Speak to the agent first to determine what her terms are. Remember that legitimate agents never ask for money from you up front. Legitimate agents take your book because they expect it to make money, so agents asking for "supply" or "processing" fees should be disregarded.
Check Preditors and Editors, a well-known writer resource, for information about the literary agent you're considering. This website has the most comprehensive list of agents representing all genres in the business. The site details whether the agent has previously sold to major houses, and whether he charges reading fees or other fees. (Please see Resources.)
Research the agent's previous or current clients. This is direct information about who the company is representing and whether the agency is successful. Write down the names of the writers the agency is representing and research those writers. If possible, contact the writers and ask a few questions about the agency and whether the writer is satisfied with her agent.