It wasn't too long ago that all agents used a simple handshake agreement with authors rather than the signed contract. After all, it was a "gentleman's business." At BookEnds, most of my clients have a written agreement; there are a few, however, usually those who come to us for what is expected to be one book only, who operate with a handshake agreement. These authors still have an agency clause in their publisher's contract, and until I hear otherwise it is assumed that we are working together on future projects. No matter what type of agreement I have with an author (written or handshake), I treat all my clients equally, contacting them with ideas I might have, or with information from a publisher, arguing contract points, and keeping an eye on royalty statements to ensure everyone is getting a fair deal. In fact, many of these handshake agreements have evolved greatly over time, with authors going on to write a number of different books (one author, I believe, has 11 to her name, and another close to 20).
While some agents still use the handshake agreement, I suspect there are two reasons that more and more are making signed contracts a mandatory part of business. The first is the growth of agents and agencies. With more agencies starting up every day, there's more competition and therefore a greater need (from an agent's perspective) for a written agreement.
The second is one that I can personally vouch for, since it happened to me just last week, when this handshake agreement came back to bite me in the ass (excuse the language, but I'm still burned up about it). Through an author's newsletter I found out that she had signed a second agreement with the same publisher I had sold her to, effectively cutting me out of the deal (and by the way, she didn't use another agent).
There are so many reasons I'm upset about this. One is obvious, the loss of potential income, but the others aren't as clear to an outsider and, frankly, probably upset me far more than the loss of income. After all, 15 percent isn't really that much given what authors get paid these days.
The first (although not the most upsetting) is that I'm not sure the author realizes that there's an obvious reason the publisher contacted her directly rather than going to me (okay, it is possible they didn't do any research and “forgot” I was the agent), but in my mind the reason is that they can get a bargain. I know what publishers are paying and have paid for certain types of projects, which makes negotiating the advance and royalties easier for me and tougher for the publisher. I also know all about those little extras in a contract that aren't fair to the author (and aren't that little). I wonder how she negotiated those? And don't even tell me she used the first contract I represented as a boilerplate. While I know it's perfectly legal, it certainly doesn't ring as ethical.
The second and most upsetting issue is really this author's dishonesty. When I approached her about the situation, her reaction made me realize that she really hoped she could do this without my finding out and save herself the 15 percent commission. Sigh. You know, I don't want to work with someone who doesn't want to work with me. Owning my own business gives me the freedom to work on projects I love with people I like, but I just do not get the whole concept of sneaking around. If she had told me, up front, that she no longer wished to work together and, possibly, even mentioned this deal, I'm sure I would have let her go. My job isn't to make someone else's life difficult, it's to make it easier.
There is some recourse to this—not much, but some. Obviously I won't be working with this author anymore and am currently in search of another writer with her expertise. There are other, similar projects headed my way all the time, and I like to have someone on board who can handle them.
My last thought on this matter concerns something I read recently about selling your home. It said that people who decide to sell their own home rather than go through a realtor usually undercut themselves 15 percent (when a realtor would only cost them 5–6 percent). It makes me wonder how much more an author pays when negotiating her own deal.