In my mind, there are four tiers of agents in terms of how ethical and reputable they are. Here is how I break it down to keep it simple. It's over-simplified, but should help new writers understand how things work and what to watch out for.
First (Top) Tier:
In this tier, I put all the agents that are part of the Association of Authors' Representatives (AAR).
Consider this: There is no test to be a literary agent. If you print up business cards that say you're a literary agent and create a Web site tomorrow, effectively, you're in business. Applying to and being accepted into the AAR is the closest thing to an accreditation that an agent can get. To be a member of the AAR, they have to follow a strict canon of ethics. To see the full canon, see the AAR Web site here.
If you're hooked up with an AAR agent, nothing is guaranteed, naturally, but more than likely you're in great hands.
In this tier, I put all reputable agents that are excellent reps, but just not part of the AAR. In reality, there is little difference between tier one and tier two, except for the three letters after the agent's name. There are many agents who are excellent and ethical, but just not part of AAR for whatever reason - and they should not be ignored, by any means.
In this tier, I would also include newer agents that have good intentions but have yet to really learn the system. I'm talking about a fresh young face at an agency who hasn't made her first sale yet. She is ethical and fair, yes, but she may not be that effective yet. That will come in time. You may not sell your book quickly, but you won't be out any dough.
In this tier, I put agents that may very well have the ability to sell work, but also do shady things, such as charging fees or referrals to editing services. The agents are probably quite capable, and they could definitely sell your work to a publisher or production company, but they're also bending the rules when they like to make money on the side.
Slippery slope here. There is a big fat line between the second and third tiers.
Fourth (Bottom) Tier
Scammers, baby! I'm talking about the WL Literary Agency and the Writer Beware's legendary "20 Worst" literary agents.
These are people who have absolutely no ability or intention to sell your work, and promise you success while picking your pocket. Stay away from the fourth tier! Stay away from the light, Carol Ann!
When I think of tiers, I
think of Connect Four. And
then I smile.