From Adventures in Agentland:
A typical agency clause will read something like:
Author authorizes Agent, located at (ADDRESS), to collect all gross sums of money due under this Agreement. Any receipt of such sums shall be a good and valid discharge of Publisher’s obligations to make payments to Author. Agent is empowered to act on behalf of Author in any and all matters arising out of this Agreement.
In the article, the author addresses why this is problematic, and recommends either not having this clause, and having all money go directly to you, or modifying it to be revocable at any time.
For the record, I HIGHLY respect SCBWI, and I HIGHLY respect the author of the article. The intention behind it is very good, and authors SHOULD think about what they’re agreeing to; it IS problematic if you’ve signed with a “schmagent” – someone who disappears, along with your statements and royalty checks, leaving you high and dry.
I shared my post with Sara Rutenberg, the author of the SCBWI article, who pointed out: “Unfortunately, there are so many agents out there who are unscrupulous. The column was written in response to a number of people who found themselves in [the position of being with an agent who is not remitting timely or disappears]. It is critical to [discuss the agency clause] up front, or people will not feel comfortable taking actions needed to protect themselves.”
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I think it would be a mistake to feel that you are getting a bad deal from, or not sign with, an agent or agency that insists on this language.
There are several issues with direct payments. If you have your royalty statements and payments coming to you, instead of your agency, you would be responsible for remitting your agency’s commission and, at the end of the year, also remitting a 1099 to that agency for what you paid them. I actually can’t imagine that any foreign publisher would be ok sending payment to the author, instead of the foreign co-agent who brokered the deal – but, in that case, you’d be responsible for remitting payment to your agent, your co-agent, and dealing with any tax withholdings applicable to the specific country’s laws when you pay your co-agent (and then have to remit a tax form to them, too, at the end of the year).
You would also be responsible for sharing statements with your agent(s). Why? We need to check them! Think mistakes never happen? Think again!! It is part of my job to monitor any statements that come in, to be sure everything is calculated and reported correctly.
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You can absolutely discuss the split payment option with your agent upfront. However, keep in mind that not all publishers will agree to this (particularly in the case of subsidiary rights), which is why an agent may not agree to contractually be obligated to secure split payments for you.
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But, as I said, this isn’t something every agent will agree to, even if discussed upfront. And that doesn’t have to mean the agent is a schmagent, or that you’re getting screwed. The agency clause is VERY common. At the end of the day, if you have doubts about whether or not you can trust your agent to handle funds or statements – why are you signing with this person?! I think the true warning, and really, what Sara was after too, should go against schmagents, rather than the agency clause. You sure as heck should have done your research to make sure the agent offering rep is legit.
The agent-author relationship should be one of trust. If you’re worried your agent is going to, or currently is, screwing you over…you’ve got issues that need to be addressed immediately, either in conversation with your agent, or by parting ways/not signing with that agent.
Link to the rest at Adventures in Agentland and thanks to Sandra for the tip.
The original post is incoherent in spots, so allow PG to clarify a few points:
1. The agreement between author and agent as well as an agency clause in a publishing agreement should always provide for split payments with 85% going directly from the publisher to the author and 15% paid to the agent. Each payment should be accompanied by a royalty report delivered to both the author and the agent.
There are no benefits and many potential downsides for an author to have the entire royalty check sent to the agent. At a minimum, there will be an unnecessary delay of a few days or a few weeks between the time the royalties are paid to the agent and the time the author receives his/her share of the royalties.
And if an agent runs into financial troubles or develops a drug habit . . . . Stories of agents stealing from authors are legion. PG believes most agents are honest, but everyone is better off to avoid the possibility of temptation. An old Mark Twain (PG thinks) saying applies here, “Many a man has been saved from sin by the lack of opportunity.” Mark Twain spoke before gender language equity, but the saying would also apply to many a woman.
2. PG usually doesn’t play the lawyer card, but the advice to check out your agent and go on trust (instead of a proper contract) is typical of the way non-lawyers think about business relationships. And very few agents are lawyers.
How long does the contract last? While PG strongly objects to their length, a typical publishing contract lasts for the life of the author plus 70 years in the US and for a similarly long time in most other industrialized nations.
Under a standard agency contract, how long will the agent be collecting royalties when an author signs a typical publishing contract? You guessed it, the life of the author plus 70 years.
Agents die. Agents go out of business. Agents sell their businesses to other agents. Agents merge their businesses with other agencies. The probability that the agent who sells a book to a typical publisher will still be around when the publishing contract finally ends is very close to zero. The probability that, at some time during the life of the publishing contract, a total stranger will take over administration of the contract in place of the original agent is close to 100%.
Your original agent could be the Mother Teresa of the agent world, someone who would never, ever do anything to harm an author under any circumstances. But, when Mother Agent goes to her heavenly reward, she could be succeeded by Mother Devil. You don’t want Mother Devil’s hands on your money.
3. PG could mumble on about other problems with the original post, but he won’t. Like many other fields of human endeavor, some agents are wonderful and capable, other agents are terrible and incompetent and most are somewhere in the middle.
Some of the problems with agents are a result of the fact that anybody can call themselves a literary agent regardless of qualifications or the lack thereof. Cathy Convict could walk out of a twenty-year stretch in Folsom Prison on Monday afternoon and set herself up as Cathy Agent on Tuesday morning.
For all their shortcomings, lawyers must hold a valid license to practice law. For all their shortcomings, bar associations can and do cause lawyers’ licenses to be yanked if the lawyers don’t follow the rules. Clients can file complaints with bar associations without hiring a lawyer to assist them. For all its shortcomings, the threat of losing a license helps keep lawyers in line.
If a lawyer does what virtually all agents do – receives all the royalties payable under a publishing contract, then pays the author 85% of the proceeds – the lawyer would be required to maintain a trust account separate from any other bank accounts for the purpose of holding client funds. The lawyer would have to deposit the publisher’s check into the trust account and pay the author directly from that account. The trust account is subject to audit by the bar association to make sure client money is handled properly.
Trust account mismanagement is one of the quickest ways to lose a law license. A complaint from a client to a bar association about trust account problems may be the best way to fast-track a bar association investigation of that lawyer. A lot of lawyers (including PG) strive to avoid receiving client funds in order to stay clear of potential trust account issues.
None of these safeguards apply to a literary agent. There is no agent’s license to yank. The agent may have a trust account, but nothing requires the agent to put all client funds in the trust account. If a client has a complaint about improper behavior by an agent, there is no agents’ bar association where the client can lodge a complaint. An author has no way to resolve a large problem with an agent short of hiring an attorney and, if that doesn’t work, filing suit against the agent.