From Issue 6, September 2002:

All you need to know about agreements with agents but were afraid to ask

Most professional writers have agents but not all necessarily either value or fully understand the role agents perform.  It may be as difficult to be a good writer as a good agent but in reality there are relatively few agents who understand the business and can combine all the requisite aspects of the role.  This article seeks to provide a checklist of the sorts of issues writers consider when signing up with an agent and the nature of the legal relationship of an agreement with an agent.

1. Making an agreement

It is important that any agreement with an agent is set down in a formal agreement. Actors’ agents (and some writers’ agents) often operate without a written agreement. While oral agreements are binding, it is in both in the writer’s and agent’s interest to have a written agreement which deals with all the important issues that may arise during their relationship.  Without this, both sides are vulnerable to misunderstandings and, as a result, acrimony.

2. Choice of agent

The relationship of writer and agent is very personal. There needs to be some sort of ‘connection’ for it to work for the writer so the agent needs to be able to appreciate the writer’s strengths and weaknesses in order to advise on which jobs to accept or reject. Ideally the individual agent you choose should be named in the agency agreement you sign and you should not be moved from that individual without your consent. That being said, the first agents to approach should be reputable agents who know the business. The general professionalism of an agency is normally dictated by the leading agents within it and so joining a leading firm, even if you are not with one of the more experienced agents is worth considering.

3. An agent’s legal standing

An agent acting within his/her ostensible authority (i.e. acting in a manner you would expect them to be entitled to) can bind the client.  Though an agent by signing an agreement will not be able to waive the writer’s moral rights or actually assign the writer’s copyright, the agent can contractually bind the writer which can be interpreted as a licence of copyright in the writer’s work.  This is an additional reason for only using reputable and professional agents and making it clear from the outset with the agent whether or not the agent is entitled to sign an agreement on your behalf.  I would strongly recommend that the agent should not be entitled so to do and his/her remit is therefore to negotiate a deal for you. By signing the agreement you will have the opportunity to check that you are happy with it and this prevents any argument between writer and agent as to whether the agent should have gone ahead and concluded a particular agreement.  From a producer’s point of view, no producer should accept a writer’s agreement signed by an agent as it is ineffective to transfer the necessary rights.

4. An agent’s duties

By virtue of there being an agency agreement there are a number of legal duties imposed upon the agent.  The agent is responsible to the client for any loss if he/she did not use the proper skill and diligence and has a duty to keep accounts and to show the client on demand all documents and transactions relating to the client.  In legal terms the agent has a fiduciary duty towards the client which means that because of the high degree of reliance of the client on the agent, the client can expect a higher degree of care than under a mere contract.  The client can also sue the agent for any profits he/she makes due to the use of confidential information.  Agents have a first duty to the client so that where there is a conflict of interest, they are obliged to give full disclosure to the client and seek the client’s approval to their proposed course of action.

5. The agent’s authority

The agreement needs to specify what areas of activity for which the agent represents a client. Often agreements cover all activities within the entertainment industry so that this would cover acting or directing as well as writing and it is crucial to be clear as to whether the agent acts on an exclusive or a non-exclusive basis and for which territories.  Agents will only really want to act on an exclusive basis for good practical reasons but where a writer is receiving jobs from America, the writer may have a US agent who needs to liaise with the UK agent and ensure that there are no overlaps or double bookings.

6. Term and termination

You need to be absolutely clear how long the agency agreement continues.  From the writer’s point of view it is particularly important where there is an exclusive agency arrangement as if you are ‘stuck’ with an agent where the relationship is not working and you are not getting the work you need or want then you need the option to find a more suitable agent.  I would recommend for writers that there is always the ability to give notice to terminate of anything between one month and three months.  Be wary of minimum periods of say three years because in reality there are few obligations on agents to find work for clients.

7. Payment of commission

First you need to agree the agent’s commission; this is generally in the region of 10%-15% though I have seen higher.  Higher rates should be specifically justified.  You need to understand what expenses the agency is prepared to bear as part of the commission and what expenses it will expect you to bear.  For instance, professional costs e.g. accountant’s costs are occasionally treated as an expense deducted from a writer’s income and any expenses, if not set out in detail, should be pre-approved.  These mostly relate to printing and posting of scripts.  Commission will usually be paid on all the writer’s income whether the deals are negotiated by the agent or not.  This should not be an issue as there should be an obligation on the writer to pass any enquiries for work through to the agent.  If the writer starts negotiating deals on his own this will undermine the relationship.

Do remember that VAT will be charged on commission so if you are not VAT registered this is an unrecoverable cost.  You need also to be clear as to which earnings have commission charged.  For instance, if you are introduced to a producer of a soap and then get regular work for the next ten years some agent agreements will provide that the introduction was sufficient to entitle the agent to take commission on that income.  More justifiable is where there is a deal negotiated for future series or future episodes; the agency agreement should be clear as to whether full commission is payable on that income. You need to avoid the situation where you move agent and end up paying double commission on income. A new agent may either be prepared to take a reduced commission on such income or negotiate shared commission with the previous agent.

8. Client money

It is highly preferable that clients’ money is paid into a separate trust account.  There is no specific legal requirement for this but it should be specified in the agency agreement.  The agency should then be entitled to take its commission from the client account so that the clients’ money is never mixed with the agency monies.  Amongst theatrical agents there have been notable bankruptcies where agents have dipped into client money causing very substantial losses to clients.  This is another reason for working with a professional and reputable agent.  The agency agreement should specify how soon after receipt monies are passed on to the client as well as the specific rights of the client to inspect accounts and receive statements from the agent.

9. Legal regulation

The main legal regulation for writers’ agents is the Employment Agencies Act 1973 which provides that monies must be paid to the client within 10 days of receipt, or if so requested, are paid into a separate client account. The law is going to change in the next year. At present the details are under discussion but they are likely to include stricter rules for the setting up of client accounts and payment of client money with two business days.

Whenever entering into an agency agreement, even if you are told it is in standard form, writers should obtain separate legal advice.  This is actually in the interests of both the agent and the writer.  Not only should the lawyer identify any problematic areas but also, from the agent’s point of view, where there is an exclusive relationship and any significant minimum period of the agency agreement, then there can be an issue of restraint of trade which might entitle a writer to argue that the agreement is invalid.

If all this seems like mere common sense that’s fine.  The aim of this article is to help writers assess the arrangements with their agents and whether they are satisfactory.  If there is a concern it is much better raised at an early date so it can be discussed and resolved.  The only people who generally benefit from litigation are lawyers!

There are two organisations that ‘represent’ agents and it is advisable to be represented by an agency that belongs to one or the other. They are AAA (Association of Authors’ Agents) and the PMA.  In addition, writers can obtain support, including legal, from their membership of the Writers’ Guild or the Society of Authors.

© Sean Egan 2002

Sean Egan is Head of the Arts & Media Department at Bates, Wells & Braithwaite, Solicitors.