Before I indie published, I’d already queried 200 agents and got numerous rejections. As some of you may know, I blogged about it here on WG2E before. In the last year and a half, I’ve published 4 novels, 1 shortie collection, 1 novella, and my next novel will be out before Xmas, but I didn’t think once about querying an agent again. Then back in the summer, I was contacted by a guy (also a fellow author), who was impressed with my sales figures and asked me if I wanted an introduction to a Hollywood/New York agent that he knew. (There’s also a Kindleboards thread on it.) I figured why not? What have I got to lose? There’s no harm in looking at every opportunity that comes your way.
So I spoke to the agent on the phone, and he was particularly interested in touting the film rights to my romantic comedy Fourteen Days Later. This sounded great to me because I wasn’t entirely sure I wanted to give up my ebook rights, but a possible film deal or publishing deal for paperbacks sounded pretty damn good.
A little while ago, I had an email from the agent’s assistant saying they were impressed and wanted to offer me an agency contract.
Yikes! Suddenly, I had to put my business head on and try and find out more about contracts, because I didn’t want to sign something that might come back to bite me on the ass later. But where do you go to get that kind of information?
Well, I asked some fellow authors who had experience with agents, and I’d followed The Passive Guy’s website for quite a while and knew he dissected author contracts a lot and had a whole lot of fantastic information on there. I also looked at Kris Write’s website – she also has some great advice about business and contracts for authors So I did as much research as I could, writing down a list of things I wanted to question or change, and then had to make a decision about which lawyer to have check it out. Now, as we all know, there are good lawyers and bad lawyers. There are lawyers who specialize in contracts but won’t be experienced in author contracts with agents and publishers. I wanted to use someone who was experienced in both, and The Passive Guy AKA David Vandagriff was the obvious choice because I knew he knew what he was talking about. He also charges a set fee for dealing with contracts (details are on his website), so instead of being charged an hourly rate, you know exactly what you’re getting included up front.
David was fantastic. I emailed him the details of the agency, a copy of the contract, and a list of my concerns and questions. He emailed me back a document breaking down the contract into various sections and giving a very detailed explanation in plain English (not lawyer gobbledy-gook), which showed possible advantages or pitfalls along the way. After a few more exchanged emails, I had my proposed amended contract to send back to the agent for us to negotiate. I have to say, David was very thorough, fast, helpful, and professional.
There were a number of problems I had with the agency’s standard contract, but I’ll talk about the most important ones so you can look out for them, too.
Perpetual Agency Clause:
This agency wanted perpetual representation, which is pretty scary. There’s a long explanation of it here. I’m going to give you the short version. Basically, what it means is that the agency is entitled to their 15% commission for the life of the copyright (your lifetime plus 70 years), which is pretty much forever. So, imagine this scenario:
1) The Agent sells your book to ABC Publisher and they get 15% commission on any advance and future royalties you receive.
2) ABC Publisher stops publishing your book a few years later and the rights revert back to you.
3) In the meantime, you’ve cancelled your contract with the agent because you’re no longer happy with them.
4) Another publisher is interested in publishing your book and offers you a contract, or you decide to indie pub the book yourself, or you find another agent and they sell it to a new publisher.
5) YOU STILL OWE AGENT ONE 15% commission on any future royalties from no 4) FOREVER!!!!!
Yep, that’s what the perpetual agency clause means. Even though the first agent is no longer your agent, isn’t doing anything to help your career, and hasn’t worked for the new royalties, you will still have to pay them 15% commission FOREVER!
But wait, there’s more! This contract also had a clause in it saying that I could terminate the contract, HOWEVER, if I terminated the contract after they had “placed” my work with a publisher, and I later sold the book to this publisher myself or through another agent, they would still get 15% commission. Here’s the scenario:
1) The Agent sends your book to every single publisher he can think of. The publishers don’t bother to read it, but the agent has proof he sent it to them. He sits on his ass and does nothing else.
2) I get fed up with my agent doing nothing and terminate my contract.
3) One of my books hits the bestseller list (that part is true!), and now I’ve got publishers contacting me left right and centre. A bidding war starts (OK, getting carried away now!), and I land a publishing deal through my new agent. BUT since the publisher is one that my agent queried in no 1), I STILL OWE AGENT ONE 15% commission on any royalties on that sale FOREVER!!!!! In fact, now I owe AGENT ONE and AGENT TWO 15% commission, even though Agent One didn’t have anything to do with the sale!!!!!
I apologize for all the exclamation marks but this has to warrant them! Can you think of any other business in the world where this could happen?
Sequels and Works Derived From Clause:
Here was another biggie for me: At the beginning of the contract it lists the book that the agent would be able to represent. HOWEVER, there’s a later clause in the contract that states they get 15% commission (FOREVER) on any works derived from this book. Basically, that means the agent can claim commission on any sequels or series based on that book, even though it wasn’t specified at the beginning of the contract and they had nothing to do with any sale of it!!!!!
Have you fainted yet from amazement? I know I did.
Another thing I was worried about was the fact that the agency would handle my payments from any publisher/movie studio. They would get a royalty cheque for me, then they’d deduct their 15% and give me a cheque for the rest within a certain time period. BUT there is nothing to state that this money (my money) is going into a separate client account. So, imagine another scenario:
1) ABC Publisher sends my yearly royalty cheque to my agent.
2) My agent puts it in his regular business account.
3) A creditor of the agent wins a court judgement against the agent who owes him money.
4) The creditor gets access to my money because of the court order, and he uses it to pay the bills he’s owed by the agent.
5) I don’t get my royalties!!!!!
OK, surely you must be picking yourself off the floor now, wafting smelling salts under your nose, thinking is this for real? Oh, yes, I can assure you this is what the standard contract said. Now, a standard contract is one that is a starting point for negotiation. Almost every business in the world will start from a basic contract and negotiate over points before a deal is done, but not this agent. No. After I’d got my lawyer to make proposed amendments to the contract that would better protect my interests, they wouldn’t negotiate anything. It was their way or the highway
Bye bye time for me!
So back to the ass-biting thing again…If I’d signed their standard contract, any one of these clauses could come back to bite me in the ass later on and have a detrimental impact on my money and my career. I really hope this kind of standard contract doesn’t become an industry standard because the only person these clauses protect are the agent.
I asked David a few questions that will hopefully explain author contracts to you a bit more…
1) How long have you been a lawyer, and what interested you in the field of author’s contracts with agents and publishers?
I became a lawyer when I was admitted to the bar in California in 1979. I became interested in publishing contracts when my wife signed her first publishing contract in 1992. Since that time, she has published 11 additional books and I have become a little better at reviewing publishing contracts with each one.
Earlier this year, I was involved in extended negotiations with my wife’s publisher to regain her rights to her backlist. We are now in the process of self-publishing those books.
During that process, I did a great deal of research on legal aspects of publishing contracts. I discovered there weren’t a lot of good blogs that discussed legal issues from an author’s viewpoint. That discovery lead me to start The Passive Voice – http://www.thepassivevoice.com/ – in February.
After getting the blog rolling, I discovered that some of my most popular posts discussed contracts authors sign with publishers and agents, so I wrote several more. I don’t follow a regular schedule, but I usually try to put up a new contract blog post every two or three weeks.
Although I had closed my law office several years earlier to pursue opportunities in the corporate world, I kept receiving e-mails from authors asking if I could help them with their contract issues or recommend someone who could.
Over several months, these requests led me to decide to become an active lawyer again. The large majority of my current clients are authors and most of the contracts I work with are publishing or agency contracts. Sometimes authors want to make certain they understand a contract before they sign it. At other times, authors want to see if they can get out of a contract they have already signed. Some authors want me to analyze their contracts and others want me to negotiate contracts for them or assist them while they negotiate their contracts.
One of the things I have always tried to do as a lawyer is to design systems that will allow me to provide quality legal work in an efficient manner. In the 1980s, I wrote a computer program that was, essentially, a divorce lawyer in a box. This program, called Splitsville, used artificial intelligence techniques to rapidly create the documents necessary to handle a divorce from start to finish. I used this program in my own office to keep costs lower for my clients and sold several thousand copies of the program to other attorneys.
While I may not write another computer program, I’m trying to use similar systems to assist with analysis of publishing and agency contracts. When successful, this approach allows me to provide good quality results while reducing costs for my clients.
2) One of the big problems for me in my recent contract was the perpetual agency clause. In fact, organizations including Authors Guild, the Romance Writers Assoc, and Novelists Inc called for agencies to stop using this clause, and warned their members to be aware of what they might be giving up if they signed such a clause. Can you explain more about exactly how that affects authors?
The perpetual agency clause grew out of a similar clause that publishers began to use a few years ago. In a typical publishing contract today, the author is granting the publisher an exclusive license under his or her copyright for the “life of the copyright.” In the United States, a copyright usually lasts for the lifetime of the author plus seventy years.
Agents decided that if this was a good idea for publishers, it was also a good idea for an agent.
The way this clause works in an agency contract will vary depending upon the specific language used in that contract.
A common version of this clause gives the agent the right to continue to receive commissions on a book that the agent sells to a publisher for the life of the copyright. This means that if an agent spends a week selling the book to a good friend who is an editor, that agent may receive commissions on that sale for 100 years or more.
As a general proposition of principal/agent law in the United States, a principal (the author) always has the right to terminate the services of an agent. One of the more pernicious effects of some of these perpetual agency clauses is that, even if an agent is fired, the agent continues to receive royalties and royalty statements for the author.
Agents pitch the value of their ongoing services to authors as a way of justifying their ongoing commissions. For example, the agent will continue to assist the author in dealing with publisher issues.
You can imagine the quality of ongoing service an author will receive from an agent she has fired. I can’t go into detail because of client confidentiality obligations, but some authors have a difficult time getting any information or royalties from an agent they have fired.
Another consequence of perpetual agent clauses is that the author is not only tied to the original agency, regardless of whether the agent she worked with is still there or not, but the author is also tied to whoever purchases the original agency or whoever inherits the original agency.
Again, you can imagine the problems this might raise over a 100 year time period. If a book is successful and continues in print, an author’s grandchildren might be fighting with an agent’s grandchildren to receive prompt royalty reports and payments.
3) What other important clauses should writers look out for?
I will preface my remarks by saying that any clause can be extremely important, depending upon what it includes. There is no law governing the drafting of contracts that requires important clauses to be highlighted or set apart from routine boilerplate. One of the oldest contract drafting tricks is to bury a significant clause deep in the middle of a lot of boring and difficult language.
Another old contract drafting trick is to say one thing toward the front of the contract then include something in the back of the contract that effectively changes the meaning of the first clause.
If paragraph 5 says, “Royalties for Ebooks shall be 25% of the selling price” and (20 pages later) paragraph 35 says, “Royalties for all books sold for less than $25 shall be 20% of the stated royalty in paragraph 5,” instead of receiving $2.50 in royalties for each sale of your $10 ebook, you will be receiving $.50 in royalties.
With that preface, here are some important clauses writer should look for.
In a publishing agreement that includes a life of the copyright clause, your Out of Print clause is probably the only way you will escape from that contract while you’re alive. 00P clauses are among the most boring and complex that you will find in a typical publishing agreement. Once you parse the whereases and wherefores, in a publisher’s “standard” contract, an Out of Print clause generally means the book will never go out of print.
In an agency agreement, you want to look at the payments clause. This will typically provide that all payments of royalties from a publisher will go to the agent. When the agent receives these payments, he or she is supposed to keep 15% and send the remainder to the author. There are many things that can happen to the author’s money while the agent is holding it. Very few of them are good for the author. I strongly recommend to all my clients that they insist on split checks so the agent is paid 15% from the publisher and the author is paid 85% directly from the publisher.
4) On your Passive Voice blog, you collect contracts and regularly analyse interesting paragraphs and “gotchas”. What’s the worst thing you’ve seen in a contract that could come back to haunt an author.
This is a tough question because there are lots of bad things that can happen to an author if she signs a bad contract.
I think the worst thing is a provision that is found in many publishing contracts and is often buried in the boilerplate at the back of the contract. This is a non-compete clause that places substantial restrictions on what the author can write other than books the author is writing under the publishing contract.
Some of these clauses prohibit an author from writing any book until the book in the contract is published. This can effectively prevent an author from writing anything at all for a period of two years or more. A multi-book contract extends the non-compete period even longer.
Other versions of these clauses prevent an author from ever writing anything that “might compete” with the book that is the subject of the contract. Looking at specific wording in some contracts, by signing the contract, the author is giving a publisher veto power over the right of that author to ever write a fantasy or sci-fi book for any other publisher.
If you sign a contract with one of these buried clauses in it, you may have killed your career as a romance writer. Or a science fiction writer. Or a young adult writer. Let’s hope you enjoy writing westerns.
5) One of the clauses in the standard contract sent to me was about getting paid my royalties. The agency wanted to receive payments directly from the publisher, then forward my percentage to me at a later date. This meant I would be putting trust into someone to deal with my money who I’ve never met. You suggested modifying the contract to include split cheques, so the publisher pays me my percentage directly and pays the agent theirs directly, which would immediately get around this problem. In your experience, do publishers have an issue with splitting royalty cheques in this way?
Thanks for giving me the opportunity to revisit one of my previous comments. Publishers split checks all the time. When two people co-author a book, they always ask for split checks. When three people co-author a book, they always ask for split checks. When a celebrity shares royalties with a ghostwriter, they always asked for split checks.
If you think about it, when you ask for split checks, you are requesting that a multi-billion-dollar corporation write four checks each year instead of two checks each year. These corporations write thousands of checks for all sorts of things each month. Sending one check to you and one check to your agent every six months is not going to work anyone at your publisher to death. The checks are all created and signed by computers anyway. Once the split checks are entered into the system, nobody at the publisher ever thinks about them again.
I will not ascribe bad motives to agents who want a single check like some other commentators do.
I will merely observe when the agent receives all the money, psychologically, the author may feel like she is in a dependent position. Will the agent send the check this week or next week? Perhaps the agent will send the check next month. This dependency tends to keep unruly authors in line.
Three years ago, I would’ve been desperate to sign a contract like this to get published, but not any more. And while I am disappointed they didn’t want to negotiate, it means I’m still in full control of my career. But just because I think something’s not right for me, doesn’t mean it’s not right for another author. The good thing for me about sharing this information with you is that it might hopefully help you make an informed choice if you’re ever in the position of being offered a contract, or give you a starting point to do your own research.
The way I see it, it just means another opportunity is out there for me. I’m doing OK on my own. In the past six months I’ve sold over 44,000 books without an agent, although the thing that I would love to see is a movie deal. Whilst it would’ve been nice to have a Hollywood agent touting my work to producers/studios, I think I’ve done the right thing by turning down their contract. I was recently approached by a film company about movie rights to The Fashion Police, and the only thing I would need is an IP/contract lawyer. You never know what’s round the corner!
So, how about everyone out there? What have been your experiences with agents and contracts?
Happy Writing in WG2E land! – Sibel