).

    • “The solution is either to negotiate a time-limit to the digital license, or else a sales floor (i.e., if the ebook doesn’t sell at least “x” copies per sales period, it’s eligible for reversion).”

      In my contract, it’s both time (can’t ask for the rights back until 7 years from publication) AND a sales floor. The sales floor is a dollar amount per royalty period. Unfortunately, it’s a very *low* amount – due to inexperience on both my part and the agent’s. Sigh~

      I’d *strongly* advocate a time-based reversion. Most digital-first independent ebook publishers give your rights back within 2-5 years, regardless of $.

  7. You are AWESOME, just so you know.

    I would say more, but I have tacos on my hands and face and am receiving Clean-Yourself-Up looks from Wifeage.

  8. Having never signed an agency contract, I wonder how this scenario would play out:

    Writer signs a bad contact with the Agent which includes a 15% commission for the life of the copyright. Later, writer fires agent. The rights to the book eventually revert back to writer (agent originally negotiated contact on the book). Writer (now without an agent) self-publishes the book herself. Under the agreement, it appears the agent is entitled to 15% of writers profit from self-published sales.

    Talk about a bad deal, and a windfall for the agent! Am I missing something?

  9. This stuff makes my head hurt. Not your writing, but the bullet I dodged. Not sure where else to share this, but I’ve just posted about one of the most famous/infamous agents in the land who jerked me around mercilessly. And I’d like to share it with you. Boy am I glad it all worked out the way it did, or rather, didn’t.

    http://www.lauranovakauthor.com/blog.html

    Thank you for all your excellent work. I read it every day and learn many (frightening) things about the publishing industry!

  10. I’ve been feeling listless too. These screw the author contract studies perk me up too. Every time you write one I get a happy smile.

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