Business Musings: Fair, Compromise, Clout, and Balls (Contracts/Dealbreakers)
I’ve been ordering books to help me with this blog series on contracts and deal breakers. Some of the books cover topics I’m less familiar with, but some look like they might be useful to beginners. I want to be able to recommend books that cover things I don’t necessarily cover.
I didn’t expect to find, in the basic books, things I never even thought about.
I guess it makes sense. I’ve been dealing with contracts my entire adult life. I’ve received contracts and I’ve created contracts. I seem like a different person when I receive a contract than when I issue contracts—or so some of my students would say.
As a writer and editor, receiving contracts, I negotiate the hell out of them. As an editor and publisher, issuing contracts, I negotiate only so much and then I shrug, with a take it or leave it.
In truth, I’m the same person with the same goal both times.
I want to control whatever project I’m working on. I don’t negotiate for more money, but I do negotiate for more control. When I issue a contract, I do my best to foresee what rights I need to license to control the project itself, and then I go forward.
Right now, traditional publishers are just beginning to realize that they can (and often do) control everything about a work of art. This should frighten you traditionally published writers, because publishers are going to exploit your works as never before. We’ll deal with that a bit next week, in a blog on copyright and permissions.
Before we go any farther, however, let me give the standard caveats to those of you who are new here. First, I am not an attorney nor do I play one on TV. Nothing in this blog constitutes legal advice or should be mistaken for legal advice. This blog is informational only.
Before you comment, look at the introductory blog so you know where I’m coming from. This series of blogs has a particular slant from a set perspective, and you need to know that before you get all riled up. The information on perspective is in the front part of that post.
Remember, too, that I’m deliberately being as simple as I can. All of those exceptions that those of us who read legal stuff for fun know about aren’t going to apply here. So, lawyers, do comment below, but please realize that I know things aren’t absolute: I just can’t cover all the contingencies here.
Okay, then. Let’s continue.
Control. It is at the heart of any negotiation. All business owners want to control as much about their businesses as possible.
How does this relate to my reading this week? It wasn’t until I picked up Helen Sedwick’s Self-Publisher’s Legal Handbook that I realized I had left out the concept of control entirely. As far as I’m concerned, control governs everything, and is as natural as breathing. I had forgotten—if I ever really knew—that most people don’t understand this most basic of concepts.
We all know that you can’t control everything in life. That rule also applies to contracts. Some large entities do not allow negotiation on their contracts. This is particularly common in Terms of Service agreements (although I do know people who have managed to negotiate some of those as well).
Where do you get control in a TOS or a nonnegotiable agreement? In your own decision-making.
Here’s what you ask yourself:
- Do I need this particular service?
- Is there a way to do what I want without this service?
- If there is no alternative, can I live with the terms that the service provider has posted on their website?
- If I can’t live with those terms, then I have no choice. I do not hit agree on the Terms of Service. I do not sign my name to the contract. I walk away from the deal.
Remember, from last week’s blog, what the most basic elements of a contract are. There are three essential ones: offer, acceptance, and consideration.
The Terms of Service or contract acts as the offer. It is not valid until you accept it. However, sometimes acceptance is not done with a signature or a click of the mouse. Sometimes acceptance happens when you cash a check from the company or when you use the service.
In the olden days of websites and online service providers, you could use a service without hitting agree on the TOS. There was no guarantee you had even seen the TOS. That’s why now, most service providers make the TOS obnoxiously hard to avoid when you try to go into their website.
You have to realize that when things like that happen, someone litigated the free-standing TOS and a court found it wanting as an agreement.
The way websites and TOS operate is different from brick-and-mortar stores or services. You don’t have to sign a TOS before you enter your local grocery store. But I’m sure there are some implied agreements with that store. For example, they put prices on their food. You know without being told that you cannot remove the food from the premises without paying for it. An agreement—offer (food on display with a price), acceptance (paying for the food), consideration (they get money; you get food).
When I discussed this with Dean, he added a few other things to the grocery store analogy. He added that we, as consumers, have an expectation that the food is fresh and won’t poison us. The store has an expectation that our money is good (we won’t bounce a check, pay with forged dollars, or use someone else’s credit card). All of these implied agreements that we accept as normal, and live with from day to day.
The web is different from brick-and-mortar. Indie publishing is different from traditional publishing. But contracts and agreements remain the same. They are about control.
Which brings us to some of the topics listed in the blog’s title. Most of them I got from you folks, either in private emails or comments.
Here’s my theory: If one of you takes the time to comment on something or write me an email on a certain topic, I’m pretty sure that a lot of other people have the same question or comment.
So here goes:
Often, you’ll see a lot of discussion about fair terms or fairness among non-lawyers about certain deals or certain business behaviors.
Oh, I hate to say this, folks. But when it comes to the law, and when it comes to business, fair does not exist. The law concerns itself with what’s legal under statute. And business concerns itself with business.
Some businesspeople are very fair in their dealings with others. Other businesspeople are not.
Whenever you deal with contracts, you don’t negotiate the contract for the nice reasonable person sitting across from you. You negotiate the contract with the idea that the nice reasonable person will be fired and replaced with a demon from hell who will enforce every part of that contract to his own benefit.
The best contracts are compromises between the parties to the contract, as I mentioned last week. That means that these contracts are the good enough for all the parties, and not great for any of the parties.
The best contracts are fair to both sides—at the time the contract is negotiated. However, contracts that were negotiated in 1980 are still being interpreted today, and the world had definitely changed. What might have seemed “fair” then isn’t necessarily “fair” now.
Keep that in mind.
Marsha asked a corollary question in last week’s blog. She wrote:
With a standard TOS, say with CreateSpace, I assumed that there is little or no negotiating room, and because everyone does sign their TOS, the TOS must be fair to both parties. Am I wrong?
She asked a two-part question: Is there little or no negotiating room? And because everyone signs the TOS, is the TOS fair to both parties?
She’s right about the little or no negotiating room. I don’t know anyone who has successfully changed the CreateSpace TOS. If you have, please let us know below.
But she’s wrong about her second assumption. In fact, it’s a very dangerous assumption both in the CreateSpace TOS and in life in general.
…because everyone does sign their TOS, the TOS must be fair to both parties….
I’ve heard this assumption a lot and not just in the discussions on this website. The idea that everyone signed a document or has a mortgage or has worked with this particular company means that someone (who?) already negotiated the contract or the mortgage or the terms and came up with something fair.
Or that the company itself made sure its agreement was fair to everyone involved.
Go back to the opening of this blog. Contracts are about control. They also define the relationship. If you have a hard-and-fast contract that no one can negotiate, well, by definition, that’s unfair. You have all the control and the people using your service or buying your product have no control.
If you have total control over what’s in a contract, and the other party has none, you have no reason to be fair to that party. Some businesses are, and some aren’t.
But as a consumer—in general—you should assume that no company looks out for your well-being unless that company’s existence is governed by certain laws (consumer regulations, etc.). Some companies comply with those laws and regulations, and some do not. When we get to agents, we’ll talk about how they rarely comply with agency law.
Just because a law exists governing behavior doesn’t mean a person or a company follows that law. It might mean that there is nothing about the company to complain about. It might also mean that they are violating the law left and right and no one has brought any legal action against them.
You don’t know.
As a writer, you run a small business. I don’t care if you’re a traditionally published writer, a hybrid writer, or an indie writer. You run a business and so the rules of business apply.
One of those rules is this: Protect your own interests. Do not expect someone else to do it for you—be that person an agent, a lawyer, a company, a business partner, or a co-writer. Believe promises once they’re in writing. Otherwise, remember that a verbal promise is worth the paper it’s written on. (And for those metaphorically challenged, that means the promise is worth nothing unless it is in the form of a contract.)
If you have trouble with this concept, go back to your childhood. I’m sure at one point or another, someone said to you, “Just because all the kids are doing it doesn’t mean you should do it.” That’s one of those lessons learned on the playground that apply to adulthood as well.
One of my great disappointments when I became an adult was the realization that you don’t get an extra double-helping of wisdom when you turn 30 (or 40 or 50). You just gain some experience. Some people learn from that experience; most do not.
Be one of the people who learn from their experiences. Or better yet, be someone who believes the best in people, but plans for the worst out of them. When it comes to business, the law, and contracts, it’s always better to expect the worst and be happily surprised when the best occurs instead.
Every time I talk about contracts, either in person or on this blog, someone says that they can’t negotiate a contract because they lack clout. And every single time I hear that, I sigh and think (but do not say) that the speaker is one of those people who will get screwed throughout their entire life.
You don’t need clout to negotiate a contract. You just need…
And by “balls,” I do not mean you have to be male. I mean you need to be willing to step up to the plate. When I look up the slang term “balls,” most websites use “courage” or “bravery” as synonyms. And yeah, those are good words, but “balls”—at least in American English slang—means more than that.
It means a willingness to put yourself out there in a way that the average person would not.
So…you don’t have clout to negotiate a contract. You’re not James Patterson or Nora Roberts. You aren’t already a multimillionaire. You aren’t a successful businessperson. So, most people think you should slink into the background and wait for the success pixie to sprinkle you with magic dust. Once that occurs, then and only then can you negotiate a contract.
Seriously? Please excuse me while I sigh and shake my head.
How do you think people become successful? They become successful by controlling their own interests and standing up for themselves. They become successful by learning their business. They become successful by taking risks.
One of the major risks you take in any business is that you will hear the word “no.” A lot.
What’s the worst thing that could happen in a negotiation when you ask for something you want (but may fear you don’t deserve yet)? Well, the person on the other side could say “no.”
But that person could say yes. Or they could say, I can’t do what you ask, but I can do something else that might benefit us both.
You don’t know until you ask.
And here’s the thing, people. Anyone who knows contracts, who knows business, expects you to ask. So ask.
What’s important to you might not be important to them at all, and so a yes on your most important thing might be easy to them.
It’s not all up to them, by the way. Because it’s a negotiation, which is a dialogue.
You might say, I want X.
And they might respond, I can’t do X. Sorry, no.
Then you might say, I see you want Q. But I can’t do Q if I don’t receive X.
If Q is important to them, they might cave on X. And so on.
You don’t know if you don’t try.
And here’s the thing—even if your try fails, you’ve practiced negotiating. That’s a win.
I’ve been talking about negotiation here as if you know how to do it. I know most of you are terrified of negotiating. That’s why I wrote a short book about negotiating. You can either get it as a standalone (How to Negotiate Anything) or as part of my Freelancer’s Survival Guide. It’s also free on this website.
Last week, I realized I had left something really important out of the negotiation book because it was so basic to me, I didn’t think to include it. In the comments, Antarespress reminded me that in any negotiation, principals negotiate with principals. Well, duh! And I left it out.
What that means, in plain English, is that the people making the deal—the people who can sign off on the deal—negotiate with each other.
This is a really, really important concept. It ties in with something else that a number of you wrote to me about.
I mentioned that in some states, oral contracts are binding. Oral agreements, by the way, are verbal agreements.
The legality of oral contracts varies from state to state. Some states, for example, will accept oral contracts for small things (under $10,000 for example or maybe an agreement to mow the lawn), but not for large things.
Some states have different laws as to what’s covered under oral agreements and what is not. It’s up to you to know what’s legal in your state and in the state where the other person is.
Better yet, never ever ever ever make any agreements over the phone. I do all of my negotiating on paper or online, and refuse to take phone calls ever from anyone I’m negotiating with.
Why? Because the other party could claim that the 30 minute conversation we had on April 12, 2015 was about a contract negotiation when it really was a review of a copy edit. What? some of you say. They would lie?
Yes, they would lie. Not everyone will, but some people do as a matter of course.
This principals-negotiating-with-principals thing comes into play in any phone conversation where you and the other party are able to make an agreement.
Indie writers, who came into the publishing business cold, might have an easier time with this concept. But any writer who started in traditional publishing has a lot of difficulty with it.
Because in traditional publishing, representatives negotiate with representatives, and the principals do not talk to each other.
What do I mean? I mean that agents negotiate with editors. Agents theoretically represent the writer and editors represent the publishing company.
Even then, the negotiation is uneven. In theory, the agent has no power to make or sign an agreement. In reality, the agent shouldn’t even be negotiating a legal document. Savvy writers use attorneys to negotiate a contract. We’ll get to all of this down the road.
Here’s the upshot: the writer’s representative should not be able to sign the documentation to make the deal. The writer’s representative is not (or was not) a principal. (Many agents are in the process of subverting this these days, which gives me the willies.)
Editors also cannot sign an agreement, and have only limited power to act within certain parameters, as the company’s representative. The editor has an offer and some wiggle room, but must get approval for almost everything.
Writers who drop their agents or handle things with their lawyers in the background often forget that the editor can be a representative. Suddenly, the writer is taking terms on the phone with an editor, and it might be a binding negotiation, not a casual discussion.
Be very, very careful when dealing with someone else. Again, don’t do it on the phone. Always in writing.
Use a representative when you’re not certain you’ll be making a final deal or you need someone to be tougher than you can be. Let the representative put distance between you and that nice person you like a lot on the other side of the table.
Understanding the Limitations
As I mentioned above, each party to a contract wants certain things out of that relationship. Some of those things will be deal breakers. Without those things in place, the party will not make the deal, because there’s no point in doing so.
When I act as a publisher or an editor, I try to be as fair as I can. I’ll pay what the company can afford to license the rights we will need now and in the foreseeable future. Every clause in my contract has a purpose. Some of that purpose is to get the license, and some of that purpose is to protect me and my business.
When I act as a writer, I try to be as fair as I can. I will license as little as possible, but that license will enable the project to go forward. I will negotiate away any rights grabs. I will also ask for some kind of term limit, because I might want to use those rights in the future. I would like to be paid a good price for the license. Whether that price is a flat fee or a fee with a royalty structure will depend entirely on the project.
I know, because I’ve been in this business a long time, what a publisher needs in a license and what that publisher is just trying to grab because they can. I do not let a publisher grab everything. If that’s a deal breaker for the publisher, then it’s also a deal breaker for me. I don’t want to work with someone who wants to own my intellectual property outright. I really don’t want to work with someone who wants to own my intellectual property and who tries to gain that property through subterfuge, as many new traditional publishing contracts do.
Learning what is and isn’t acceptable takes time. It’s not something you can pick up in an afternoon.
That’s why I recommend you hire an attorney to explain the contract to you. Those of you who have agents and ask the agent to explain the contract to you are being foolish. You’re asking an English major to pilot a 747 with no training whatsoever. Your English major agent knows maybe a bit more than you do about contracts, but not much more.
However, just because you’ve hired a lawyer to explain the contract to you and the lawyer does that, doesn’t mean you know how to negotiate that contract.
For example, I’ve had writers (who hired lawyers) negotiate worse contracts because of a lawyer’s advice. Not that the lawyer gave bad advice, but because the writer didn’t know what the advice meant.
The Whole Document
A contract is not a series of disconnected lines. It’s a complete item, one thing, in and of itself.
Let me use a metaphor.
A contract is not composed of separate pieces of thread lying next to each other on a board. You cannot remove one thread and have the others remain intact.
Instead, a contract is a delicately woven shirt. You can take a thread from that shirt, but if you tug on the thread, the entire shirt might come apart, or the sleeve might fall off.
A line on page 3 of a contract might have an important corollary on page 2 of the contract. Remove the line on page 3, and that line on page 2 might mean something else entirely.
When a lawyer explains a contract to you and says that Clauses A, C, and F are not in your best interest and should be excised, ask the lawyer what you should do if the other party lets you delete Clauses A and F, but not clause C.
The lawyer might want you to add wording or bring the contract back to them or tell you to keep Clause A in the contract in that instance.
Because it’s all interwoven.
I had one writer try to remove the clause that warrants they did not plagiarize the story. Did I think the writer had plagiarized the story? No. I knew what the lawyer objected to. The lawyer wanted the entire warranty clause removed from the contract, or to have a clause added that would make my company liable in the same way as the writer was. We might have discussed that.
But the writer heard that the plagiarism clause had to be removed and took it as a deal breaker—which it was for us. Because any time a writer refused to warrant that they did not plagiarize a document, well, then I have to assume they did. As a publisher, we couldn’t publish a story with no legal protections for our company in place.
Changes in language, yes. Deleting the entire clause, no. Had the writer consulted with the lawyer about the negotiation, rather than about what the contract meant, then we might have been able to come to terms.
But in that instance, we couldn’t. Because the writer did not understand compromise.
In recent years, “compromise” has become a dirty word, particularly in America. Our politicians refuse to compromise with each other, entire groups demand everything be their way or else, and everyone screams at everyone else.
But compromise is the essence of human relationships. No one gets everything they want—or at least, no one should.
That’s particularly true in negotiation. The best negotiations are the ones in which both sides end up vaguely unsatisfied—yet with the knowledge that they got the best deal they could under the circumstances.
I began this piece by talking about Terms of Service which often don’t allow for compromise, at least from the average user. But the large user—the big corporation at the other end of the table, or the client who spends a large sum of money on the product or service—might be able to negotiate a much better deal than the small user.
Some day, you as a writer or a business might become a large user with clout. Prepare for that day. Learn what’s possible.
In traditional publishing contracts, what’s possible is more than most writers ever get. Because most writers never ask. Their agents don’t ask either.
When contracts are weighted to one side, often that weight comes because the other side didn’t negotiate or didn’t negotiate effectively.
The upcoming contract and deal breaker blogs will all come from the perspective that you can ask for what you want. You might lose more than you win. Or you might compromise.
But you will stand up for yourself. You will understand the position of the person on the other side of the table, and you will make the best possible deal for your situation.
Or you might walk away.
Over and over in these posts, I will tell you to stand up for yourself. I will tell you to be strong. I will tell you to have courage. I will tell you to take risks.
You’re in business now—whether it’s traditional publishing, indie publishing or hybrid publishing. To be successful, you need to control your own destiny as much as possible.
Contracts define your relationships. Contracts define who controls what in the relationship.
Start thinking about control and compromise, about risk and reward. About standing strong.
Because you have to do all of those things as a businessperson.
And that, my friends, is non-negotiable.
When I started The Freelancer’s Survival Guide, I soon realized that the interaction with all of you made the guide stronger. That’s already happening with these contract posts.
Please keep the questions coming. And the comments. And the clarifications. They help all of us.
As I mentioned before, writing about contracts and the current state of the publishing industry—particularly the traditional publishing industry—with respect to most writers depresses the hell out of me. Writers are taking deals that they shouldn’t take, and signing contracts they don’t understand.
If I can help you understand what you’re signing, then we all benefit.
So, if you’re getting something out of this blog or this series, please consider supporting it. You can support it with a cash donation or by forwarding it to writers.
Thanks so much.
Click paypal.me/kristinekathrynrusch to go to PayPal.
“Business Musings: Fair, Compromise, Clout, and Balls,” copyright © 2016 by Kristine Kathryn Rusch. Image at the top of the blog copyright © 2016 by Canstock Photo/iquoncept.