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Protection racket
As if nonfiction authors didn't have enough to worry about with deadlines, shrinking advances, and sphinx-like editors who fail to return phone calls, they now have something new to add to the list: libel insurance.
Since the late 1980s, publishing houses have been revising the terms of insurance policies designed to protect them and their authors against the rising cost of defending against lawsuits for libel, invasion of privacy, defamation, and so forth. The object is to pare expenses and reduce liabilities, yet the results for many writers have been the opposite: increased liability and stepped-up costs. "For most writers doing their first work of nonfiction, this could be apocalyptic," says J. Anthony Lukas, author of Common Ground. "It would wipe them out."
At issue are insurance deductibles, the same kind that crop up in auto policies, only bigger. When publishing houses first offered to take authors under their libel-insurance wing in the early 1980s, deductibles were a few thousand dollars. Recently they've mushroomed to the point where, among major houses, $ 250,000 is the norm. Since the policies call for an equal division of costs between author and publisher, writers could be out $ 125,000 in the event of a suit.
Investigative reporter Seymour Hersh, who recently signed a contract with Little, Brown for a book on Richard Nixon, says that if he were a new author faced with a typical current libel insurance deductible, "I couldn't do it. I would just go into some other kind of business."
Publishing houses are still hungry for journalistic exposes. And as Nicholas Lemann, author of The Promised Land, points out, writers often benefit from a system of "off-the-books paternalism," in which publishers agree to take legal costs out of future royalties, which are, of course, negotiable. In some cases, the protection is on the books. Random House, for example, which recently had its deductible raised to $ 250,000, hedges the deductible with so many restrictions that, short of being found guilty of copyright infringement, little of the increase is likely to filter down to Random House writers.
One solution to the problem of runaway deductibles is self-insurance. Debra Baldwin, vice-president of Herbert L. Jamison & Co., a brokerage house specializing in libel insurance, believes that possibly hundreds of authors each year take out additional insurance on their own. But at roughly $ 4,000 to $ 8,000 a policy, the arrangement is not only expensive but, to some, humiliating, since it calls to mind vanity press arrangements in which authors pay to get published.
The hike in deductibles represents at least a partial return to the days before joint author-publisher libel insurance, when authors were easy prey for marauding plaintiffs' attorneys. The only comfort in those days was their lack of resources, which made the deep-pocketed publisher the prime target.
The rise in deductibles is in equal part due to the deterioration in insurance companies' investment portfolios, particularly in real estate, and an explosion in libel awards. According to a study by the Libel Defense Resource Center in New York, damage awards tripled during the 1980s to an average of just under $ 4.5 million in 1989-90. Insurance premiums, as a result, have soared.
Meanwhile, the publishing merger mania of the 1980s and the concomitant rise in corporate debt led a top-to-bottom review of budget items that can be cut and liabilities that can be reduced or shunted onto other parties - such as writers.
Authors who look to academic presses for refuge had better look again. Most academic presses do not carry libel insurance and, in event of a suit, the author is stuck, as University of Missouri journalism professor Steve Weinberg discovered when he proposed a biography of muckraker Jack Anderson to Columbia University Press. "Were the Press to be sued for libel for one of our publications," he was informed by letter from one of the Press's editors, "we would refer the matter to our attorney, and the bills for the attorney's fees would be forwarded to the author of the book in question." Weinberg has abandoned the project.
