Terminating an Agency Agreement

A question I get asked relatively often is when, whether, and how to terminate an agency relationship. There’s obviously no “one size fits all” answer, especially in relation to the “when” and “whether” questions. There are lots of reasons clients might consider leaving an agency. It could be that the agent isn’t the best fit for the client’s more recent work, or that the client is moving into a new genre/market that the agent doesn’t handle, or a particular agent is leaving and the agency doesn’t have another agent who can take over the client’s projects. (Often when agents leave for another agency, they offer to take existing clients with them, but that’s not always the case.)

Whatever the reason, there are legal issues attached to terminating the relationship and they are generally governed by the agency agreement. Most often, this agreement will be in writing and will explain how to terminate the relationship and what rights and obligations survive its termination. Some agency contracts are simply verbal understandings or handshake agreements, and, in those cases, the mechanics for termination can be more challenging. It will usually depend on what has been agreed previously between the client and agent and, in the absence of information about what was intended, a court (if it ever got that far) would usually look at customs in the industry to figure out what rights and obligations the parties owe each other.

In this column I’m going to focus on the more typical situation where there is a written agency agreement in place. I’ll highlight the kinds of clauses that may come up in those contracts relating to termination.

How to Terminate the Agreement

The mechanics of terminating an agency agreement—the actual “how to” part—usually requires notice from the client to the agent and often includes a certain notice period (like 2 weeks, 30 days, 60 days or maybe longer). Agency contracts usually also allow for the agency to terminate the agreement with similar notice to the client.

The reason for the notice period is basically to give the agent time to close out the client’s work—remove work currently on submission, remove the client from the agency website and other digital media, etc. If nothing is on submission and there’s nothing else outstanding relating to the client’s work, the agency may well be prepared to waive some or all of the notice period. The contract then formally terminates at the end of the notice period or whatever other agreed time period is completed. (The end date is often called the “Termination” date in the contract).

What Happens to Client Work After Termination

Agency contracts often include a clause to the effect that if the client sells any projects the agency worked on within a certain period after termination (probably some number of months), the agency is entitled to its regular commission. The idea here is to compensate the agency for work it has done on the project during the term of the agreement. The client can always wait the additional [x] months before submitting the work again, either unagented or with a new agent, to avoid having to deal with passing commission back to the original agency.

Some agency contracts will say that the client is NEVER allowed to submit work the agency has worked on independently of the agency. That kind of language should be a red flag to anyone on signing the contract initially. Such clauses may not be enforceable for a variety of reasons, but it’s just as well to be aware of them upfront.

How Soon Can You Look for a New Agent?

Theoretically, you should not formally seek new representation until the actual termination date of the original agreement. That’s the date after the notice period ends under the contract. Some authors will put out informal feelers to new agents after giving notice, but you generally should not formally submit work to new agents until the termination date. The new agent is likely to ask for the status of your relationship with the prior agency, which is another reason why it’s just as well to wait until the original contract formally terminates before seeking new representation.

What Rights Can the New Agent Handle?

The new agent can obviously handle any new projects. However, with projects that the prior agency has worked on, you need to look at relevant clauses of that agency agreement. Some common clauses that appear in agency contracts include the following.

1/ The original agency will typically keep taking commission on all deals it brokered for you; that’s standard agency practice and found in most agency contracts.

2/ The original agency will often retain the right to deal with any subrights (e.g. audiobooks, foreign/translation, film/TV, merchandising etc) related to deals it originally brokered. So even if you have retained some of those rights under the original publishing contract, it’s possible—even likely—that your original agency is the agency empowered to negotiate deals with respect to those subrights.

3/ The original agency may try to retain the right to deal with any option books under deals it brokered for you. This is a less usual clause and may be unenforceable in some circumstances, but if your contract says that the prior agency retains rights to deal in option books, be aware of that upfront because it may lead to arguments down the line.

4/ The original agency may try to retain the right to deal with works it has sold for you even after rights have reverted to you (e.g. if the book goes out of print/publication and you get the rights back). This is less usual and less standard but it does happen. Be aware of this possibility because it can lead to arguments down the line if you want to revise and submit a new version of an older piece that has gone out of print.

IMPORTANTLY, do not rely on the above notes for your own situation. You must always read your own contract and try your best to understand it, even if you need to seek outside help. Your situation will be governed by your own agency agreement, regardless of industry norms, and the contract terms can vary widely between agencies. This is why it is so important to consider the termination terms carefully when you first sign an agency contract.

As a matter of contract law, any agreement can be renegotiated and some agents will be happy to be flexible: they may, for example, agree for your new agent to handle subrights on deals they brokered and then share the commission between the two agencies. Negotiation is always at least theoretically possible, but it depends on the situation and the agents and authors involved.

Authors leave agents all the time and there are usually ways to handle what at first appear to be difficult situations. The best advice is always to make sure you read and understand the “termination of the agency agreement” provisions when you first sign the contract.

And of course my usual disclaimer applies: nothing in this column is intended as formal legal advice, but hopefully it is helpful by way of background information.

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