Kay: When Agencies Go Rogue

By now, probably many of you have heard the news about Donadio & Olson, the New York–based literary agency, whose bookkeeper stole $3.4 million (or more) from the agency’s clients, its writers. One of these writers is Chuck Palahniuk, who has written 24 books so far, including Fight Club, which was turned into a film. None of the royalties, advance monies, or film-option payments were turned over to him, leaving him “almost broke,” he says in an incredible and heartbreaking blog post.

I briefly had an agent at one time, and I never had to get into trust issues with her, because she never sold the book she’d taken on for me. But I’d wondered about the language in the standard contract she sent—how your royalties or advances go from the publisher to the agent, who takes her cut and then sends the rest to the writer, supposedly in 10 days or two weeks or so. You really have to trust the agent, I thought, but because this woman was a friend of a friend, and because she’d signed on with all the usual agents organizations, I did trust her.

And so did Chuck Palahniuk, and all the other writers at D&O, trust their agents.

Kristine Kathryn Rusch has written three posts that I’ve caught (herehere, and here) that discuss how she thinks this kind of theft is more common than you’d think. But authors don’t monitor their agency accounts because monitoring is complicated—and they trust their agents.

Rusch’s posts about agent chicanery are sobering. I don’t think I’m mischaracterizing her views if I say that she feels that even if writers want to go with traditional publishers, which she doesn’t advise, they don’t need agents—that writers are better off with a good literary attorney. And from my personal experience, as an unagented writer, when I was offered a contract from a small publisher and read one clause I knew I didn’t like, I sent the contract to a literary attorney. She found something to worry about in every clause. I offered revisions to the contract, which the publisher declined, so I passed on the contract. And felt mightily relieved that I’d called that lawyer.

There’s been a fair amount written about the current situation at D&O, given the amount of money stolen, the stature of the agency, and the fame of the clients. For a more legal discussion (and more links), you can check out the post on The Passive Voice, which parses the phrasing of the press release about the investigation and raises the question of whether the agency principals were victims or somehow involved in the theft. But the money for all the writers is probably gone forever. And even if the agency principals are unwitting victims, the reputation of the agency is probably trashed. Who’d trust them now?

It’s particularly unnerving because so much of the business world depends on trust. Even an indie career depends on relationships with other professionals that you expect to do their job properly. And you don’t have to look very far to find examples of rip-offs in indie publishing, too.

So—does anybody out there have an agent? What do you think?




10 thoughts on “Kay: When Agencies Go Rogue

  1. It’s amazing to me that this fraud seemingly went undetected for so long. I was also surprised to read Passive Guy’s comments about the lack of regulation literary agencies are subject to, despite their fiduciary role in handling their clients’ funds. PG has posted a short list of suggested changes to the current status quo, and as far as I can tell they seem very sensible. Here’s hoping that some proactive rulemaker is a subscriber to The Passive Voice blog!

    • Exactly! The thief at D&O had been ripping authors off since 2009, I believe. Well, $3.4 million isn’t chicken feed. It takes a while to rake that in.

      You’d think that agencies would be required to have an audit every year, right? Maybe now, as you say, Steps Will Be Taken.

  2. I don’t have an agent, and don’t plan to, and this story was the first time I’ve felt unreservedly glad about that.

    As you say, there are many trust relationships in India publishing, but the opportunities for loss are much smaller.

    • I’m not sure about the losses in indie pub being smaller, but the frauds are committed differently. Some of the writing loops have been discussing issues at the various platforms due to scammers, which the affected authors say have resulted in the loss of millions of dollars of income. It seems that all one can do is stay vigilant and take action whenever and however possible.

      I’m feeling a bit like this is my Doomsday post for the month!

  3. I’ve written nonfiction under another name, and the publisher issued two checks: one for my agent, one for me. So I’m just confused why any publisher would pay an agency and task them to pass on the money. It seems to me that there would be a good case for holding the publisher liable as well for that kind of shoddy setup. But then I haven’t sold in the fiction market, so maybe it’s different there? (Still seems crazy to me.)

    • It seems totally crazy to me, too. I believe (certainly not an expert here) that the setup that you have with your agent and publisher is available for fiction authors, too. I think that’s a newer development, relatively speaking. Maybe the D&O agency was more old-fashioned and the writers didn’t think they had anything to worry about. Certainly it makes more sense to have the publisher split off the agent’s commission and send the checks directly to each party. Very wise on your part to have that arrangement!

  4. That is a very good point about having a literary attorney. That may be the way forward. Plus, it probably would be a good idea to have a literary accountant.

    I get the feeling that there’s a lot of sloppiness in the arts; artists want to concentrate on doing what they do best: writing, painting, making music, etc. They are desperate to have someone handle all the things they aren’t so good at — marketing, accounting, etc. — that they may not keep an eye on things until they’ve found out they are bankrupt. (Yes, I’m thinking a little bit about David Bowie here, and his experiences with MainMan/Tony DeFries. https://en.wikipedia.org/wiki/Tony_Defries After that, Bowie got a lot more hands-on about the logistics and specifics, it seems.)

    • I think that’s true, Michaeline—it’s hard to do everything well, and negotiating a contract might be the hardest of all. Also, agents have closer relationships with more editors than most authors ever will, so the role of an agent makes sense to me. But it never makes sense to let someone else control your money.

  5. This kind of reminds me of the scandals years ago in sports and the arts when players would get to retirement and a number of them found that their agents or financial advisors had absconded with itheir money.

    A definite reminder that, just because someone is working with you or on your behalf, doesn’t mean they should be blindly trusted/believed.

    • Yes, I remember some of that, too. Willie Nelson is a good example—his long-time manager had ripped him off for, I think, 40 years. And Nelson had no idea until the IRS went after him for nonpayment of taxes. He had to sell his lifetime of memorabilia to pay the bill. On the upside, he seems to enjoy performing.😀

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