Agency versus Client Part 1

Whoever works in marketing knows that relationship between marketing organizations and their agencies is turbulent. Clients have the money...but they are (often) idiots; Agencies have the brains (sometimes) but they are forced to suck up the idiots. So here's a story about that cultural tension to solve

We have creative agency that has proven to produce good quality work when briefed well and given some freedom. They seem very flexible and like many agencies, worried about the fact that their client may walk out if they are not served well (makes sense)

We have one client that seems to belong mostly to the idiot category (purely invented for the sake of argument).
#1 They don't brief because there is not really time for it, so they ask agency to write the brief. When they review their own brief (created by the agency) they inform it's spot on. When it comes to budget - they approve it but would like to add 3 additional photo shoots. The original budget was already ridiculously tight (of course). Because client is always right agency decides to approve the extra, non-billable work and sucks it up.
#2 Second issue in this relationship is always travel costs. Agency has established their offices in all the wrong places, causing unnecessary travel. Not only that but agency dares to propose the client would travel to one of their locations as it would require 2 people to travel in stead of sending 7 people on their way. Client has forgotten that they awarded the agency in the first place for their central locations and good reach globally. They also make it clear that travel cost is not a number game...that is how many people travel. It's WHO needs to travel. Marketing manager of client clearly is more important than 7 creative people all together. Only exception to client rule is when he needs a haircut in this Metropolitan city...or when his wife needs to do some shopping. Then the agency location is just fine. Agency sucks it up...move people between countries to meet client needs...and make their own travellers to stay affordable, smoking and non-allergy free rooms
#3 Decision making must be the greatest tension. Sometimes the issue is that client doesn't make decisions...so there is no way of knowing how to proceed...only deadline has been decided and it was just brought forward. Sometimes it's the lack of commitment to stick with decision. Every decision or approval changes when work is shown to client's next level of management. Client has very arrogant...yet bunny like puppets who make themselves important until their managers state their views. Again, agency must tighten the upper lip. Final form of decision making conflict is the activist client (I'm afraid I belong to this client group). They write the copy text and say this is what I want...don't change this. Agency tells that copy-line is actually NOT following commonly understood grammar rules. This could be ignored by agency BUT whoever ridicules that ad when live...the agency will get the blame.

How to solve this? Should agency management take responsibility of managing client expectations, discuss the scope of work, agree travel policies and work with client to make improved decision making mechanism with clear change management rules?

Well, in this case the agency management takes the client to expensive dinner and hopes the operative people solve the problems...