The Business Rusch: Agents and Money

 I have spent weeks Googling this topic, talking with other writers, looking up case law (ouch!), and trying to jog my memory, and have come up with nothing. So I’ll ask you all:

Do you know anyone who has audited their literary agent?

When I put “literary agent” and “audit” into search engines from Google to Duckduckgo.com, I get thousands—and I do mean thousands—of hits. These hits always involve literary agents auditing publishers (or threatening to) on behalf of writers.

When I put “literary agent” and “lawsuit” into search engines, I mostly get links to the Martha Grimes case of a few years ago, although I also found some very scary things, most of them already adjudicated cases on FindLaw.

I have yet to see anything about an author auditing her agent.

And why not? After all, literary agents handle writers’ money. In fact, the agent gets the money first and funnels it to the writer, even though it’s the writer’s money. You’d think that someone would have audited an agent, just to make sure the books are being well-kept.

Well…there are so many problems here that I can barely begin to examine them.

First of all, no one has the right to go into another business and demand to see their books, even if that business owes that person money. There are only two ways you can audit the books of a business that owes you money.  The first way is contractual. The second is for cause.

Let’s deal with the contracts first. Agents proudly mention on their websites that they routinely force publishers to include audit clauses, and that the agents themselves will then “audit” the royalty statements to make sure they’re accurate.

However, I have never ever ever ever seen an agency agreement that allows the writer the same rights that the agent negotiated on the writer’s behalf with the publisher. The writer does not have the right to audit a literary agent, even though most agents get all of the writer’s money from the publishing house. Those agents then cut a check—15% for the agent, and 85% for the writer.

Theoretically.

Think about this for a moment. The agent gets all the money and all the paperwork associated with that money. This almost always is part of the contractual agreement the writer has with the agent. Inside a publishing contract, the agent has the publisher slip in an “agency clause” which essentially says that the agent will receive the money and that receipt will mark the end of the publisher’s obligation under that agreement.

Now remember this: literary agents aren’t bonded or licensed or certified. They do not have an organization with teeth that can fine them or sue them or disbar them if they behave improperly. Nor are they publically traded corporations, like some parent companies of publishing houses, so there’s no way to audit on behalf of the shareholders or any other reason.

In other words, the only one watching the store—the only one with the right to watch the store—is the agent herself. Writer J. Steven York has made his cat into a literary agent to show how ridiculously easy it is to become a literary agent. The cat has her own website, and even though she calls herself “Bad Agent Sydney,” satire-challenged writers have—quite seriously—written to her and asked for representation.

Most writers never vet their agent. They don’t check with the local Better Business Bureau or the state attorney general to see if someone has filed complaints against the agent. They don’t run a credit check to see if the agent can handle her own money, let alone theirs.

I know of so many agent stories about financial mismanagement, most of them because the agent was a sole proprietor and used client funds to pay personal rent or, in the case of one very famous agent, to buy cocaine.

Most agency agreements between the writer and the agent are so one-sided in the agent’s favor that they terrify me. I’ve written blog posts listing the many reasons why you should not sign one of these documents. Of course, you can write your own agreement with an agent, and if you do, make sure it has an audit clause. You might even want to base that audit clause on the one for publishers that agents so happily tout on their blogs.

So, without a contractual agreement allowing it, how can you audit your agent? You can only audit if a court determines that you have cause.

Cause is a dicey thing. You need to have enough evidence that financial mismanagement is going on that you can get a court order to hire a forensic accountant to go in and examine another business’s books. In other words, you need proof.

If someone is deliberately stealing from you and is good at it, you won’t have proof. You might have suspicions, but you’ll never have proof.

I had suspicions for years that one of the agencies I used to work with had a problem with its foreign rights department. Years before I hired this agency, which I will call Boutique Agency, I had hired a sole proprietor agent, whom I will call Solo Agent.

Solo Agent embezzled from his clients routinely. When a client caught him and sued, that client had to sign a confidentiality agreement to get a settlement. This is one of the many reasons that I never found any reference to audits of Solo Agent in my Google searches, even though those audits happened and the court cases got settled. (Makes me wonder how many other agents insisted on—and got—confidentiality agreements in exchange for a settlement instead of a lawsuit.)

Solo Agent embezzled with foreign contracts. He never let his clients see the contracts, claiming they weren’t in English (not true: the contracts are always translated into the language of the writer). I’m convinced he underpaid the foreign advances, and he claimed those books never ever earned out. I’m sure he pocketed the extra advance and the royalties, but I can’t prove it in my case, since I didn’t sue him.

How do I know this then? Well, people close to me sued Solo Agent and got the settlement. And others have—well, not exactly broken their confidentiality agreements, but have let me know that going with Solo Agent as an agent isn’t a good idea because of something to do with foreign rights. Oh, and when I switched agents years later, all of my foreign editions with the same companies that had published previous editions paid me higher advances, and royalties after those advances earned out. One foreign publisher told me that I had always earned out for his company. Always. Even with Solo Agent was my agent.

Anyway, long story short, I’m very sensitive about my foreign payments because of Solo Agent. So when I became a client of Boutique Agency, I watched my payments like a hawk. Fast forward several years. I fired Boutique Agency (for reasons unrelated to money) and moved to another agency. And suddenly, my foreign royalties from the Boutique Agency started to look weird.

They got paid late, or not at all. In my series novels, the foreign publishers would pay royalties on Books 2 and 4 but not on Books 1 and 3. Sometimes those royalties would show up years later.

I complained, but no longer had clout. The money still funneled through that agency because I hadn’t gone through the nightmare of segregating funds. I had dozens of books which would have had to go through that process.

Instead, I simply made sure my rights reverted on those books as soon as possible, something that benefitted me years later when indie publishing started. Only I got my rights reverted to easily (and cheaply) get Boutique Agency off my back.

Foreign money still trickled in weirdly and inexplicably. But it wasn’t foreign money that gave me the obvious cause. It was tie-in novels.

A lot of writers wrote tie-ins in those years, and often for the same editor at the same franchise in the same publishing company. The royalties statements would come bundled and packaged from that publishing company.  You’d have to read those statements closely to realize that TV Franchise Novel: The Awakening was a different novel from Movie Franchise Novel: The Awakening.

The Boutique Agency started to send me royalty statements for other writers who had written similarly titled books. I complained and mentioned it to Boutique Agency. Nothing happened.

And then I got the super large payment that made my eyebrows go up.

I always read my royalty statements. Always.

And as I examined that royalty statement for that really big check, I saw another royalty statement attached. A royalty statement for a completely separate writer, whose novel had a similar title. A royalty statement for said writer, who deserved all but about $5 of the money that had been sent to me.

Fortunately, I had not deposited that check because, among other things, Boutique Agency had stopped getting my company name right, so the check needed to go into an account I kept open only because of Boutique Agency’s incompetence.

I photocopied everything, then sent Boutique Agency a scathing letter, reminding them that they had fiduciary responsibility to me, and they had violated it.

Said fiduciary responsibility, by the way, comes from agency law.  Please remember that I am not an attorney and I don’t play one on TV. But a literary agent fits into the broad category of agents—like real estate agents—who exist under the law, and they are subject to a general thing called agency law.

The obligations that an agent—any agent, from a real estate agent to a literary agent—has to the principal (that’s you) under agency law include:

  1. To act within the confines of the law
  2. To act with reasonable care
  3. To maintain loyalty to the principal
  4. To disclose any material information to the principal

Some of these terms, such as acting with “reasonable care” are legal terms in and of themselves and have specific meanings. There are a lot of other things that are involved in this side of the relationship, some of which you can find in the definition of fiduciary duties in the Free Online Law Dictionary.

One of the many responsibilities is privacy between the agent and the client. Just by sending me the other client’s royalty statements, the Boutique Agency was in breach of general agency law. But sending me another client’s money, well, that was an obvious breach and one that would have easily given me enough cause to get a judge to grant me the right to audit the Boutique Agency’s books.

It’s expensive to hire forensic accountants, even with the court’s permission. I was ready, though. Before I went to court, however, I decided to give Boutique Agency one last chance. I wrote a letter, citing all of the breaches, demanding a full accounting of my books, and reminding them of their fiduciary responsibilities to me.

The Boutique Agency not only terminated the remaining parts of our relationship the next day, they willingly wrote to all of my publishers that week, informing them to send me 85% of what was owed, and to cut a separate check for 15% for the agency. (This is called splitting checks).

Except the Boutique Agency’s foreign agent balked at doing her part. She refused to contact the foreign publishers. She thought my request “insulting.” I had to write a series of letters to get action there. Finally, when I told Boutique Agency to stop worrying about writing those letters to my foreign publishers; I would do it myself. And guess what? Two days later, I got copies of letters sent to all of my foreign publishers.

Occasionally, I muse as to why Boutique Agency’s foreign rights person didn’t want to write those letters and wonder if I should have simply gone to court. I probably wouldn’t have made much money on this (if any), but I could  have blogged about the whole experience, and it might have caused a major upheaval.

You see, some really well known New York Times bestsellers—with series and movie franchises and all kinds of foreign rights—funnel all their money through Boutique Agency. Hundreds of millions of dollars flow through that place. At best, Boutique Agency’s accounting department sucks. At worse, someone(s) at Boutique Agency has very sticky fingers.

By the way, because I’m completest, let me add this: in a fiduciary relationship, you (the principal) have obligations as well. They are, generally speaking:

  1. pay the agent
  2. reimburse the agent for reasonable expenses

Nowhere does it say that you must let the agent get the money and disburse it to you. In fact, it’s really, really, really rare outside of publishing for someone who is called an agent to get the money in his own account, and then disburse it to the client.

For example, when you sell your house, your real estate agent does not get the check for the house, put it in his account, take his commission, and give the rest to you.  If you have an insurance claim that pays out, the money does not go to your individual agent first for her to remove her commission and then give the remainder to you. You get your check separately, usually in the mail, from your insurance company. If the check has to be hand-delivered, it is not a check from your insurance agent minus his fees, but a check from the insurance company itself, drawn from the corporate account that it has for this very kind of pay out.

Writers are so used to the literary agent system that we don’t question it at all. And yet, when Dean and I showed an attorney friend who specializes in corporate law (not intellectual property) a book contract, he freaked out. Not just at the jargon—he admitted he didn’t understand that—but at the agent clause. He thought it was a joke. He couldn’t believe how agents got paid. Or rather that writers, who had not checked an agent’s financial credentials, let that agent handle their funds.

In hindsight, I don’t understand it either. Yet I did it several times with different agents and different agencies.  I could claim youthful ignorance—I got my first agent at the age of 28—but I had already been a business reporter for years, and I knew about all kinds of scams. I just didn’t even consider how rife the agent/author relationship was for mismanagement until…well, until I encountered Solo Agent. Even then, Solo Agent didn’t stop me from hiring the Boutique Agency without vetting them. I vetted later agents, but didn’t ask for split payments, even though I should have.

And so should you.

If you have an agent, you should make sure that your payments get split. If the publishing company refuses to do that, then have the money come to you directly and you live up to your side of the fiduciary relationship: pay your agent the moment the big check arrives.

If your agent balks at that—if he doesn’t trust you to pay him his 15%—then why should you trust him to pay you 85%?

If you don’t have an agent and believe you need one, then make sure you have an agent agreement that you draw up, not the agent. And in that agreement (which you need to draw up with the help of an IP attorney), add an audit clause so that you can audit the agent.

A lot of you indie writers believe you need an agent to sell foreign rights (you don’t) or movie rights (you don’t) or other subsidiary rights (you don’t), so you hire someone to handle your books when you and an intellectual property attorney could do so much better on your own.

Think long and hard before you hire an agent to handle your work for you. The business model no longer works in today’s new publishing environment so most agents are moving to dicey practices that, in fact, violate the fiduciary duties listed above.

Investigate anyone you hire, but before you do, question the assumption that you need to use a 20th century model (the agent) for a 21st century business.

If you think you need an agent, then research the hell out of the person you hire. Ask to check the firm’s credit, get recommendations, and write your own agent agreement with an audit clause. Split payments or have payments come directly to you.

Just because a firm is “reputable” doesn’t mean it can handle its books. That Boutique Agency has one of the best reputations in the business—and no, I won’t tell you who it is. I’m telling you to be cautious no matter who you hire to handle your business affairs.

This is a writer beware situation, and a very serious one.

You don’t want to be in the position where you believe you know that someone is mismanaging your funds, but you can’t prove it. You don’t want to get to the stage where you actually have cause, because that means something horrible has broken down somewhere.

You want the money you’re owed—all of it—to come to you. You want your business relationships to remain aboveboard and honest.

Are there good agents in the world? Yes. I partner with one on occasion when I need to, which is rarely these days.

But are there bad agents? Infinitely more bad agents than good. And honestly, I know of a few good agents who work in that Boutique Agency. Because they partner with that business, I’d never hire them, because that agency has some serious flaws in its accounting department.

Do your homework, take care of yourself, and make sure you’re never in a position where you need to audit anyone because you suspect something is wrong.

This blog comes from the school of hard knocks or, as I sometimes say to my students, the do-what-I-say-not-what-I-did school of publishing. I am older and wiser now, but I’m still learning and, I’m sure, still making mistakes. I just try not to make the same mistake twice.

I also want you to learn from my mistakes so you don’t have to take those hard knocks like I did. Believe me, they’re painful. And that’s where this week’s blog came from.

However, this blog does need to be self-sustaining because I could always use the extra 3,000 words for whatever fiction project I’m working on. So, if you get anything of value from my work on The Business Rusch, please leave a tip on the way out.

Thanks!

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“The Business Rusch: “Agents and Money,” copyright © 2012 by Kristine Kathryn Rusch.

 

 

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52 Comments

  1. If your foreign publisher is European you can always do a reverse audit. Each european country has a law under the data protection directive that requires companies to send all the data they have on you for a nominal fee.

    So, for example, you could send a subject access request in the UK and 10 pounds and get details of every payment and contract a publisher has made with you.

    You know what payments you have received, and what payments the publisher made so it is easy to show an error in court.

    Reply
    • Wonderful, Thomas. Now I must figure out what that law is in France. Because there’s an agency there that needs to hear from me…

      Reply
      • Kris, in English the key words are: -

        Data protection, subject access
        EU directive 95/46/EC

        So
        http://en.wikipedia.org/wiki/Data Protection Directive

        click on Francais and get
        http://fr.wikipedia.org/wiki/Directive 95/46/EC sur la protection des données personelles

        which mentions Droit de accès and points in turn to an article on Loi relative a l’informatique which was modified to implement the directive in 2004.

        There is probably a French FAQ and dummies guide somewhere which these key words can find, but just mentioning the Loi and Droit de accès may be a good opening shot.

        HTH

        Mike D in Walton-on-Tmaes

        Reply
  2. I wanted to read more about the lawsuit you mentioned in the first paragraph, so I googled on “literary agent lawsuit martha grimes”.

    …and this very blog post came up in the #2 position.

    The internet can be so wacky and self-referential sometimes.

    (The #1 hit was a concise explanation of the case, though, so it’s wacky, self-referential, and USEFUL.)

    Reply
  3. I found my first agent by cold-calling a list of writers’-organization-approved agencies after getting my first offer from a major publisher… one who was well-regarded and well-known within the genre. When the contract for that book never materialized, we lapsed into a relationship where Agent would have to actually send my books out to find them homes. For four years, Agent claimed to be doing so but was cagey about where those books were actually going.

    Several years later, frustrated with a lack of progress and a lack of useful feedback on how things were going, I told Agent “This isn’t working for either of us… I think we should terminate this relationship. Can you get me a list of places these books have already been so I don’t send them to the same editor?”

    And Agent said that there had been a terrible hard drive crash and those records weren’t available, and Agent couldn’t remember any of the editors or publishers either.

    That was my first experience with an agent–a well-known agent well-regarded in my own genre–and that was my last experience with agents. I am done with them.

    Reply
    • You’d be surprised at how common this is. The agent just wanted a percentage of your $$. And the agent didn’t want to work for more. [sigh]

      Reply
      • Yeah. It took me a long time not to figure that out, but to believe it of someone so well regarded within the circles I moved in. I was appalled. :P

        Best of all, after I ditched That Agent, I had several author peers come to me and say, “I knew that about Agent, but I didn’t want to harsh your buzz.”

        Seriously? They KNEW? And didn’t tell me because… why?

        (I stopped before I thought of all the possible answers to that question, and just moved on.)

        *shaking head*

        Reply
        • “Seriously? They KNEW? And didn’t tell me because… why?”

          Experience, probably. When you Do tell a client what you know about their agent, their reaction is, “Thanks for sharing. I needed to know that,” ONLY if they’re ALREADY seriously contemplating firing the agent.

          The rest of the time, they’re either ANGRY at you for saying such things about their agent, or dismissive (“well, that may have happened to you and nine other people you know who worked with this agent, but -I- have nothing to worry about here”), or full of excuses (“my agent must have been going through a bad path during those 5 instances you’ve just told me about”), or insulting (“I wonder what unique flaw in =you= or those other nine clients you’ve mentioned forced my agent behave like that?”), and so on.

          Or sometimes HURT: “I’ve worked so hard to find this agent, and now you’re trying to spoil it for me.”

          IOW, it never goes well.

          Reply
          • P.S. Oh, and then there are the instances where the client goes straight to the agent with what you’ve said, and then you get an extremely nasty and possibly legally threatening letter or call from the agen.t

          • There’s also legal considerations. YOu can’t continually badmouth someone else’s business without them knowing, and they might come after you legally, either as slander, libel, or (I always forget the exact legal term) attempting to interfere with their business.

          • What Kris said. (We’re getting into quite a circular thing here.) There are legal ramifications and risks when talking about an agent’s bad practices.

            Moreover, there’s the risk of embarrassing your sources (or, worse, causing professional problems and perhaps even lawsuits for them).

            There are any number of instances where, once you use names, you screw over the source who confided in you. There’s a lot of information which is so specific that, one names are involved, the agent can easily figure out who talked–which editor confided to a writer that this house no longer accepts submissions from this idiot agent, or which writer found out the agent was skimming funds, or which former colleagues knows the agent brings his drinking problem to work every morning, etc.

            So even in an instance where names are relevant–ie. I know that YOU are with a bad agent, or that your current problem is being CAUSED by your agent though you don’t realize it–I often have to be careful about what I say.

  4. “Think about this for a moment. The agent gets all the money and all the paperwork associated with that money.”

    And if the author hasn’t been sensible enough to get it written into the contracts that payments will be AUTOMATICALLY SPLIT if/when the agent and author terminate their business association… then an agent whom you fired years earlier (and, indeed, an agent against whom you’ve filed ethics complaints and/or against whom you’re taking legal action) can still maintain complete control of YOUR earnings and ALL the fiscal paperwork associated with that money.

    For example, after I fired one of my agents, the agent promptly ceased sending me my royalty statements. I could only get those fiscal reports from the agent via weeks and months of assiduous nagging. The problem got serious and repetitious enough that I filed formal complaints against the agent with RWA, NINC, and the AAR, and I consulted four different lawyers (three of them paid for by advocacy organizations that I belonged to). But the upshot was always: Legally and realistically, there was nothing I could do about this situation.

    The problem was, the agent repeatedly refused to consent to split payments (a standard and sensible process whereby my 85% of the money and a copy of the paperwork would routinely be sent directly to me by the publisher, and thus the agent whom I had –fired- WOULD NO LONGER =CONTROL= MY MONEY and my earnings records). Correspondingly, the publisher repeatedly refused to split my payments until/unless the agent consented to this—which consent, as I have said, the agent repeatedly refused to give (on at least seven different occasions over a period of years, including instances when an attorney or a national advocacy organization communicated with the agent on my behalf).

    So years of my royalty income and even more years of my fiscal statements were controlled by someone whom I had fired and against whom I had filed ethics complaints.

    On occasions when I requested a separate copy of my statements directly from the publisher because of this problem… the publisher always sent the duplicate statement TO THE AGENT (sigh). When I explained, no, I needed it sent to –me- because I COULDN’T GET it from the agent… the publisher insisted that the only person with a right to receive –my- earnings records (as well as –my- earnings) directly from them was the agent; -I- had no such right, they insisted.

    THAT’s how insane and out-of-control this system is.

    (I only resolved this problem, after many years, by getting all rights reverted to me after the books in question went out of print. That was my only means of severing that agent’s control of all my own income and all the fiscal paperwork on those titles for years after being fired.)

    Reply
    • “Cause is a dicey thing. You need to have enough evidence that financial mismanagement is going on that you can get a court order to hire a forensic accountant to go in and examine another business’s books. In other words, you need proof.”

      During my consultations with four different lawyers about the problems I described above, the attorneys repeatedly warned me of two very discouraging things.

      One, under NY state law, the agent is required to FWD monies to the client within 30 days. I thought, hey, great, if this agent hangs onto my money for 31 days, I can get a judge to overrule the agency clause publishing contract (the clause which stated that all my money and fiscal paperwork would go to the agent), and I can finally get this individual OUT of my life and get this person’s hands OFF my money. Right? Well…. no. Each of these four attorneys warned me that if the agent makes up a specious excuse (as this agent did with the AAR, RWA, and NINC, all of which contacted the agent about my formal complaints) and finds a judge who’s amendable to such excuses, I would wind up just wasting a LOT of time and a LOT of money trying to get my case before a judge. In reality, they said, the law is vague and flexible enough about how an agent handles YOUR money that it’s actually quite hard to get an agent’s hands off your money if he’s determined to maintain control of it.

      Two, they all said that, yes, if you can prove embezzlement to the satisfaction of a judge, you can definitely get the agent’s hands off your money (and probably get the agent arrested)… But there’s a pretty big fly in this ointment, which is that by the time you have proof that the agent had embezzled… the money stolen from you is ALL GONE and you ain’t never gettin’ it back.

      Again, THIS is hnow insane and out-of-control the traditional literary agent system is.

      Reply
      • Laura, you’ve just run into the primary barrier in law that takes three years (or more) to beat into law students (and left a Laura-shaped hole in it as you ran through):

        There’s a big difference between “it’s unlawful” and “what a court can or will do about it” — and it’s not just the US. Consider, for example, Agent A, who not only kept money due authors (and refused to send them contracts), but held himself out as the “agent” for authors who had never consented to an agency relationship. For decades.

        In the best of all possible worlds, a court would recognize this, and unwind everything, and get the authors their money and documents and rights, and declare contracts entered into without authority unenforceable, and all that stuff. Agent A died. Without any discernable records to support a court doing any of that. And so no court will touch this, because the court that now has authority over Agent A’s estate has no authority over Agent A’s business dealings prior to his death.*

        This is, admittedly, a rather extreme instance, but it illuminates the distinction between “right” and “remedy” that gets in the way of fixing things when they go wrong… and of preventing things, because the centuries-long trend toward treating all rights as “property” rights that can be compensated with money damages allows the consequences for violating the law to be merely a cost of doing business.

        There’s also one side point that I should make: The right to cure. In some legal contexts, a wrongdoer has the right to cure a mistake — and in commercial law, demonstrating that misconduct was more than a “mistake” is extremely difficult. As a specific example, let’s say that either publisher X or agent Y is late in remitting funds to Writer. Under the law as it stands, X/Y has a “commercially reasonable” time to “cure” that lateness (whether we’re dealing with US or European law goes only to the details). Since the terms of the contract allow a publisher to delay paying the author his/her share for up to 18 months after a particular nonreturnable sale to a reader occurs, it should surprise nobody that the “commercially reasonable” time most often chosen by courts that even get this far is… the next-due royalty statement.

        * This is not a hypothetical. This is an understatement, based on my own dealings with the fallout from Agent A. It doesn’t always require Bond-supervillain-level, Snidely-Whiplash-moustache-twirling “evil intent” to do, and even to be, thoroughly evil (regardless of any purported “redeeming characteristics”).

        Reply
        • ” and in commercial law, demonstrating that misconduct was more than a “mistake” is extremely difficult. ”

          Ah, yes, this is essentially what I was advised by the various lawyers I consulted about my problem with that agent. What each of them said, more or less, about each new twist of the situation that arose–in which they all agreed I had a legitimate grievance about the agent failing in fiduciary responsibility and behaving in a way that SHOULD be corrected by having the payments split… Was that I could get my problem in front of a judge, and then the agent could charmingly explain it was all an unavoidable accidental mistake that the agency would rectify as soon as it could (or had already rectified, while I waited to see a judge) and it would Never Happen Again, etc… And the judge would tell me not to waste the court’s time over a little misunderstanding that the agency was happy to fix.

          The other thing I was advised was that the best way to get my payments split without the agent’s consent was just to collect evidence and show it to the publisher. My publisher was indifferent to the fact that I was having so much trouble getting my royalty statements; but, as I mentioned in my initial acccount, other ex-clients having the exact same problems with this agent got their payments split after one of them showed their publisher (a different house) proof that the agent had sent this writer ANOTHER writer’s royalty statements from the same house. That house considered this sufficient cause, after having previously refused to cooperate with the writer.

          Reply
        • In my “day job” (Information Security and Internal Audit in the Medical Field) we rely on several scary Federal and State regulations (HIPAA, HITECH, and State Privacy Laws, etc.) to do the legal heavy lifting. I wonder if a group of writers or a professional organization like NINC, etc might not be able to get the FTC or something like the Office of Civil Rights interested in looking into this “agent problem”.

          The core of the problem (from an auditing perspective) is two fold, the accuracy and timeliness of records. It would seem to be logical and inarguable from a regulatory standpoint that agents should be required to keep accurate records and provide them to their clients in a timely fashion. Regulatory agencies love to require folks to things that should be logical and inarguable and typically the penalty for non-compliance is scary enough to keep swindling to a minimum.

          Just a thought. :)

          Reply
          • ” I wonder if a group of writers or a professional organization ”

            A key barrier to this, Christian, is that the majority of writers are perfectly happy with the system that Kris is describing and think only whiny cranks have a problem with it.

          • Not gonna happen.

            The FTC has very, very limited authority over business-to-business transactions (and most state “little FTC” agencies and laws have even less). The FTC has already — multiple times, for several decades — rejected calls to look into agent/manager-in-the-arts activities, due to First Amendment doctrine. It’s the same doctrine that prevents authors and publishers from getting loans through/via the Small Business Administration. In any event, after so many federal agencies have been smacked around for exceeding their authority for much, much more serious problems that would otherwise seem to fall within their authority (the FDA on tobacco comes to mind), the smart agencies are very gunshy… and we don’t want a less-than-smart agency doing this sort of thing.

            The only way around this is for Congress, acting under its commerce power and its copyright power, to explicitly give an agency authority to deal with the problem. Yeah, that’s gonna happen Real Soon Now.

            And we’re not going to mention the antitrust problems. At all. We just don’t want to go there… and even if we did, it would thoroughly hijack Our Gracious Hostess’s forum.

    • Technically, and sadly, Laura, if you had an agent clause in your contract with the publisher, then the only way you could get the paperwork and money first was to amend the contract. So your publisher was right. It’s not that they were brainwashed; it’s in the agreement that writers sign.

      The key–from now on–is for writers to never ever ever sign any publishing contract with an agent agreement in it. Or you’ll end up in the same circle of hell that Laura was in. (What’s that? The fifth? I forget; I’ve been in so many myself.)

      Reply
      • “Technically, and sadly, Laura, if you had an agent clause in your contract with the publisher, then the only way you could get the paperwork and money first was to amend the contract.”

        It’s actually much more random than that. During this same period, two other ex-clients were having the exact same problems with the agent–repeated problems with mishandling their fiscal paperwork combined with the agent’s repeated refusal to consent to split payments. However, in an incident similar to one you describe in your essay (and, yes, it’s an amazingly common occurrence) the agent mistakenly sent one of these writers the royalty statement of a different client who also happened to be at the same house. Well, upon seeing that, the house in question changed its position and split these two ex-clients’ payments from the agent WITHOUT the agent’s consent–because now the house was annoyed with the agent.

        I, however, was at a different house, one that was NOT annoyed with the agent–and so I couldn’t get my publisher to split payments without the agent’s consent.

        Meanwhile, another house told me that they, too, have split payments at the writer’s request, even on occasions when an agent didn’t agree to it, because they consider this a reasonable request from a writer who’s fired an agent.

        So legal/contractual issues notwithstanding, this is all very random in practice.

        Reply
        • Considering the contract is between the publisher and the writer, and not the agent, I don’t see how the agent’s consent is required at all. The agent is not a party to the contract, though he/she receives benefits from it. Sounds like just a lame excuse to me.

          But then, I’m not a lawyer so I’m probably missing some great big nuance.

          Reply
          • The contract has a piece that says all documents and payments go to the agent, and that once those payments are made to the agent, they legitimately fulfill the publisher’s part of the contract. It’s done all the time in contracts: where do the payments go? To this address? To that address? To this person, that company, this relative? It’s just a payment directive.

            You are correct, Michael, that a third party should have no say in a contract–so all that other crap an agent adds into the contract that benefits the agent probably wouldn’t hold up in court. (It didn’t in the Grimes case) But do you want to go to court to test it? Better not to let any of this into your contract, including the directive to send the money to the agent. Or for that matter to anyone other than you.

          • Michael, that was always my feeling, too–the agent was not a signatory to the contract, and so should have no say in whether the publisher and I amend the contract to ensure split payments.

            However, I gather that if a third party is affected directly by a contract, as per the agency clause in a publishing contract, there are legal ramifications to changing the contract in ways that party won’t like. This was addressed, IIRC, on The Passive Voice months ago. (I don’t remember the details.)

            There’s also the real-world stuff. Does the publisher have a stronger relationship with the writer or with the agent? Is the publisher annoyed at the agent (or at the writer)? Etc. When I saw that one publisher changed its position about splitting payments without the agent’s consent AFTER the house got mad at the agent… that was a wake-up call about how random and arbitrary this is, contracts notwithstanding.

  5. Thanks for the inside look of the agent world and what they are all about. It’s scary that authors have put them on this poduim to worship. I hope some of them wake up and check out their statements.

    Reply
  6. I think it’s easier than ever to research agents these days, but like you said how easy is it to research their accounting departments? Good agents don’t equal good finances, and I’ve heard so many stories like this it’s scary. Thanks for a great article!

    Reply
    • Great quote, SavvyBlue. Good agents and good finances aren’t equivalent, although I did learn that agent/embezzlers are generally good sales people. They need something to embezzle from…

      Reply
  7. My God, Kris! How can you impugn the honesty of agents?

    It is like impugning the honesty of the President. Or the CEOs of corporations. Or Senators and Congressmen. Or Publishers.

    All of these people have impeccable records – how could you?

    Ah – wait a minute – how could I forget bankers? And investment companies? And Mr. Madoff?

    All stellar.

    Any system humans devise will be scammed by other humans. And this includes computer systems (which have the capacity to do much larger scams much more quickly).

    Keep pushing for accountability – and even then…

    Reply
    • I figure if you go in with your eyes wide open, you’re safer. Then you can either choose to fight, or shrug and say to yourself, “Well, it was worth the risk.” (Okay, I am cynical.)

      Reply
  8. Surprisingly enough this is a small(ish) community around the Dean and Kris info-show (as a way of speaking). Someone who knows him should give Jim C Hines a link to this blog entry.

    He’s always seemed like a nice guy and a good writer. This blog could help him (IMO) if someone had 6 (or is it 7?) degrees of separation to him.

    Reply
    • Because he has troubles with agents ? I’ve occasionally exchanged some emails with him, but not much more than that.

      And yes, I agree he seems to be a really nice guy and good writer.

      Reply
      • I believe Nathan may be referring to this post of Hines:

        http://www.jimchines.com/2011/11/keeping-my-agent/

        I’m a fan of Hines’ books and if he’s fine with netting $50,000 in good years while keeping his day job, I see no reason to bother arguing with him. He’s happy with what he’s getting, and remarkably, he’s still putting out books at slave wages.

        But I’ve followed his numbers for a long time (5 years? Longer?), as long as he’s been discussing them, and it is patently obvious that the publishing system is screwing him out of hundreds of thousands of dollars every year.

        He honestly thinks that if he dropped everything traditional and switched to Indy that his books would only sell 1000 copies per year. He is, by his own admission, horrible at business, and expresses that numerous times when he brings up the business things his good agent does for him.

        I used to feel bad for him, knowing, simply on the business side, that here was a good author getting paid a fraction of what the market was “willing” to pay him to produce more. The agency and publisher is making huge profits (seriously – I see his books as frequently in the hands of middle school kids as I do Twilight and Hunger Games), which of course, in their twisted language is called “breaking even on the midlist.”

        But the fact is, he doesn’t want to hear this, and he has every right in the world to choose not to dig into his own business. It is clearly a side-job for him, and more power to him. Hopefully, that will keep him producing books for a long time, and money just isn’t that big of a motivator for him.

        I don’t know why he feels compelled to subsidize his agent and DAW so heavily, and is relying on a non-attorney to translate his contracts, but he’s made it clear over the past half-decade that he’s happy with that model as long as his readers are happy with what he writes.

        And they are. Just way happier than he will ever realized, based on the amount of money I can make an educated guess that he’s never going to see.

        Reply
        • From what I gather — limited outsider experience following authors — DAW seems to be one of the better publishers for keeping authors happy. Last I looked, it wasn’t totally absorbed into one of the big multi-media international conglomerates, and therefore doesn’t have to report a bazillion in profit to its corporate masters every month. It may be that — just as I apparently have the last good B&N store in the country — that DAW is a still a good publisher to work with. (They’re certainly one of the two that I’d be interested in, if I actually wrote something that wasn’t a twixt-and-tween genre-bender… *facepalm*)

          If a publisher is providing value, equal or greater to what one might get striking out on one’s own, then the tradpub option might look pretty decent.

          Reply
  9. Boy, if I ever had a delusion of signing with an agent, this blog post smack that idea with a 2×4 across the nose…

    The Agent was/is a middleman (or woman)and at one time was the best way of getting your novel published. So, if they skimed off the Writer’s profits, what was the Writer going to do? Could the Writer do anything?

    That’s changing. E-publishing bypasses both agent and publisher — a direct shot around the two points and a direct shot from Writer to Reader. The Agent is being left in the dust, thier model of business charred toast.

    That explains Writer’s Digest twitter account tweeting once or twice a day “Agent X of Y company is looking for writers!” or promoting webanars “How to attract an agent’s notice!” tought by an agent for $99! They beginning to get desperate.

    But they will be too many Writers who aren’t aware of the changes in the business, and it keep the Agents going a little longer. But agensts will need to change their way of business or go extinct. Their choice….

    As for me, back to my NaNoWriMo attempt and see if I can get past 50,000 words this time!

    Craig

    Reply
  10. Hi Kris,

    I happen to recall a case I read about in the news back in 2010 on an agency’s accounting troubles that resulted in a lawsuit filed in 2007 with the Manhattan Supreme Court.

    Here’s an old post from the New York Post written at the time the lawsuit was filed in 2007:
    http://www.nypost.com/p/news/regional/star_agent_scammed_us_writers_Op8Sne7NFI0UjIiP1UVLOI

    And here’s the article I read in 2010 that provided more in-depth coverage and an update about the case:
    http://www.thedailybeast.com/articles/2010/06/26/harriet-wasserman-literary-agent-scandal-and-ted-mooney.html

    Reply
  11. Hi Kris,

    Brittiany Koren from Written Dreams posted this on her FB page. She’s currently editing my novel. She had referred me to your site before. Wow. What an eye-opening article on agents. I’ve been rejected almost 200 hundred times by agents regarding my novel. I guess I’ll consider myself lucky with what’s been going on. It’s truly difficult to find a good agent to accept your work, and then to learn how many cut corners. Who suffers in the long run, eh? The writer. Your insight is great. I love your website too. I’m hopeful my book will land a shelf some day. Until then…take care and keep up the good work.

    Reply
  12. Yet another reason why I’m not even looking in the direction of “traditional” publishing. I’d much rather do the work myself, or hire someone on my terms, and know what’s happening with my money.

    Of course, we indies are trusting that Amazon, Smashwords, et al are being honest with us about sales and royalties, but I think we’re probably better off than trusting agents these days.

    It’s sad that Jim Hines is so against changing anything about his work relationships. But, if he’s happy, so be it.

    Reply
    • This is only partially germane to the discussion here, but if you’re not willing to name the agencies who are (probably still) screwing over authors, then this is anecdotal at best and just another ‘scare story’ aimed at telling young and excited authors what they already want to hear: go indie, ‘big publishing’ is broken.

      The truth is that there are hundreds of fantastic, honest agencies out there, JABberwocky (Jim Hines’ agency) among them. A few bad apples don’t ruin the whole bunch.

      There’s no way on this earth that I’d go indie unless I had a few hundred rejection letters. And in that case, should I really be going indie at all?

      Reply
      • Of course I’m not going to name them, Alan. Just like you’re not putting your full name here. I do love people who want me to put myself and this blog in legal jeopardy, but do not want to admit who they are.

        And it doesn’t bother you that you can’t audit the person you hired to handle your money? Oh, unless you already have a contract with your agent, and you have an audit clause in it.

        As I said in the blog, there are lots of good agents out there. Fewer good agencies, and getting fewer by the minute. Perhaps you should look at the agent blog I linked to in this article to see the pitfalls of signing with an agency these days.

        As for going indie, if you actually look at my blog and my career, you’ll see that I’ve been an editor, publisher, traditionally published writer, and indie writer. I still publish through traditional outlets, although I now use an IP attorney to handle the contracts. You’ll note that many bestsellers ditched their agents long ago, among them Dean Koontz and Stephen King.

        I’m just trying to inform people, and let them make their own choices. You have a choice now: You can get 100 rejections and then go indie, you can never go indie, or you can be traditionally published. You must, however, let whoever is publishing you know your real name…

        Reply
  13. Someone did indeed send me a link to this entry. I appreciate the concern for my career. As usual, I think Rusch has a lot of good experience and advice, and that these are important things to think about.

    Anyone who’s serious about their writing not only has to think about this stuff, but they have to revisit their choices as publishing evolves and their own personal career progresses.

    I try to be pretty open about why I’ve made the choices I’ve made, but I would never try to say my path is the right one for everyone. All I can say is that, based on my research, experience, and situation, it’s the right path for me at this time.

    Reply
    • Good comment, Jim, and great blog post (there’s a link in a comment above). Folks, this is what I’m talking about in all of these blogs. You must use the information to do the right thing for you. Only you can determine what that is. Only you know what you want from your career and what your circumstances are.

      Thanks for coming over, Jim.

      Reply
  14. so all agents are evil.

    all publishers are evil.

    that’s simple enough.

    let’s go self-publish!

    Reply
    • Wonder what list this blog got forwarded to. Look at all the commenters who are terrified to give me their real names and their real e-mail addresses. Annie, if indeed that’s your name, read the comment I just made to Alan, who made the same point as you, only using more words.

      Reply
  15. Kris, thanks for sharing your experiences. This blog is a huge asset to those of us still figuring out the path to publication which suits us best and I’ll be following your posts from now on.
    The comments about the way Jim Hines has decided to run his career have also been interesting. As Kris says, each writer chooses their own way forward.
    If there’s one sure thing, it’s that publishing – indie or traditional – is not a ‘one size fits all’ world!
    Now I’m better prepared to consider whether I want to pursue getting an agent, what I expect of them and the business relationship and the elements I’d like to put in place.
    Thanks again.
    Cate

    Reply
  16. Thanks for the blog. I don’t have an agent yet (haven’t sold any of my novels), but when I first read up on agents I thought, “Oh, okay. You have to ask for split payments when you sign with them–it needs to be written into the contract.” That seemed obvious. I am confused by why writers don’t ask for this. Is it because agents find it insulting and refuse to split payments?

    (Related point–we’ve all got wonderful friends who can’t manage their finances, right? Under what circumstances would you allow those friends to hold thousands of $ of your money in their bank accts? Think about it–and that’s a case where honesty and goodwill are not an issue.)

    Reply
  17. Kris — and anyone else who has the same trouble:
    Try getting Gail Gross of Royalty Review to look things over for you. She is a CPA whose primary focus is the auditing of royalty statements. I know she does a lot of work on the ones issued by publishers, exhuming errors and lost payments. I suspect that if anyone knows how to get the agency monies unearthed, she’s the one.

    She probably also knows which attorneys have the best track record in these instances.

    As one number-cruncher evaluating another’s skills, I can say that I admire her, as well as endorsing her as a very pleasant person.

    And the standard disclosure: I spoke to her regularly for a lot of years, but it has been several since we last crossed paths. My company was audited by her company once, if I recall correctly, but we’ve never had any other professional tie. And it was so NICE to finally have an auditor who actually knew what they were doing!

    Reply
    • Marion, thank you ever so much for this. I hope the folks reading this blog will take a look at your comment. Great!

      Reply

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