Literary Agents
Many writers of books prefer to market their work through literary agents. Agents provide the service of submitting work to publishers, negotiating contracts, and handling matters such as monitoring payments and working out issues between the publisher and the writer. They also are familiar with which publishers offer better terms and treat writers appropriately. Many agents assist clients with improving their book proposals and manuscripts before they are submitted. Agents generally do not act as freelance editors, and agents rarely represent magazine pieces or act as publicists for books.
The first question a writer should ask before soliciting representation by an agent is whether an agent is necessary. Major strengths of agents are their knowledge of which editors are likely to be interested in particular kinds of books, and their abilities to get submissions reviewed by the appropriate editors. Some publishers, particularly the major trade houses in New York City, refuse to consider works that are not submitted through an agent. For trade books directed to a large audience, it is generally beneficial for a writer to have the book handled by an agent. On the other hand, many books are directed to small audiences and are published by smaller houses that entertain submissions directly from writers. Examples include many professional and academic books. In such cases, it is generally unnecessary to retain an agent if the writer pays sufficient attention to crafting a strong proposal and knows generally which publishers may be interested.
Literary agents tend to have individual preferences, skills, and tastes regarding the genre of works they will represent. For example, some agents have specialized experience in representing mysteries and others refuse to represent them at all. Most agents will have established client bases but also seek new writers. Nonetheless, agents are inundated with submissions and are very selective in choosing writers to represent. After all, in order to stay in business, agents must be sure that a substantial number of the works they select will not only be placed, but will be profitable.
FEES
Most reputable agents charge for their services by taking a commission on advances and royalties. The industry standard is 15 percent on domestic sales and 20 percent on foreign sales. In addition, many agents will deduct direct costs, such as photocopying and postage, from the writer’s portion of the proceeds. Some agents will charge clients an up-front fee ranging from $100 to $150 to cover direct costs, and some require their clients to reimburse them for such costs even if the work does not place.
IN PLAIN ENGLISH
Very few ethical agents charge any sort of fee to read or evaluate submissions from prospective clients.
Writers who want to be represented by an agent should be aware that there are many unethical agents who take advantage of inexperience and naivete. Many such agents charge reading fees to evaluate submissions. Others prey on writers’ hopes by talking favorably about submissions, but then ask for a fee to revise a work or else refer the writer to a supposedly independent editing service that kicks back part of the fee to the agent. Such agents make their money by preying on writers and rarely succeed at placing works with publishers. A particularly notorious example was the Edit Ink agency, which closed in 1999 after criminal convictions and levied fines were affirmed by an appellate court in New York. Edit Ink worked with several literary agents who were paid kickbacks after encouraging writers to seek professional editing from Edit Ink. About $4.75 million was obtained by Edit Ink from 3,600 potential writers who had been deceived by agents’ representations that their works showed great commercial promise, yet were rejected by publishers after editing.
THE DUTIES BETWEEN AGENT AND CLIENT
The agent’s ability to succeed depends in large part on maintaining the good graces of the publishing industry. Even though this can create a conflict of interest between the agent and client, agents cannot legally put the interests of publishers above those of their clients. Literary agents are fiduciaries, and thus owe a duty of loyalty and good faith to their clients. This means that literary agents may not disclose confidential information, make deals that are essentially self-serving, or receive secret profits. It also means, among other things, that the agent cannot represent writers whose commercial interests conflict with each other, except with the consent of both writers. For example, an agent should not take on books that are so similar that they directly compete for prospective book contracts.
Should an agent act in such a way as to interfere with the writer’s best interests, the agent may be liable for breach of the fiduciary duty. For example, the agent’s role in contract negotiations will normally be to get the best contract possible for the writer without unduly antagonizing the publisher. Many publishers prefer to negotiate with agents because agents are familiar with the legal and trade aspects of the industry, and this tends to facilitate the process. Moreover, since agents are constantly involved in negotiations between various writers and publishers, they are usually in the best position to identify an acceptable contract and can be trusted to moderate unreasonable or unrealistic demands made by either party. Agents cross the line, however, if they attempt to ingratiate themselves with a publisher by giving the publisher a better deal at the expense of the writer. In such cases, the agent would be liable to the client. Fortunately, this is rare, and many agents that are highly respected by publishers have reputations for zealously advocating the interests of their clients.
Agents serve the important function of getting publishers interested in books and have the duty to act diligently in submitting their clients’ materials to publishers. While agents are given considerable leeway in how they allocate and schedule their time, they are not free to ignore clients. Absent a prior understanding that an agent will make a limited effort to find a publisher, clients should expect that the agent will put a reasonable effort into finding a publisher and will notify the client promptly should it become apparent that the prospects for placement have declined to the point where future submissions are no longer warranted.
Agents also have a duty to have reasonable communications with their clients. However, given the practices within the publishing industry, this does not necessarily mean frequently. When dealing with book submissions, months can go by without a positive response, and a literary agent is not obligated to keep clients posted regarding inactivity or negative responses. Should a publisher make an offer, however, the agent is obligated to inform the client promptly even if the agent does not feel the offer is worthy of consideration. Similarly, agents should respond to inquiries from clients in a reasonable amount of time.
IN PLAIN ENGLISH
Agent’s Duties to the Writer:
• Duty of loyalty and good faith to their clients
• Duty to act diligently in submitting their clients’ materials to publishers
• Duty to have reasonable communications with their clients
• Duty to inform the client promptly of any offer
Writers, as principals, in turn owe certain duties to agents. They are generally obligated to provide their agents with an opportunity to perform the services for which they were hired. The writer must also refrain from interfering with the performance of the agent’s work. For example, once an agent has been retained, the client should not make independent submissions to publishers without the agent’s knowledge and consent. Likewise, it would be highly improper to hire another agent to place the same or a competing work. Writers should understand that agents are entitled to their commissions, even if it is the writer who solicits and obtains an offer from a particular publisher. In the event a writer places a book independent of the agent, the agent is still required to be paid for services, reimbursed for expenses, and indemnified against losses.
In Levin v. Grecian, a literary agent sued his client, an author, claiming that he was entitled to be paid 15 percent from the publication of a bestselling book. The writer countersued, claiming, among other reasons, that the agent failed to represent him effectively or to keep him informed. The court explained that, under the law, the agent did not have a duty to sell the author’s works, but did have a duty to use his best efforts to do so, whether those precise words were contained in the exclusive representation contract or not. The court determined that whether or not the agent fulfilled that duty would need to go to trial and could not be determined based on motions filed by the parties. As to the writer’s countersuit, claiming that the agent had breached a fiduciary duty owed to him by putting his own interests before that of the writer when he tried to get a producing position with respect to the properties he was pitching, the court concluded that, because the contract the parties had entered into expressly permitted this conduct, it was not a breach of the agreement for the agent to attempt to do it.
After the court’s first opinion, the case went to trial. Three years later the court entered another opinion, finding that the agent did materially breach his contract with the author by failing to keep the author informed and by failing to get his permission for certain agreements. This allowed the author to terminate the contract between them, but the agent was entitled to commissions for the work that he did before the contract was terminated.
LIABILITY FOR THE ACTS OF AN AGENT
Since agents are appointed by writers to represent them in the transactions associated with placing manuscripts, writers may be liable to third parties for some acts of their agents. Liability will depend on whether the act performed by the agent involved a contract or a civil wrong, known as a tort. If the act involves a contract, liability will hinge on whether the act was authorized by the writer. If the act is a tort, liability will depend on whether the agent is legally classified as an employee or an independent contractor of the writer.
Authority
The writer as principal will be liable to third parties for the agent’s breach of contract only if the agent was acting within the scope of the agent’s authority. The law recognizes three different types of agency authority—actual, apparent, and inherent.
Actual authority is what the writer intentionally confers upon the agent either by written or oral agreement. This authority may vary considerably. At one extreme, the agreement might include a power of attorney that grants the agent absolute authority to contract on behalf of the writer. This is not the customary relationship between agent and writer. Generally, the writer gives the literary agent the authority to negotiate contracts, but reserves the right to accept or refuse the contract. Sometimes, the writer may limit the agent’s authority to negotiating contracts for specific works or certain rights only, such as movie or serial rights. The agent’s authority may also be confined to a particular geographical area, such as North America.
The agent’s actual authority to act on behalf of the writer need not always be expressed explicitly—sometimes it may be implied from circumstances. Implied actual authority is what the writer as principal intentionally or inadvertently allows the agent to believe he or she possesses. If, for example, the agreement with the agent expressly limits the literary agent’s authority to negotiation with North American publishers, but the client has customarily allowed the agent to negotiate worldwide, then the agent probably does have implied actual authority to negotiate with any publisher in the world. In this example, the agent may also have apparent authority to act.
Apparent authority is authority the writer has not actually granted to the agent, but that the writer indicates to a third party has been granted to the agent. Thus, if the writer leads a particular publisher to believe that the agent is authorized to negotiate on the writer’s behalf, even if that publisher is outside the scope of the agency contract, the writer will be responsible for the agent’s negotiations with that particular publisher. It should be emphasized that apparent authority exists only in dealings with the third party to whom the agent’s authority has been stated. A fourth party cannot allege the agent’s apparent authority because of hearing about it from the third party.
Finally, an agent may have inherent authority to act. This type of authority encompasses all acts and duties that are customarily permitted to an agent while carrying out an agreed-upon responsibility. The scope of an agent’s inherent authority depends upon whether a person is a general agent or a special agent. The distinction between these two types of agents is based on the agent’s status, especially in regard to the duration of the agent’s relationship with the writer.
A general agent is authorized to act in a series of transactions involving continuous service. A special agent, on the other hand, is authorized to act in a single transaction only, or possibly in a short series of transactions not involving continuous service. The general agent is usually considered to have inherent authority to act on behalf of the principal in all matters connected with the job the agent has been hired to do. The special agent’s inherent authority, on the other hand, is limited to specific acts dictated by the principal’s instructions or necessarily implied from the act to be done. Agents that are retained to market a single work would be considered special agents. The agent’s inherent authority, therefore, would probably not extend beyond those acts actually or apparently authorized. Should the literary agent be in the continuous employment of the writer—and therefore a general agent—the inherent authority will encompass all acts customarily associated with literary agents.
Ratification
Ratification is an important concept when dealing with the acts of an agent. The term describes affirmation or confirmation by a principal of a previously unauthorized act by an agent. By ratifying, the principal affirms the unauthorized act and is legally bound by it as if it had been initially authorized. Thus, although the writer will be liable for any of the agent’s acts for which the agent has actual, apparent, or inherent authority, the principal will not be liable for unauthorized acts unless they are ratified.
Ratification may be express or implied from any act, words, or course of conduct that tend to show the principal’s intent to ratify. Even silence may constitute ratification. If, for example, a writer has full knowledge of a contract executed without authority by an agent and accepts the benefits of the contract, the writer may have ratified the act, and therefore is bound to the contract.
Disclosure
The agent alone will be liable to a third party for breach of contract if the agent did not have authority or if the act was not ratified. Where the act was authorized or ratified, the agent, as well as the writer, may be liable depending upon whether the writer (and thus the agency relationship) was fully disclosed, partially disclosed, or not disclosed. If the agency relationship was fully disclosed, generally the writer alone will be a party to the contract and is thus liable for its breach. As a general rule, the agent will be liable, as well, if the writer was partially disclosed or undisclosed. The writer is partially disclosed if the agent reveals that he or she is acting as an agent but does not say on whose behalf, or if the writer is named but there is no indication of an agency relationship. The writer is undisclosed when the agent does not name the writer or indicate the agency relationship, but instead appears to the third party to be acting alone. If both the agent and writer are liable for the same breach, the third party cannot sue them both, but must instead elect to sue one or the other.
The liability of a writer for an agent’s torts is determined, in part, by the nature of the agent’s employment; that is, by whether the agent is legally considered to be an independent contractor or a servant. The term servant, in the legal sense, means an employee over whom an employer has more control than the employer has over an independent contractor. If the writer retains only the right to control or approve the end result of the agent’s activities and leaves the means to the agent’s discretion, the agent is probably an independent contractor. If the writer retains the right of control and approval over most of someone’s activities and decisions, the law will probably regard that person as a servant, whether or not the writer actually exercises the right of control or approval. Literary agents are almost always independent contractors, though other people hired by writers (such as secretaries and research assistants) would more likely be considered servants.
The writer is liable for the servant’s torts that were within the scope of employment. For example, if a research assistant provides the writer with inaccurate information that defames another, the writer will likely be liable—even though he or she did not personally know that the information was false. The writer will generally not be liable for the torts of an independent contractor, but there are exceptions. First, the principal will be liable for any torts of the independent contractor that involve nondelegable duties. These are duties that are so important to the public welfare that the principal is legally responsible for their proper performance even if that performance is delegated to an independent contractor. For example, a writer would be liable for not paying estimated income taxes even if the writer delegated responsibility to the agent to see that taxes were withheld. Similarly, a writer who writes a defamatory book will be liable even if a private detective was hired to check out the accuracy of the facts.
Fraud and deceit are other circumstances in which the writer will be liable for the acts of an agent if the writer has authorized the agent to make misrepresentations to a third party. Likewise, a writer could be liable for not exercising due care in hiring or retaining an agent. For example, if the author continues to employ an agent known to respond violently when a publisher rejects a submission, the writer may be liable to others hurt by the agent. The other circumstance in which principals can be liable for the acts of an agent—ultrahazardous activities, such as the use of explosives—rarely concerns writers.
The authority of the agent to act on behalf of the writer ends with the termination of the relationship. By law, the relationship automatically terminates
• upon the death or loss of capacity of either the agent or the writer;
• when the goal of the agency becomes impossible to achieve;
• once the purpose of the relationship has been fulfilled; or
• when the time period for which the agency was created has elapsed.
The agency can generally be terminated voluntarily if the writer revokes or if the agent renounces the agency relationship. With the exception noted below, the parties are free to revoke or renounce at any time, regardless of whether the agency is governed by a contract, since the agency relationship is consensual. However, if a contract is involved, termination of the agency may result in liability for its breach. If, for example, the contract calls for the agency to last for one year, either party is free to terminate prior to that time—but not without incurring liability for damages.
The only exception to the rule of voluntary termination is an agency relationship that involves a power coupled with an interest. In this situation, neither party may terminate prior to the expiration of the interest. A power coupled with an interest exists when the agent has a vested interest in the thing or property involved in the agreement. For example, a literary agent might have a power coupled with an interest if the agent has contracted with the writer for partial ownership of a work. The agent’s power to negotiate or execute contracts for that work would be coupled with an ownership interest, and the agent’s power would be irrevocable. When an agent is compensated simply for acting as an agent, as is the case when an agent receives a commission for negotiating a writer-publisher contract, there is no power coupled with an interest, since the agent does not have an interest in the publishing contract itself. A mere interest in the proceeds from the sale is not sufficient to make the power irrevocable. The concept of a power coupled with an interest is extremely complex and a lawyer should be consulted if an irrevocable agency is desired or involved.
It is not uncommon for a literary agent to have a provision in the writer-publisher contract stating that the agent will continue to be paid under the contract even though the writer has terminated the relationship.
When the agency is terminated, the writer must give actual notice to third parties who have dealt with the agent and reasonable notice to third parties who have knowledge of the agency but who have not actually dealt with the agent. This is assuming the agent is a general agent, such as one who has been hired to represent the writer on an ongoing basis. Reasonable notice means reasonable efforts to notify these third parties, whether or not the efforts succeed and the third parties actually receive notice of the termination. The writer is not required to give notice to third parties that have neither dealt with the general agent nor know of the relationship. If the writer is required to give notice but fails to do so, the writer remains liable for the acts of the agent even though that agent’s authority has, in fact, been terminated. The writer is not required to give notice of termination of a special agency, a situation in which the agent has merely been hired for a single project or to accomplish a single goal. Third parties who deal with a special agent do so at their own risk.
AGENT CONTRACTS
To protect against possible liability, a writer should choose an experienced, legitimate agent and should dearly delineate the scope of that agent’s authority in a written agency agreement. Care should be taken to define the scope of the agent’s authority to bind the writer and address whether the agent is retained to represent a single work or all the writer’s works. Other issues that should be addressed are geographical scope, duration and termination, and how payment is to be handled. Most agents receive monies from the publisher on the writer’s behalf and then forward the writer’s share to the writer. The contract should specify that the agent shall hold such monies in a trust fund and pay the writer promptly (e.g., within ten days). Since most established agencies have their own form contracts, it is not a bad idea to have them checked by a lawyer familiar with publishing.