Contract Negotiation 101

Welcome to the autumn 2014 series on contract negotiation!

In the weeks to come, Wednesday posts will take a look at the process of negotiating a publishing contract, as well as which terms are negotiable (and which are not).

Today, we’ll examine an overview of the contracts and negotiation process.

Step 1: The Offer.

Publishing contracts always start with an offer. In some cases, the “offer” is the contract, but more commonly, the offer begins with an editor sending a short term sheet to the author or author’s agent.

A “term sheet” won’t contain all the terms that will show up in the contract. Instead, the term sheet focuses on “big ticket” items like advances, formats, and number of books in the deal. This allows the editor and agent (or author) to hammer out the big deal points before the publisher spends the money on contract preparation. If the parties can’t come to terms on the big-ticket items, the author rejects the offer and no contract is prepared.

Step 2: The Contract.

If the author accepts the publisher’s initial offer, the publisher (or its lawyers) will prepare a contract for review (and, hopefully, signature). The agreed-upon terms from the offer sheet are integrated into the publisher’s standard contract form and sent to the author (or agent) for review.

Many first-time authors mistakenly think the contract is “take it or leave it” in the initial draft. In reality, most publishing contracts do have some wiggle room for negotiation.

Step 3: Contract Review and Negotiation

The most important–and often overlooked–part of the contract negotiation process is reading the publishing contract and making sure you understand all of its terms. Too often, authors fixate on money-related items like advance and royalty payments and completely overlook the other provisions. This is dangerous. Advances and royalties are important, but so is every other provision of your publishing contract.

Authors with agents (or lawyers) have an advocate who can explain and negotiate the publishing contract. Authors without an advocate must be careful not to make mistakes. (And I always recommend professional review.)

During the review process, the agent (and author) read the contract and make a list of provisions they’d like changed. This list of requested changes is then presented to the editor, who will respond with the publisher’s position on each one.

If the parties can reach agreement on all of the terms of the publishing contract, agreed-upon revisions are made and the contract is finalized for signature. If the parties cannot reach agreement, the author walks away without signing and the process can begin again with a different publisher.

Don’t Be a Jerk In Negotiations — It May Cost You The Deal.

This is the most important negotiating lesson an author can learn. A publisher’s response to the author’s requests for contract changes is impacted significantly by the author (or agent)’s attitude and tone. Demanding, uncompromising responses will often earn a “no” even when the publisher might otherwise have agreed to the contract change. Attempts to negotiate politely, and with an eye to the publisher’s needs as well as your own, usually get much better results.

In the weeks to come, we’ll break down publishing contract terms, and look at which ones are (and are not) usually negotiable. I hope you’ll join me!