The AALA Makes Significant Updates to Its Canon of Ethics

For the second time in four years, the Association of American Literary Agents (AALA) has updated its Canon of Ethics.

The last time, in 2022, the major changes related to packaging and producer fees for clients’ TV and film deals (with members prohibited from participating), and to the growing practice of agents doubling as paid editors. Where the old Canon included a blanket prohibition on paid editing, the update created guidelines designed to allow the practice but head off the more common abuses. Member agents were prohibited from making editing a condition of representation, and required to offer paid editing services only to writers who approached them for that specific purpose (i.e., no bait-and-switch conversion of prospective represntation clients to editing clients). And if they subsequently offered the editing client representation, they had to reimburse all editing fees.

The current update is more sweeping. Most of the revisions are focused on the rapidly-growing trend of agents offering paid services other than editing to clients and non-clients, and are intended to establish guardrails to prevent these new practices from being abused, while not constraining member agents’ ability to run their businesses and make a living.

They aren’t totally successful, in my view. And beyond the Canon itself, I think the issues the revisions address pose some troubling questions for the agent profession as a whole.

The revised Canon, which takes effect September 1, is here. The AALA’s explanation of the changes is here.

What Has Changed?

Much of the old language remains, such as the prohibition on reading fees and the guidelines on payment and accounting. But some clauses have been overhauled, new clauses have been added, and the Canon as a whole has been re-organized and re-formatted to be more streamlined and easier to read.

Clause 2: Fiduciary. This new clause includes most of the language that appeared in Clause 5 of the old Canon (prohibiting agents from representing both buyer and seller in the same transaction, prohibiting agents from participating in packging fees for film/TV deals or accepting producer fees without the client’s consent) but also adds a helpful paragraph defining the role of a fiduciary.

Clause 6: Payments from Third Parties; Referral Fees. The old Canon prohibited members from “solicit[ing] or accept[ing] any payment or other thing of value in connection with their referral of any author to any third party for any purpose.”

The new Canon both expands this–making clear that agents can make third party referrals (which many are already doing), though they must do so “with the client’s best interests in mind”–and softens it. Secret profits are still prohibited, but while members are forbidden to seek or solicit payments or items of value in return for the referral, referrals to third parties that are “known to pay referral fees or other things of value to those who refer to them” are okay, as long as the agent discloses to the client what they’ve received and the client is “agreeable to such an arrangement.”

For me, the acceptance of something of value in return for a referral is always a conflict of interest, whether or not the agent solicited the thing of value or admitted they received it. Requiring disclosure doesn’t necessarily mitigate that, unless the agent also has to disclose how often they refer to the third party in question (i.e., are the referrals a pattern, in which case the agent may be pursuing their own benefit rather than the client’s).

Clause 8: No Reading Fees. Members are still prohibited from charging reading fees. The section allowing members to receive payment for teaching classes or from writers’ conferences has been expanded to emphasize that such compensation can’t come directly from creators.

Clause 9: Paid-For Editorial Services. This section has been shortened and simplified, with a major component under the old Canon–the prohibition on converting writers who query for representation into clients of paid services–moved to Clause 11. Members still can’t charge clients for editorial services, but if a non-client who buys editing is later offered reperesentation, “the treatment of monies paid for editorial services performed prior to representation shall be subject to mutual agreement between the member and the prospective client.”

This walks back the language of the old Canon, which required the agent to reimburse editing fees if they later offered representation. This is a shame, in my opinion. Removing that obligation weakens the disincentive to double dip by converting service clients to representation clients, since the agent only has to “mutually agree” with the client on how to deal with the fees. How many eager writers, with a representation offer in hand, will protest a “mutual agreement” not to be reimbursed?

Clause 10: Other Paid-For Services Offered to Clients. This is a new clause. It allows members to “employ staff or specialists to aid clients in other areas such as marketing, promotion, web design, or other work, for a fee to be mutually agreed” but prohibits making representation contingent on the client buying such services, and requires members to inform clients of this.

I see potential problems here as well. The required disclosure doesn’t remove the possibility that the agent might pressure the writer to buy in–maybe not overtly, but via more roundabout methods: overstating the benefits of purchasing the agent’s marketing services, for example. Too, the lopsided balance of power between author and agent–especially if the author is new and inexperienced–exerts a pressure to consent. I see this play out in questions I get from writers who have concerns about some aspect of their relationship with their agent but are afraid to voice it for fear of consequences to their manuscripts.

Clause 11: Paid-For Services Offered to Non-Clients. Another new clause. Members can offer not just editing services to non-clients, but also “non-editorial services (e.g. web design, social media consultation, creation of promotional content”). They must state in writing that buying services won’t necessarily lead to representation, and if they don’t offer the service personally, they must disclose who will provide it and their relationship to the member.

As I’ve noted, the language prohibiting client conversion at the query stage has been moved here (I’m very glad to see it’s still included). Quoting in full: “To avoid the possibility of abuse, members may not respond to an author who approaches them only for literary representation by instead directing the author to pay for services by the member or by anyone financially associated with the member or the member’s agency.”

Clause 12: Publishing. This too is new language. Quoting in full again: “While the AALA does not encourage its members to act as publishers of their clients’ work because of the inherent conflicts, doing so may be permissible if the member and client fully execute the ‘Consent Regarding Publication’ or a similar agreement containing all of its substantive provisions.”

The AALA says the Consent document “delineates the ways in which the roles of agent and publisher differ”, but though there’s a link, it’s behind a member login so I don’t know what it includes. Again, though, the emphasis is on “transparency and consent”, which doesn’t necessarily rule out the conflicts of interest the clause acknowledges.

UPDATE: I meant to include this, but pressed “publish” too soon.

A surprising omission from the revisions is any language addressing AI. According to PW’s article on the revisions, though, this is something the AALA is looking at.

Guidelines around AI usage are notably absent from this round of revisions, though AI use ranked as one of the top concerns among agents in a recent AALA survey. [AALA president Regina] Brooks said the AALA has begun circulating information internally and among members, but is “waiting for things to settle out” before formalizing anything.

Whither the Agent Profession?

The Canon has an enforcement mechanism, in the form of writers’ ability to make a complaint about an agent to the AALA’s Ethics Committee. But it is essentially an honor system, and an honor system is only as good as people’s honor. I do think that most people prefer to be ethical, and I’m certain that most agents adhere to the Canon in good faith. And overall, it offers a robust set of ethical principles.

Still, I’m concerned about the new permissiveness around third-party referrals and the walkback of the editing fee return requirement, both of which, I think, create ethical loopholes. And as I’ve described above, I worry especially about the gray areas surrounding paid-for services.

I imagine there will be some criticism of the new Canon as “permission” for agents to move wholesale into becoming paid service providers. But this is a shift that is already happening. When the Canon was created, back in the pre-digital era, the worst abuse it needed to address was the dishonest use of reading fees. Times sure have changed–and change is accelerating, as evidenced by the fact that this new revision comes just four years after the previous one. The AALA is really only playing catchup, adapting their ethical guardrails to address business practices that already exist and are being widely adopted.

There’s also a bigger question. With all of these new roles and business practices, what happens to agents’ core function: the representation of authors’ work to publishers and the sale of rights? If an agency is also a PR company and a tech company and maybe some other kind of company as well, how does it allocate resources betwen the different functions? What if the agency side is less lucrative than the editing or marketing side–will the agency side be neglected? What if the uncertainty of selling intellectual property rights–which by definition involves unpaid labor, since not every manuscript in which agents invest time and effort will wind up finding a home–begins to seem less attractive than the predictability of fee-for-service? What happens when a core function gets pushed to the periphery?

Whatever all of this means for the agent profession, it’s yet another minefield for writers, and yet another reason to do careful reseaarch when choosing whom to query. Things I’d suggest you consider if you’re thinking of querying an agency with a service side:

• Is the agent an AALA member? The Canon may not be perfect, but it does offer assurance against major abuses. That’s not to say that non-AALA members aren’t entirely ethical. But with AALA members, you know a bit more going in.
• Does the agency’s online presence place the major emphasis on services, or on representation?
• How does the agency’s track record of sales compare with its service side (i.e., if it has an active service side but has placed relatively few books, that could suggest representation isn’t its main priority).
• Has it placed clients with hybrid publishers (some of which are known to pay referral fees)?
• What can you discover about client crossover between the service side and the agency side?
• Most important: how does what you see match your needs and goals for your writing career?