I laid out something similar here on HN last summer and Atlay (of 10x) was one of the first to comment. (
https://news.ycombinator.com/item?id=4555165) As a longtime tech recruiter, what I find most valuable about the model is that it is much more geared towards helping tech pros focus on what they do best (code) and not have to worry about what they tend to do worst (handle the business side of their work, negotiate, etc.). I haven't switched my business into an agency model at this point as I think there are still a few kinks to be worked out.
Here is some recruiter-speak (what we are trained to say) that might make sense to some of the contractors out there or at least sound familiar. If you are working with a recruiter and you ask for $125/hr, and you feel that is a very fair market rate for the work you will be doing, and the recruiter is able to get the client to pay say $130/hr, chances are you won't care because you are getting your 125 and the recruiter is making almost nothing. So let's now say that the recruiter is an excellent negotiator and gets $150 - should you (as the coder) get more because the recruiter was able to negotiate a higher rate? At what point should the recruiter be rewarded for doing a good job negotiating? If the recruiter is getting $250 total and you are only at $125, surely you will feel slighted - but if $125 is the market rate for that skill, should the recruiter not be rewarded for the ability to negotiate and get a higher rate? I could argue both sides of this.
One way to alleviate part of this problem is to essentially split the difference. If you come to me asking for 125, let's say my standard cut is 10% (which is low, but this is just an example) - and anything I get above that 10% we split. So at 137.5, you are at 125 and I'm at 12.5 (10%). If I get the client up to 150, I get my 12.50 (10% of your 125) + 1/2 of the additional 12.50 (150-137.5) for a total of 18.75, while you get 131.25. This way the recruiter is rewarded for getting a higher rate, and the coder doesn't feel like a victim.
Unfortunately, most recruiters won't reveal the bill rate (paid by the company) to the coder or the coder's rate to the company, so all sides are in the dark except the middleman.
Almost all recruiting models are quite imperfect and have some really disturbing incentives for the recruiters (http://jobtipsforgeeks.com/2012/09/17/disrupt/). Transparency between all parties is something I am offering my candidates so they can use their best judgment as to whether my advice is clouded by a higher fee with one company over another. Transparency is the real key to solving many of the problems in the industry.
The agent model seems to be the right track, and hopefully we'll get it right some day.