What Can Happen When Your Agent Decides To Become Your Publisher

From Writer Beware:

Last week, several people drew my attention to this article in the Des Moines Register. “Iowa Romance Writer Sues Over Efforts to Have Ghostwriter Take Over Series.” 

If your “conflict of interest” radar is screaming right now, it should be. 

Clark’s complaint (which you can see here) accuses Grishman et al. of breach of contract, breach of fiduciary duty, and fraudulent concealment, and alleges a variety of malfeasance, including concealing the family connection, and invoking an allegedly non-existent contract clause to justify buying out the final two books in an uncompleted series and hiring a ghostwriter to write them. Clark is seeking to terminate both her RedRock Literary and Pink Sand Press contracts, and to receive an award of “lost profits, damages, costs, and attorney’s fees based on Pink Sand’s breach”. 
As of this writing, Grishman hasn’t filed a response to the lawsuit, but he did have this to say to a local reporter:

. . . .

Apart from the books it has published for Clark, Pink Sand has virtually no track record as a publisher. A search on Amazon turns up two other authors and five other titles–but the status of those titles is unclear. They are nowhere to be seen on the Pink Sand website, they don’t appear ever to have been promoted–or even mentioned–on Pink Sand’s Facebook page, and four of them–by Jeanne De Vita, writing both as herself and under the pen name Callie Chase– have either been taken out of print or are listed as out of stock or unavailable everywhere but on Amazon.

. . . .

Both of the contracts Clark signed–the RedRock agency contract and the Pink Sand publishing contract –are attached to her original complaint. 

The agency contract looks reasonably standard to me, though it imposes a three-year term that the author can terminate only in the event of breach by the agent–not ideal. It also has an arbitration clause, which could complicate things for Clark’s legal effort to be released.

The publishing contract, which covers a whopping 28 titles, is another story. It includes some really terrible clauses, particularly in regard to payment. 

For instance, here are the royalty rates for hardcover publication:

This is seriously nonstandard. Mass market paperback royalties are also substandard, at 5% of wholesale. 
Of course, both of these provisions are moot, since Clause 4(a) of the contract stipulates publication only of “an e-book and trade paperback edition”–but there are big problems with royalties for those formats as well. Ebooks are paid at just 15% of net (even the big publishers typically pay 25% of net, and most small presses pay considerably more). As for trade paper royalties, there is no mention of them in the contract. At all. (!!!)

Subsidiary rights payments too are hugely, one might almost say rapaciously, substandard, with the publisher keeping 85% and the author getting just 15%. These include foreign language, book club, and numerous other rights that are typically allocated at least 50/50 between author and publisher.  
Other lowlights: an overly lengthy grant term (10 years); no advances for certain of the many backlist titles acquired; a non-competition clause that bars Clark not just from publishing competing works, but from publishing anything until the terms of the contract have been completed; an agency clause that empowers RedRock to increase its commission for subagented rights sales beyond the commission rates stipulated in the agency contract; and a clause that empowers Pink Sand to retain rights for five years to a delivered revision it declines to publish, unless the author can find another publisher willing to hand all the author’s earnings over to Pink Sand until advances have been repaid. (Good luck with that.)

It’s hard for me to imagine any reputable publisher offering a contract like this, or any reputable literary agent advising a client to sign it. I see some pretty atrocious contracts from inexperienced publishers who don’t know any better, but Grishman is not inexperienced. Waterhouse Press is a successful house, and he worked there for years. 

Make of that what you will. Make what you will, also, of the timelines involved. David Grishman incorporated RedRock Literary (for the first time) on November 13. Less than three weeks later, on December 2, he signed Clark as an agency client. Six weeks after that, on January 15, Steven Grishman incorporated Pink Sand Press. Clark’s publishing agreement was signed just eight days later, on January 23. 

The whole thing has the feeling of a rush to pin something down.

Link to the rest at Writer Beware

PG was inclined to go on a rant, but, surprisingly, he restrained himself.

He will make a few points, however.

  1. Yes, lawyers cost money. Ms. Clark is learning that because she has had to hire a lawyer to represent her in this contract litigation.
  2. Litigation always costs more, lots more, than hiring a competent attorney to look at a contract before you sign it.
  3. (Side note: PG has cut his law practice way back and isn’t accepting any new clients. If anyone has had a personal satisfactory experience with another attorney who reviewed a publishing contract or agency agreement, send a note to PG via the Contact PG link at the top of the blog so PG can add her/him to his list of attorneys to send to people who contact PG for legal help when he’s not able to provide it.)
  4. Any time someone sends you a document for your signature, they are asking you to agree to be bound to a contract, give them permission to do something, give up some right you have, pay them money, act as their body slave, etc., etc., etc. This is standard practice for most reputable businesses and also standard practice for many crooks.
  5. READ THE DAMN CONTRACT BEFORE YOU SIGN IT! READ THE DAMN CONTRACT BEFORE YOU SIGN IT! READ THE DAMN CONTRACT BEFORE YOU SIGN IT! READ THE DAMN CONTRACT BEFORE YOU SIGN IT!
  6. Make a working copy of the contract, sit down with that copy and a red pen and READ THE DAMN CONTRACT! The longest business agreement PG ever reviewed was much shorter than any book PG has read. (And a lot more boring.)
  7. An author who has spent hours and days and weeks and months writing a book should be willing to spend the extra time necessary to make sure that her/his baby is going to have a good home surrounded by honest people. Plus, remember how much it will cost you in legal fees to get out of a bad contract.
  8. Annotate the contract with your red pen as you go through it – underlines, question marks, exclamation points are all great. Write notes in the margins. Use your red pen for anything that worries you, that sounds fishy or that you don’t understand.
  9. If the contract says something like, “As set forth in Paragraph 49 . . . ” make your red pen mark, then go look at Paragraph 49, use your red pen there and combine the Paragraph 49 language with the language that includes “As set forth in Paragraph 49 . . . ” so you’re reading both provisions together.
  10. The other party can give you something in Paragraph 1 and effectively take it all back in Paragraph 49.
  11. Be just as careful reading the end of the contract as you are when you are reading the beginning of the contract. If the contract has exhibits or additional pages after the place where the parties sign it, read those just as carefully as you read the rest of the contract and use your red pen liberally.
  12. In most American business contracts, the last provisions of the contract are called boilerplate and often consist of stuff the person who put the contract together may well have copied and pasted from a prior contract. But just because it’s copied from another contract doesn’t mean the boilerplate provisions are fair or safe or that something nasty isn’t hidden there.
  13. PG can recall more than one contract written by someone else that incorporated what looked like it was a boilerplate “Standard Terms and Provisions” section at the end of the contract. In some cases, these were even a photocopy of something taken from another contract and attached to the custom contract that the parties had agreed to. On more than one occasion, the innocent-looking “Standard Terms and Provisions” included some terms that were deal-breakers for PG’s clients, even though the rest of the contract was fine.
  14. After you get finished with your red-pen fun, either:
    1. Send an email/letter to the person you’re dealing with asking about each of the items that concerned you or that you don’t understand; or
    2. Make a photocopy of your red-marked version of the contract and ask the other side to respond to your concerns.
  15. Aside from specific responses to your redline questions, the manner in which the individual on the other side reacts to your questions may tell you a great deal about whether this is someone you want to work with or not.

PG has millions of additional tips, warnings, cautionary tales, etc., that he could add, but these are the most obvious things you should look at and do.

3 thoughts on “What Can Happen When Your Agent Decides To Become Your Publisher”

  1. I have just had someone praise my writing, tell me she’s a hybrid author, and tell me I should be looking for a traditional publisher.

    My response was simply that I know too much about traditional contracts to dare try one.

    What I know comes from TPV, from Kris Rusch, from all the SPAs who share their expertise. And copyright books. Etc.

    And if I ever choose to pursue a contract for any of my rights, there is no way I’d do so without a very savvy attorney in the right niche vetting every word. There are a lot of words in contracts.

    Thanks, PG. Standard Terms my A$$.

  2. The following ain’t legal advice. It’s commentary from an experienced… industry participant. (And remember that “experience” is what you get when you didn’t get what you wanted — or ensured that somebody else didn’t get what they wanted.)

    16. While you are reading that contract, circle the whole clause containing any of the following phrases, or anything that sounds to you like them:

    choice of law
    conflicts of law
    arbitration
    venue
    jurisdiction
    dispute resolution
    any reference to any location other than your own legal residence and the headquarters of the publisher

    and make sure that the experienced-with-licensing-agreements attorney who helps you with the contract explain each of them, and any ways that any of them — all by themselves — modify any rights or responsibilities that seem to be covered elsewhere in the contract.

    This is much more than PG’s well-taken “paragraph 49 can take away what was given in paragraph 1” — this is “paragraph 49(c)(3) can make it impossible for one side to actually obtain something covered agreeably, in plain English, in the rest of the contract.” One need not go as far as pondering how any of this affected, say, a feud between the founder of Hustler and the founder of Penthouse{note 1}; just pondering how Random House’s attempts to force Joan Collins to repay advances for manuscripts determined “unsatisfactory” upon submission under either California law or, worse yet, UK law, will make your head explode.{note 2} So will trying to figure out when a purported breach of a warranty actually entitles the publisher to withhold royalties.{note 3}

    17. Follow the Evil Nephew rule. Imagine, for a moment, that every single disagreement relating to the contract and its language gets resolved to everyone’s satisfaction, by a combination of phone conversations and/or e-mails interpreting difficult language (or unique circumstances, and believe me they happen — consider the author who signs a contract “as” a Belize-based limited liability company, and that’s not a hypothetical) and/or actual amendments to the contract. Everybody involved goes out for a celebratory dinner… and gets hit by a drunk driver crashing into the restaurant. Who, now actually interprets what happens next? The Evil Nephew.

    This isn’t just about “make sure it’s actually in the contract,” although that’s a big part of it. It’s also about not overly trusting long-term contract provisions — that, because they’re long-term, necessarily will be interpreted by successors who may be, umm, less than honorable — that aren’t clear.

    Notes:

    1. It did. Keeton v. Hustler Magazine, Inc., 465 U.S. 770 (1984).

    2. The courts in all three jurisdictions would use different rationales to determine what law applied, even regarding a choice of law. And then they would, in all probability, reach slightly different end results, and would do so with different reasoning that would affect the next dispute to come along (and the next few contracts to be signed thereafter). But, in this instance, Random House got lucky: The actual decision against it (that the publisher had failed to provide the author an adequate opportunity to cure any defects in the delivery) is not binding precedent. Anywhere. And, in any event, has arguably been undermined by other decisions in other contexts in other courts in the State of New York.

    3. Compare Ehrenfeld v. Mahfouz, 489 F.3d 542 (2d Cir. 2007), abrogated by 28 U.S.C. § 4102 (2010), with the arbitral decision on insurance coverage for Rachel Ehrenfeld’s book, which is not publicly available and does not state its reasoning.

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