HOW TO READ A LITERARY AGENCY AGREEMENT
Special edition from Poets & Writers Magazine
I’m happy to post my article from Poets & Writers on how to read a literary agency agreement1. You should absolutely subscribe to the this magazine as I’ll be writing more there in the coming months! It’s a wealth of knowledge, even outside of my humble contributions.
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Here it is!
I hope you are in the lucky position to say yes to an agent’s offer of representation. You’ve worked so hard to get here: writing and editing and editing again. Fine-tuning your query letter. Waiting and waiting and waiting some more to hear back from agents. (We’re sorry it takes so long!) But when you finally get The Call (or more likely, The E-mail) and you have The Chat, and you’re ready to say yes—do you know what you’re saying yes to, exactly?
At the outset of your work together, your new agent will typically send you an agency agreement or contract that outlines the parameters of your agent-author relationship. Just like any legal document you sign, you should read your agency agreement and understand it. You can absolutely discuss it with your new agent, and they will be glad to explain it to you (and if the agent is not, consider that a red flag). Don’t be afraid to ask questions. To prepare for that, though, here is an overview of what agency agreements cover, so you’ll be ready when you read yours. Please note: I am not a lawyer, and this is not legal advice. If you have any legal concerns, contact a lawyer.
First off, let’s talk about the format your agreement might take. An agency might write its agreement as a letter, a list of responsibilities or services, or something that looks more like a standard contract, full of legalese. A contract doesn’t have to include herewith or notwithstanding to be a legal document, so any of these formats works. If it clearly outlines what both parties agree to, then however it’s written is fine.
The purpose of an agency agreement is to make sure that each Party (i.e., you and the agency) understands what the other will or won’t do. It sets out the basic tenets of the relationship so that if any questions arise, the answers are written down. This document doesn’t answer every question that might pop up, but it definitely covers the big ones. Take note I said that the agency is one of the parties the contract represents, not the specific agent you’re saying yes to. That doesn’t mean you can be handed off as a client to anyone else working there without your consent, but that does mean that if your agent leaves, your agreement isn’t automatically voided and you won’t automatically follow your agent to their new job. To follow your agent, that person would have to offer you representation under the new agency and you have to agree.
Next, your agency agreement will specify how long it will be in effect, or the Term of the agreement. This tells you the minimum length of time your author-agent relationship will last. Don’t worry! This clause is not generally used by agents to quickly ditch their clients. It is not a ticking clock. It does not say if the agent doesn’t sell your book in two weeks you’re outta here. It’s common to see a term of one year in an agreement, which means that if your project isn’t ready to go and/or an agent doesn’t submit your work to editors within a year of signing you up, then either party has the option to end the agreement. I promise this sounds scarier than it really is. There isn’t a mechanism at the agency that triggers a red flag and all clients whose books haven’t sold in X amount of time are unceremoniously dumped. Contracts need a defined term, and this part of the agreement will stipulate how your prospective agency defines it. Some agreements forgo the specification of a time period for collaboration and are instead made on a book-by-book basis, while some say the agreement is in effect until it ends under the termination clause (see below) but in essence are intended to last for the author’s whole career.
You will likely find another section that defines the Agent Services. These are things the agent will do for you and include developing and editing your work, sending your work to editors, negotiating deals on your behalf, exploiting (that’s just a fancy, if scary, word for “selling”) foreign and subsidiary rights, reviewing royalty statements, and processing payments. You won’t find “get author on New York Times best-seller list” or “guarantee $1 million advance” on this list because agents cannot make such promises and would never put that in a contract anyway.
It is likely the agency agreement will cover these services in broad terms. They don’t necessarily say your agent will provide specific editorial services, like “will absolutely line-edit your whole book.” Agents make personal decisions about the specific types and levels of editorial services they provide, and sometimes that still varies from client to client, project to project. If you are looking for a specific kind of “editorial” agent, this is a conversation you’ll have before you sign the agency agreement and not one that will be necessarily put in writing.
Agents vary, too, in the types of projects they will represent for you. For example, if you frequently publish short stories, talk to your prospective agent about whether they want—or don’t want—to send out those stories for you. It is less common these days for agents to send out short fiction or pitch articles for clients. If this is a big part of your publishing life, you’ll want to have a conversation about this with any agent you consider signing with.
Every agency agreement will clearly outline what happens with the money your work earns, and it usually starts out by defining Commission rates. This is how your agent gets paid. The industry standard commission rate for U.S. agents on domestic deals is 15 percent of the gross amount earned—which means advances, royalties, licensing fees, any way the work your agent sells for you earns money. Gross means off the top, before any deductions, such as foreign tax withholdings, any (rare) deductions from the publisher, etc. If your agent is not in the U.S., this rate could vary. For example, it’s 10 percent in the U.K. This rate applies to your primary book deal and any subsidiary rights like audiobooks and movie rights, as well as royalties. This section of the agreement will also include the commission rates for foreign deals and translation rights, which typically range from, 20 to 25 percent. These are higher than domestic rates because many agents use a co-agent to sell work abroad, and the commission is split between them. For example, your agent may use another agent in France to sell your book to a French publisher, because the French co-agent knows the market best. Commission here is likely to be 20 percent: 10 percent to your agent and 10 percent to the French agent. This clause will also tell you how quickly you can expect payment once the agency receives any payment on your behalf (usually seven to ten days).
Speaking of money, your agency agreement will also tell you if you ever owe the agency Reimbursement for fees or expenditures. Before we get into that I want to note that if there’s ever mention of an up-front payment to an agent—for a “reading fee” or “processing fee”—run. Reputable agents do not charge clients a cash fee for their work to be considered or sold, or for any other service of representation, and the Association of American Literary Agents prohibits its member agents from doing so. Money at a reputable agency flows from the publisher to the agency to the author. Not the other way around.
Your agency agreement may indicate that the agency can ask you to reimburse it for routine office charges like shipping or photocopying or buying physical copies of books to send to foreign co-agents, and this clause will cover that, too. I’ll admit this part of the agency agreement is a little dated and comes from a time when submissions required dozens of copies of a manuscript to be shipped in boxes to editors’ offices. (I know! We used to do it that way! In my lifetime even!) Now that most transactions, even contracts, happen by e-mail, agents rarely need to recoup these kinds of expenses, but it’s still in the agency agreement just in case. It’s a general practice that you’re notified before any large expenditure is made, so you’re not likely to see some big surprise deduction on your next check.
To me the most important clause in the whole agreement is the Termination clause. This is the part that tells you the procedure for ending your relationship with your agent and how the agent can end it with you. It very often states that either party—that’s you or the agent—can terminate the agreement by writing a letter (even an e-mail) stating as much, and the agreement is terminated thirty days after it is received. That letter usually says something like: “Thanks for everything, but I think it’s time to move on” and, after thirty days, that’s that. Your agent may do so as well. Termination is generally that straightforward but not necessarily that simple.
Even if you part ways with your agent, they are still the “agent of record” for any projects they have sold for you. This means the agent may collect commission in perpetuity and will also continue to send you statements and checks and anything else relevant to their work on your behalf in perpetuity. If you part ways with your agent while your book is on submission (which I would not generally recommend), and you later sell that book to an editor your now-former agent sent it to, that now-former agent is entitled to commission. Since agents don’t get paid until authors get paid, this is to protect them from authors who use their services right up until the book sells and then fire them, thinking they won’t owe commission. I’ve never been in this situation, but as my boss and mentor Howard Morhaim of the Howard Morhaim Literary Agency has always said, “Contracts are scar tissue”: If you see something like this in a contract, it’s probably because it happened to someone somewhere.
Regarding termination, it also matters who is due commission on unsold subsidiary rights. Yes, I know that sentence is confusing, so let me explain. Let’s say you amicably part ways with your agent after your first novel comes out. You sell your second with a new agent, and the new agent wants to see if anyone will buy the unsold audio rights to your first book. Can they? If they do sell them, do you owe your former agent commission? Your agency agreement will make this clear, and if it doesn’t it’s important to have this enumerated. It doesn’t have to be a contentious issue, but it is worth ironing it out from the beginning. Don’t worry—your agent will not think why is this new client worried about what will happen if we break up? They will give you kudos for advocating for yourself and thinking ahead. That’s what contracts are for!
Some agency agreements have stipulations that if you terminate the agreement, you can’t get another agent or send out any project you worked on with your now-former agent for a period of time, perhaps six months or so. This is to deter an author from taking a submission list or the edits an agent provides to another agent for them to sell, not that the overwhelming majority of authors would do this. (See? Scar tissue.) This is not in every agreement, but it’s important to know if it’s in yours. If you’re ever in the position of ending your relationship with your agent (it happens), be sure you understand your termination clause.
There are very often other more contract-y sounding clauses in agency agreements such as a Warranties and Indemnities clause, which outlines what happens in the event of lawsuits, a Venue clause that specifies which state’s laws govern the agreement, and more. These are generally straightforward and a routine part of many contracts. You’ll probably see them again in your book contract. They’re diverse enough that it would be too difficult to explain the nuances here, but if you have any questions about them, ask your agent.
The most frequent question I get about agency agreements is “Can I negotiate any of this?”
It’s possible, but in seventeen years of agenting, I haven’t had a client ask to do so. Whether that is a function of our agreement, my clients, both, or neither, I don’t know. I can say this: You won’t get very far asking for a reduced commission rate, as 15 percent is industry standard. You won’t get very far offering an increased commission rate either, as I have seen used from time to time as a ploy for writers to make representing them more enticing, mostly in query letters. (Sorry, this doesn’t work.) But if something in your agency agreement doesn’t work for your specific circumstances, talk to your agent about it. The agent is there to answer questions and certainly understands the need and desire to tailor an agreement to fit the situation of the author. That’s an agent’s whole job! That doesn’t mean they can or will say yes, but it’s okay to ask. If you don’t feel comfortable talking to your agent about a detail of your contract, look into the legal services provided to by the Authors Guild, a professional organization for writers that advocates for the rights and well-being of its members.
Contracts are meant to outline what both writer and agent can expect and to account for what happens when something goes wrong. Mercifully, contracts cover things that you’ll almost certainly never have to deal with; you’ll see this clearly when you sign a book contract of your own. But it’s important to understand what you’re signing before you sign it, and I hope this gets you at least some of the way there. When in doubt, ask questions. Your agent is there to answer them and to support you from here on out.
“HOW TO READ A LITERARY AGENCY AGREEMENT” was first published by Poets & Writers Magazine (July/August 2022). Reprinted by permission of the publisher, Poets & Writers, Inc., 90 Broad Street, New York, NY 10004. www.pw.org.