Given all the recent uproar about agents getting into the publishing business plus the constant drumbeat about successful indie authors being solicited by agents for representation, it’s time to look at an Agency Contract.
Before diving into the details of this contract, let’s review some basic legal principles that govern the relationship of a principal – the author in this case – and an agent. These principles are old and universally applied in the United States and probably in the UK. Search for “duties of an agent” in Google and you’ll see a million different versions of the following items. PG will generally use “author” instead of “principal” for clarity.
The three pillars of agency law are Obedience, the obligation of the agent to use Reasonable Care, Skill and Diligence and the requirement that the agent act in the Best Interests of the Author.
- Obedience. The agent is retained by the author to perform particular duties – find a publisher – and the agent is obligated to carry out the author’s reasonable instructions in doing so.
- Some of the author’s instructions will be implied – the agent should use her skill, knowledge and experience in the publishing industry to locate a willing publisher and help negotiate a publishing contract. This is expected and assumed on both sides.
- Other instructions from the author are likely a combination of what is written in the Agency Agreement and verbal instructions – “Let’s accept the $50,000 advance.”
- To be clear, a principal/agent agreement isn’t master/slave or master/servant relationship. Obedience is just a way of saying the author is in charge and the agent is obligated to help the author accomplish the author’s objectives, not the agent’s.
- Use Reasonable Care, Skill and Diligence. As the agent carries out his responsibilities to the author, he is obligated to do a high quality job. The agent isn’t required to be superman, but he’s supposed to perform his duties at the skill level expected of professional agents. For example, if one of the express or implied duties of the agent is to check royalty statements for accuracy, the agent is obligated to be diligent and careful in doing so.
- Act in the Best Interests of the Author. The agent is acting in a trusted capacity to assist the author and is not permitted to do anything that will harm the interests of the author. The agent can and will use her business judgment in representing an author, but she must do so in a way that protects the author and is for the author’s short term and long-term benefit.
- After the agent has had a detailed and honest consultation with the author, if the author makes a decision against the advice of the agent, the agent won’t be violating her obligation to act in the author’s best interests if she acts to carry out the author’s decision. In fact, she is honoring her obligation of Obedience.
- An agent must not have any personal interests that conflict with the author’s best interests. For example, if an author were considering contract proposals from two publishers, and one of those publishers offered the agent a separate payment if she was successful in persuading the author to accept that publisher’s proposal, the agent would have a conflict of interest. The agent’s own financial interest might conflict with the author’s best interests. The bribe might influence how the agent advised the author respecting the two competing proposals.
I’ve described root principles. They split, branch and rebranch into more complex areas. As described in the short Best Interests vs. Obedience discussion, obligations can conflict with one another. Agency is worth a couple of classes in law school that teach enough so you can be a baby lawyer supervised by an experienced attorney and learn more.
These principles apply to all sorts of agents – attorneys, real estate agents, stockbrokers, etc. Special rules may govern particular types of agents, but such rules typically expand upon the basic duties of an agent or prescribe how the agent is to deal with specific situations unique to a particular profession. I can’t think of any that violate the core principles of agency described above.
Against this backdrop of duties, we overlay the law of contracts. Generally speaking, two competent adults are free to arrange their business affairs in any legal manner and memorialize those arrangements in a written contract.
If a contract specifically and directly contradicts some aspect of an agent’s general duties summarized above, the contract will probably govern that aspect of the agent/author relationship. However, in interpreting the contract as a whole, a judge will work to fit such non-conforming provisions within the general legal principles of agent duties to an author. If one person is acting on behalf of another, it will be hard to persuade a judge that agency law does not apply.
Some types of contractual terms will not be enforced. For example, if an attorney only represents a client after the client signs a contract that says the attorney will not be liable for legal malpractice under any circumstances, that portion of the contract will not be enforced regardless of how well-drafted. Courts and legislatures have decided such contract terms are unconscionable and/or a violation of public policy.
Why has PG spent time discussing these basic legal principles?
Many observers of the current publishing and indie publishing scene use wild west and frontier metaphors to describe the chaos caused by rapidly-changing technology and its impact on markets, sales channels, pricing and profitability.
One of Passive Guy’s purposes for discussing basic principles of agency law is to make clear that the wild west does not operate in this sphere. Agents may be living in a wild west business climate, but their fundamental obligations to authors have not changed between 1975 and today. Indeed, their obligations have not changed between 1875 and today.
Some parts of some of the literary agency agreements Passive Guy has read turn basic tenets of principal/agent relationships upside down.
In particular, the obligation of a literary agent to follow reasonable instructions of the author is substantially undercut to the point where, in some cases, the agency contract purportedly allows an agent to act contrary to the author’s instructions, violating the fundamental principle of Obedience.
Some agreements between author and agent make it possible, even likely, that the agent will act in ways that will harm the best interests of the author to the agent’s profit instead of protecting the best interests of the author.
During settlement negotiations between another attorney (who was also a friend) and PG several years ago, after PG cited some recent changes the state legislature had made in statutes governing our case, his friend said, “I always work under the philosophy that the old laws are the best laws.”
While PG can find reasons to dislike many old laws, in the case of author/agent relationships, the old laws are the best laws and the old laws are still in force.
The next installment of this series will begin an examination of some clauses in a particularly egregious agency contract.
(Too clear and thorough to comment on, looks like! Looking forward to the next installment.)
Thanks, Beth.