What to Look for in Agency Contracts (part 1)

My Wednesday #Publishing legal posts spend a lot of time on publishing contracts, but publishers aren’t the only ones who sign contracts with authors. Agents do, too.

Today, we look at some common provisions authors should expect to see in an author-agent (agency) contract.

1. Exclusivity. The contract will normally make the agent the author’s exclusive representative, either for a single Work, all Works, or all novel-length works the author writes. This exclusivity applies for the length of the contract, and sometimes longer for works the agent represented or sold during the contract period. Read carefully: you need to know whether the agent represents you for “all purposes” or for a single novel only.

2. Termination Rights. Normally, either the author or the agent can terminate the agreement unilaterally – meaning without the other’s permission. Sometimes, termination can be “immediately on written notice” – other times, there’s a stated window (e.g., 30 days). It’s normal for the agent to retain the right to a commission on works presented to editors during the term of the contract, if the work sells to one of those editors within a stated time after termination. Make sure the contract states how long this post-termination commission right continues. 6-18 months is normal, but not much longer. Also, it’s not normal for the agent to have to approve the author’s request to terminate the agency.

3. The Obligation to Present All Offers for Client Approval. Although the contract will give the agent the right to sell your work to publishing houses (and usually also to sell subsidiary rights like TV and film), it should also state that you (the author) have the final right to approve or reject all offers. Do not sign away acceptance rights. Make sure your agent has to present all offers to you and that you are the one who signs all contracts and makes the final decisions.

4. Commissions/Payment. Literary agents work on commission, which means they receive a percentage of the author’s royalties, advances and other payments made on sales of the author’s work. The industry standard commission amount is fifteen percent (15%) of proceeds received from U.S. publishers and twenty percent (20%) on sales of translations and foreign rights. Film rights commissions are usually fifteen percent (15%) – or sometimes twenty percent (20%) if the agent contracts with a sub-agent for sales of those rights. Generally, agents’ commissions are not returnable or refundable.

A word about commissions: Literary agents get paid only when the author does. Authors do not (and should not sign contracts obligating them to) pay the agent out of pocket. In most cases, agents receive far less than a living wage on commissions from new or not-yet-established authors. (Consider: if you receive a $1000 advance, your agent receives $150, no matter how much work (s)he did to obtain the deal on your behalf.) Once the author becomes established, the agent’s work-to-income ratio tends to improve, but it bears remembering that agents work hard to get a new author published–and that they do it essentially on faith in a future benefit.

Next Wednesday, we’ll continue this series and look at more of the typical literary agency contract. I hope you’ll join me then!

And remember, if you have questions about this or other publishing legal or business topics, you can tweet me (@SusanSpann) or email me using the contact information on my website.

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