Art Advising Panel Discussion at Sotheby’s Institute on April 1st


Art Advising 2.0 :
Vertigo & Accountability

Wed., April 1st
Panel Discussion and Dialogue: 6.00-7.30 PM
Wine and Cheese Reception: 7.30-8.30 PM

Sotheby’s Institute of Art, 570 Lexington Ave, New York, NY

Register here or use the order form below.

The rise of the art advisor tracks the globalization of art business. Art advisors act as a bridge to new classes of collectors, but the role is often not clearly defined. Gallerists, dealers, art fairs and collectors encounter a heterogeneous profession. This event explores current ethical and business questions that art advising creates and the legal obligations that their relationships rely on.

Panelists

Dr. Noah Horowitz, Managing Director of The Armory Show and author of Art of the Deal: Contemporary Art in a Global Financial Market (2014). His writings and interviews on contemporary art and economics have appeared in The New York Times, The Observer, artinfo.com, Das Handelsblatt and ArtTactic. He holds a PhD from the Courtauld Institute of Art.

Megan Fox Kelly, board member of the Association of Professional Art Advisors. She specializes in, and is a frequent speaker on, advising private collectors, museums, foundations, estates and trusts on buying and selling post-war and contemporary art.  She is a U.S.P.A.P. certified appraiser, has a Certificate of Appraisal Studies from New York University, and holds an MA in the History of Art from Brown University.

Sean Kelly was trained as an artist, became a Curator, Museum Director and Director of the Bath International Festival in Britain. He moved to New York in 1989 and opened his eponymous gallery in 1995. A successful and edgy visionary with a political sensibility, Sean Kelly represents a paradigmatic group of contemporary artists including Marina Abramović, Antony Gormley, Rebecca Horn, Joseph Kosuth, James Casebere, and Kehinde Wiley. He is a member of the Art Dealers Association of America and is on the advisory boards of a number of educational and arts organizations worldwide.

Dr. Richard M. Lehun, Esq. is a founding member of the New York Stropheus Art Law collective, responsible for artist-gallery, consignor-auction house, agency, and other fiduciary relationships. He completed a doctorate in fiduciary law from McGill University while cross appointed as a Visiting Researcher at Harvard Law School. Richard Lehun has a Magister in Aesthetics from the Goethe Universität, Frankfurt am Main, and a fine arts diploma from the German Film and Television Academy Berlin (dffb).

Moderation

Judith B. Prowda, Esq. is an attorney, mediator and arbitrator focused on art law, copyright, entertainment and commercial law. She is Senior Lecturer at Sotheby’s Institute of Art and author of Visual Arts and the Law: A Handbook for Professionals (2013). She is Past Chair of the Entertainment, Arts and Sports Law Section of the New York State Bar Association, and is Chair of the Section’s Committee on Fine Arts and Co-Founder and Co-Chair of the Committee on Alternative Dispute Resolution. In addition, she is a member of the Art Law Committee of the New York City Bar Association.

Art Advising 2.0 – Vertigo & Accountability is a collaboration amongst Sotheby’s Institute of Art, the Association of Professional Art Advisors, and Stropheus Art Law.

 

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The Rise of NYC Art Fairs – NYSBA Event – Part 2


Are brick and mortar art galleries the loss leaders in an art world, potentially spiraling beyond viable limits? More than ninety art fairs now define the rhythm of globalized art business. This development has profoundly altered the relationships amongst artists, gallerists, and collectors.

This panel discussion explores and critiques the impacts and challenges – legal, ethical and business – of the rise of art fairs. This is part of an initiative to create dialogue amongst lawyers, artists and emerging and established art professionals working in the primary or secondary markets.

Moderator: , Chair, Committee on Fine Arts, New York State Bar Association, Entertainment, Arts and Sports Law (EASL) Section, Attorney and Faculty at Sotheby’s Institute of Art

Panel:
, Gallerist
Elizabeth Dee, Gallerist
, Attorney at Stropheus Art Law
, Litigation Partner at Sullivan & Worcester LLP

Here in Part 2, an audio/video recording of Richard Lehun’s PowerPoint presentation can be found in the section on his presentation below. A dedicated audio recording of Nicholas O’Donnell’s comments also precedes his text.

Judith B. Prowda, Moderator:


New York Art Law Attorney Judith B. Prowda In Part 1 we began with Gallerists Ed Winkleman and Elisabeth Dee. Ed offered an overview of the research on art fairs he is conducting, in preparation for his upcoming book, Selling Contemporary Art: How to Navigate the Evolving Market. Elizabeth reported on the chances and risks that art fairs impose from her perspective as a dealer and a founder of an art fair.

Here in Part 2 our speakers are attorneys Richard Lehun and Nicholas O’Donnell.

Richard M. Lehun is a founding member of Stropheus Art Law, New York’s pioneers in the provision of unbundled legal and business services to artists, gallerists, collectors and museums. Richard is one of the few to have completed a doctorate in fiduciary law, cross-appointed between McGill and Harvard Law School. He is responsible for gallery, museum and auction house ethics and fiduciary duties at Stropheus Art Law. He’ll be looking at the ethical problems that fairs raise.

Nicholas O’Donnell is a litigation lawyer at Sullivan & Worcester LLP and the practice group leader of the firm’s art and museum group. He has spoken frequently on the topic of WWII restitution litigation, including at a conference in Heidelberg last January about the Cornelius Gurlitt affair. Nick’s widely read Art Law Report offers commentary on legal issues affecting visual artists – the visual arts community. Nick will present on legal issues that art fairs carry with them.

I’m grate­ful for my employer, Sotheby’s Insti­tute of Art, for gra­ciously host­ing this event, as so many New York State Bar Association, Entertainment, Arts and Sports Law (EASL) Section events, in this beau­ti­ful space which is my sec­ond home. This pro­gram is part of an ini­tia­tive of EASL’s Fine Arts Com­mit­tee to cre­ate dia­logue amongst lawyers, artists, and emerg­ing and estab­lished art pro­fes­sion­als work­ing in the pri­mary and sec­ondary mar­ket. Two years ago we pio­neered a pro­gram on legal issues for artists and gal­leries dur­ing Bush­wick Open Stu­dios Week­end, geared to the pri­mary art com­mu­nity. Last Octo­ber we held a pro­gram on Gallery Ethics and have posted an audio pod­cast and transcript of that pro­gram on the Stro­pheus Art Law web­site, and we will do the same for tonight’s program.

Richard M. Lehun:


 

New York Art Law Attorney Richard LehunTo situate our discussion let me quote Michaela Neumeister de Pury: “Whenever I hear about a new art fair starting, it is almost physically painful for me. The art world is becoming a Gypsy circus.” And Jerry Saltz, who I’m sure many of you know, categorizes the situation like this: “The downside, the beloved linchpin of my viewing life is playing a diminished role in the life of art. And I fear that my knowledge of art, and along with it, the self-knowledge that comes from looking at art, is shrinking.”

We’re in a situation where there are significant contradictions. By looking at ethics in my presentation, I’m going to be looking at contradictions. And what is an ethical problem? An ethical problem is when you have to make a choice between outcomes. Both outcomes contain good and bad, and you’re in a situation where you have to resource that decision, and you have to carry with your stakeholders the consequences of those decisions. This is an area that I spend a great deal of time with in my practice; trying to figure out what burdens on decision-making mean when there is no clear answer.

Art fairs are unavoidable, and they are a contradictory phenomenon, and contradictions increase complexity. The main problem is, the more complex things become, the fewer people can typically do something, or do it well. Those who can master the complexities profit immensely. Those who can’t, as our past panelists have repeatedly underscored, may be threatened with extinction. With the rise in the complexity comes an increased risk of failure, and not only of a financial dimension. The art context is a web of relationships. Those relationships have always been difficult, fraught with idiosyncrasy, failure, and injustice. I don’t think that the art fairs themselves bring an entirely new dimension of dysfunctionality. What they do is bring a different dynamic of dysfunctionality that people may or may not be adequately prepared for. So how do the art fairs affect these relationships? That’s what I’m going to try to cover in very few minutes.

I’m an attorney and my special interest is conflicts of interest. I want to know how we can best deal with these types of situations. I’m concerned about how stakeholders – this means artists, gallerists, collectors and museums – succeed or fail when confronted with contradictory needs and conflicted obligations.

Let’s look at some of these contradictions that affect specific groups.

We have the contradiction, that on the one hand, collectors and visitors value accessibility. This means they get to see a lot, and you get to see it in one place, and it’s very efficient. We know that collectors and advisors are time-poor. They want to consolidate research, search, and purchase. As Don Thompson wrote in The $12 Million Stuffed Shark, comparison shopping at fairs is easy. A single dealer might with difficulty get three Gerhard Richters to show a client. Dealers at Art Basel can show twelve of these at the same time. There is the impact of the herding element; that the sheer number of people and the sold stickers alleviate collector uncertainty.

Fairs are playing to the experience economy. People don’t just want to go one place and have one kind of limited aesthetic experience; they want to interact with a globalized jet-setting world where they experience something. Fairs replace quiet sessions in the gallery with a shopping mall, blending art, fashion, parties in one place. Collectors buy impulsively. They may never visit the gallery of the dealer from whom they buy at the art fair. With each fair, collectors become more accustomed to purchasing art in a shopping mall.

Okay, so that’s good for the collectors somehow, one thinks. Previously, collectors had to consider the interests of the gallery to gain access to works, and indirectly or directly, the interests of the artist, because they had to go through the gallerist, and behind the gallerist one assumes, in most cases that there was an an artist. Collectors are now rendered significantly less conflicted by art fairs. They have simpler choices. If we want to analyze what’s going on at that level, it’s not just the efficiency, it’s also something beyond that. Ethical choices of collectors are diminished by art fairs. Their lives and relationships are simplified. They can spend more money easily. This decrease in transaction costs seems like a benefit, but it also means that their virtual, idealistic investment is discounted. There is significantly less incentive to invest in the dealer and the artist. Even as the gallerist makes more money, social and contextual capital is being lost. The structural degradation of social and contextual capital is a significant structural downside of the art fair.

The art fair has a structural bias toward undermining the threshold investment of the collector in the artist and gallery relationship. Being able to see works on what may appear to be a level playing field ignores the fact that art fair politics, as has astutely been pointed out here, is no less determinate at art fairs than it is at galleries. But there is a difference here, a very important difference in the frame of reference. In their own gallery, a gallerist answers to stakeholders like artists, collectors, and others. At an art fair gallerists must uphold the fair’s standards and interests. A fair does not represent anyone. It does not have an agency relationship to anyone. If anything, it survives on visitor interest. As we saw in the previous slide, attracting collectors by lowering the ideal threshold investment makes money for the art fair and gallerist. The art fair cultivates and depends on these organic relationships, but it is structurally conflicted and motivated to removing barriers to trade by undermining those relationships. The art fair piggybacks on relationships, while needing to undermine them in fact.

We’re still on the potential benefits of the art fairs in terms of accessibility. But there are other important potential conflicts. You might be able to see a work at the fair, but is it for sale? Or is it for sale to you? Very difficult to know at times. The incentive in the old system of galleries to hang works that were pre-sold, borrowed, or otherwise unavailable to build the feeding frenzy was negligible in comparison with that of the art fairs. There is an obvious moral hazard here. What a gallerist may or may not have done in the confines of the gallery, where their practices were under scrutiny over time by a group of often knowledgeable actors, shifts dramatically under the pressures and opportunities of an art fair cycle.

Thus the lessening of the investments by the collectors is mirrored by a weakening of obligations by the gallerist. And in the first law of thermodynamics we know that that energy is going to go somewhere. And that loyalty is going towards the art fairs themselves, at the expense of other stakeholders. The problem, however, is that gallerists can’t have the same kind of perspective as an art fair, which is a money making machine essentially. The gallerists, contrary to art fairs, are often agents, representatives, and in fact fiduciaries of their artists. More on that in a second. Let’s look a little more closely at the structure of the gallerist’s conflict with art fairs.

I invite the audience to read these two quotes. Now, I’m going to refer to Matthew Slotover a few times, not because I have anything against him, or believe that he is a pernicious agent in the art world. Simply, he’s representing a perspective that is clear and necessarily differs from that of gallerists like Ed Winkleman.

„And of course, galleries are not obliged to do art fairs. Art fairs really exist for the galleries—the galleries are our clients, and we’re there to serve them. It’s up to them whether art fairs exist; if they don’t want them to exist all they need to do is stop participating and art fairs would immediately not exist. So I think there are a lot of things being confused here.“ Matthew Slotover, Artspace Interview, 2013

„Because getting into the right art fairs (or not) can truly change the fate of a gallery, dealers are spending more and more of their time strategizing and networking other influential art dealers.“ Edward Winkleman, How to start and Run a Commercial Art Gallery

Slotover obviously knows a lot about art fairs. What makes his opinion so glib here? He is not actually responsible to anybody. He can make it up as he goes along. He does not owe a duty of loyalty, so he can be as self-interested as possible without moral ambivalence. Ed, on the other hand, is a gallerist. He has a duty of loyalty and absence of conflict of interest regarding his represented artists. But if a gallerist cannot fill demand without being at art fairs, then serving Matthew Slotover’s doublethink becomes increasingly important.

I’m not going to repeat the figures about the necessity of art fairs to the dealer’s life, we’ve had enough of that. I will sum up with a blog quote: “The most expensive booth at the Frieze Art fair will go for $80,000, but the greater risk for dealers lies in not participating.” In conclusion, the costs and economic advantage of being at an art fair will reduce the ability of mid-range galleries to remain viable. The gallerists have the choice of embracing the new paradigm and its hidden costs, or risk their existence. This conflict of interest is having a profound impact on the art world as we speak.

So then, let’s talk about what this does to our artists. Again we have quotes from Matthew Slotover and Jeff Poe:

„You know, artists can make one work a year or a thousand works a year, and they make that decision based on what they are comfortable with, what their public desires are, what their credibility desires are, and how many great ideas they have. But artists are extraordinarily strong personalities in most cases—they’re not going to let their galleries tell them what to do because of an art fair.“
Matthew Slotover, Artspace Interview, 2013

“If they are any good, they make art because they have to. They don’t do it to please the market. So for some artists, hanging out here can mess with their heads. Also, let’s face it, this is not the optimum place to exhibit work. The subtle notes in artworks are drowned out by the cacophony.”
Jeff Poe, Blum and Poe

The mythical notion that artists can exist on idealism alone, and that their personalities are immune from being affected by market forces, is an act of willful blindness, self-serving towards the art fair ideology. And let me be clear, I am not here to do a cultural critique of art fairs. I’m here to look at the ethical conflicts involved, so that we can discuss them, so that decision makers at the art fairs can respond to them, as well as all other the stakeholders in the process.

It is clear that gallerists are by law fiduciaries of the artists they represent. The investments that galleries are forced to make in the art fair model impoverish their brick-and-mortar galleries, lower the collector’s necessary ideal investment, and lower their necessary investment in the collectors. This means that their ability to represent artists changes. Their role becomes one to broker access to art fairs, but the art fairs do not represent the artist. So, on the way to adapting to the new reality, potentially surviving and making more money, the artist’s reliance on the gallery is also reduced. What’s the point of a solo show, or gallery representation, when the gallery does not bring the artist to the only game in town?

In fiduciary obligations, the key thing is loyalty. So all gallerists that represent artists are fiduciaries, and the primary responsibility they have by law to those relationships is loyalty. One of the very special things about the artist-gallerist relationship is now being shifted by the art fair ideology. And we need to be aware of what that means.

Those who are perhaps less familiar with the definition of the fiduciary relationship are invited to spend a moment on the text of this slide and I’ll come to my conclusion.

Fiduciary concept’s central rationale is “nurturing and enforcing commitments to act loyally toward the interest of others […]”
De Mott, Fiduciary Obligation Under Siege: Contemporary Challenges to the Duty to be Loyal, 1992

“The principle of altruism requires that any conflict of interests between the parties […] must be resolved in favour of the beneficiary, who is entitled to the ‘single-minded loyalty’ of the fiduciary.”
Hoyano, The Flight to the Fiduciary Haven, 2011

Loyalty, pre-art fair, could mean a vast spectrum of different responsibilities. Loyalty post-art fair may mean little more than more art fairs. Post-art fair could mean for the gallerist being nothing but a broker for the art fair ideology. This fundamentally reduces the scope of what a gallerist needs to provide, and in fact, they may fail as a fiduciary if they don’t produce this outcome. What used to be a fiduciary obligation in a broad sense to the potential of an artist’s career etc, shifts as gallerists become conflicted by the obligation to bring that represented artist to a fair, or they’re not doing their jobs, while the at the same time undermining their very relationship to that artist and their collectors.

This makes the gallerist’s life more complicated. It will become much harder to balance interests. At the same time, not chasing the money will not be an option. So there is no going back to the past practices. It’s a damned if you do, damned if you don’t situation.

And the artists are also not unaffected. They must be complicit to survive. This is why I say, those who care about what they do have to sit down and go through these questions carefully. The whole point of thinking of things in fiduciary terms is to treat certain ethical questions as more than just happenstance.

There’s no time like the present, and in fact there will be no time like the present, to take a moment to strengthen our capacities with these ethical issues. Thank you for your attention.

Nicholas O’Donnell:


 

Art Law Litigator Nick O’Donnell
Good evening everyone. First I want to start by thanking Judith and Richard for inviting me and to Ed and Elisabeth. It’s really great to be here, and for their thoughts. It’s really a privilege to participate. I’m going to talk little bit about relationships.

The interaction between a client and a dealer, whether at a brick and mortar gallery, or an art fair, is the commencement of a legal relationship. It might be a successful relationship, it might be strained, but that’s what it is. So what I want to talk about tonight are some of the ways that the formation of that relationship, and its rights and duties, might be affected by the fact that it is happening at an art fair. My focus is going to be on US and NY law given my practice, but hopefully we can issue spot on things that can arise around the world.

It seems obvious, but the starting point is to remember where you are. In the absence of an agreement, in most instances for the sale of art the place of the transaction will supply the law that governs that transaction. So New York law will govern Frieze, Dutch law will govern TEFAF, and Hong Long law will govern Art Basel Hong Kong.

The nature of an art fair also creates practical differences in the formation of that relationship. Consider: every art sale involves some sort of diligence, whether cursory on the spot or in depth, a negotiation of the essential terms of the transaction, and an actual exchange. A contract, after all, is an exchange of promises: I will do this if you do that. But every contract has explicit terms and implied terms, and the practical aspects of an art fair, and the law of the place where it is, will all go into what constitutes the resulting agreement.

Diligence and preparation. What does the buyer have time to investigate, and what are the consequences of proceeding with the transaction?

This is as much a matter of risk management as it is a legal question. But whether you are a dealer at a show or a buyer, your starting point has to be the rules of the show. Is there anything in the materials in which a buyer agrees to a set of terms incorporated by reference? That is, when you attend or pay for something, do you end up signing a form that says something like “buyers agree to abide by the rules of the X show”? If so, those rules will be a part of your deal.

If you are a dealer, the same will hold true most likely at the application stage. Even without a single buyer, the dealer is probably setting foot more firmly in the location of the fair. Art Basel, for example has a choice of law provision in its application form in favor of the location of the particular show (Canton Basel, Florida, Hong Kong).

What is it? What representations and warranties are inherent to a sale, and how does the dynamic of an art fair complicate how you can rely on what you have been told?

If you’re in a Uniform Commercial Code (UCC) jurisdiction, like New York, the mere exchange of information will give rise to enforceable obligations related to that exchange if there is ultimately an agreement.

UCC 2-313 provides that

(1) Express warranties by the sellerare created as follows:

(a) Any affirmation of fact or promise made by the seller to the buyer which relates to the goodsand becomes part of the basis of the bargain creates an express warranty that the goods shall conform to the affirmation or promise.

(b) Any description of the goods which is made part of the basis of the bargain creates an express warranty that the goods shall conform to the description.

( c ) Any sample or model which is made part of the basis of the bargain creates an express warranty that the whole of the goods shall conform to the sample or model.

(2) It is not necessary to the creation of an express warranty that the seller use formal words such as “warrant” or “guarantee” or that he have a specific intention to make a warranty, but an affirmation merely of the value of the goodsor a statement purporting to be merely the seller’s opinion or commendation of the goods does not create a warranty.

We can well imagine how this will play at an art fair rather than a gallery. Hundreds of people are passing a booth each hour. Routinized conversations ensue. The sellers give a standard litany of descriptions-they think, if they can remember. Buyers have spoken to dozens of people that day. Was it this dealer, or another, that talked about the condition of the paining or the location of origin. Which conversation becomes “part of the bargain”? So where advance homework is wise in a storefront, some system for noting what you heard from whom—or what you told whom—may matter if and when a deal is struck.

To illustrate the point, imagine a buyer who attends a fair of rare cars on Long Island. He talks to several sellers at the fair, but he is taken with one conversation in particular. This Chrysler LeBaron, he is told, belonged to a certain specific individual. Because of that, he buys the car in a handshake deal. The handshake representation about who owned it? “John Voigt.” You may well laugh at the idea of being as senseless as George Costanza, but the larger point is that once you shake hands, exchange promises, make a deposit, or otherwise commit yourself, what happened in that one conversation among many could turn out to matter a great deal.

Consider a less ridiculous scenario. In a conversation at a booth, the buyer observes a signature at the lower portion of an etching that looks to her, a sophisticated buyer, to be Picasso’s. She asks the dealer, what is that? “That’s signed Picasso” he says. Or did he say “that’s signed BY Picasso?” or did he say “that SAYS Picasso”? Do either remember accurately. The buyer purchases it. In a way that is so much less likely with an auction catalogue, there is now an issue with WHAT 2-313 warranty was made. This scenario happened to a client of mine in a more old fashioned context, and the particulars were more easily sorted out, but the dynamic of the show makes it one to look out for.

Here too geography will matter of course, and whether a civil law or other jurisdiction implies warranties into a contract like this. Many don’t.

Before we leave this topic, remember that an expression of VALUE is considered an opinion, and not a statement of fact within 2-313 or other law. But a claim of comparable sales is an expression of fact.

Did you make an agreement?

Let’s take a step back and talk a little about the basics of contract formation in this context. With apologies to the lawyers in the room who have done their best to forget about first year of law school, it is worth repeating that an agreement does not consist of what you think it meant, it consists ordinarily of the objective manifestation of the parties’ respective intent to be bound.

The New York Statute of Frauds, Gen. Obligations Law § 5-701, like most, requires that any agreement must be in writing to be enforceable if “By its terms is not to be performed within one year from the making thereof or the performance of which is not to be completed before the end of a lifetime.”

The key thing to remember here is not whether it IS performed within a year, but whether it can be.

So contrast: a visitor from a civil law jurisdiction sees a contemporary work at Frieze. She has a structured payment coming to her own business, so she needs some time to make the full payment, but she is willing to commit. So she says I’ll give you 50% now, 30% in six months, and the rest a year from today, after which I’ll pick it up. The dealer, happy to obtain 80% within six months, agrees. She’s never heard of the Statute of Frauds. But six months later he’s heard nothing, and he sues. Strictly applying the statute of frauds, he should win, right? Strictly, no. a year from today is not within a year. Cases have gone to court over this issue, and the party seeking to enforce the agreement has not always prevailed. Good news for them recently, although addressing a different aspect of the Statute of Frauds concerning auctions (this is the Jenack case), the New York Court of Appeals reserved some choice words for relying on the SOL disingenuously:

It bears repeating in such a case as this that: The Statute of Frauds was not enacted to afford persons a means of evading just obligations; nor was it intended to supply a cloak of immunity to hedging litigants lacking integrity; nor was it adopted to enable defendants to interpose the Statute as a bar to a contract fairly, and admittedly, made.

But here, seller in particular, beware.

I started by teasing out some of the geographical implications on the choice of law that might apply to an art fair transaction. But, as I like to phrase the foundation of all legal questions: so what? Who cares where the fair is?

With regard to the most important aspect of any sale, title to the object, you will care a great deal. Consider again a pair of scenarios, different only in geography.

First, in New York at an art fair views a striking Max Beckmannn domestic scene on consignment from an identified and reputable seller. He views its condition, and notes its presence in the catalogue raisonné with approval. The provenance provided is orderly and has no gaps or suspicious activity. He buys the painting for $25 million, which is noted in the local and international press.

Two weeks later, he receives a letter from a lawyer. The painting, the lawyer argues, was sold at the auction at Galerie Fischer in Lucerne in 1939 after being looted from a Jewish family in Frankfurt. The provenance he was given was fictional; the catalogue raisonne confused this work with another version. The lawyer’s client wants the painting back. Oh, and the reputable and known seller has gone bankrupt and fled to Zimbabwe with our buyer’s money.

Now imagine the same scenario, but at Art Cologne. What happens, and why does it matter?

Assuming that the buyer really did not know of the painting’s history, the location will not only be important, it will probably be dispositive. In New York and elsewhere in the United States, a thief cannot pass good title. So purely as a matter of title, the buyer will lose the painting. He may have some defenses like laches if the true owners knew of the painting’s intermediate location and failed to act, but that is necessarily an uphill battle, and his burden to prove AFTER a trial.

In Cologne, or Maastricht? More than likely, as a good faith subsequent purchaser, he will keep it. Even within the western art market, an increasingly seamless one, different places make different judgments about who should bear the risk of loss in that situation.

World War II looting isn’t all that matters by location. Assume fairs in the same two locations, New York and Cologne, but for a Giorgio di Chirico. The same facts apply, but assume that in 1955, the true owner had located the painting in a Geneva gallery, sued for its restitution—and lost to a “good faith purchaser.” Now, even in New York, the seller is not passing a thief’s title, he is passing adjudicated good title. So the buyer may get the painting after all.

Lastly, assume the di Chirico hypothetical: but fair number two is in Rome, where just last week, a new government passed a law declaring all Italian metaphysical art to be the national patrimony of Italy.

The buyer in New York may now be better off. Unless it was imported to the US AFTER the patrimony designation (in which case there could be customs problems, and a visit from the Asset Forfeiture Unit of their friendly local U.S. Attorney office), it’s here and it’s probably not going back. But within the EU? That jurisdiction that favored good faith title may be out of luck.

So, to foster the discussion, remember: where you are will affect whether there is a relationship, and how it plays out in the short term, and if people ever disagree. Thank you very much.

© 2014 All Rights Reserved

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The Rise of NYC Art Fairs – NYSBA Event – Part 1


Are brick and mortar art galleries the loss leaders in an art world, potentially spiraling beyond viable limits? More than ninety art fairs now define the rhythm of globalized art business. This development has profoundly altered the relationships amongst artists, gallerists, and collectors.

This panel discussion explores and critiques the impacts and challenges – legal, ethical and business – of the rise of art fairs. This is part of an initiative to create dialogue amongst lawyers, artists and emerging and established art professionals working in the primary or secondary markets.

Moderator: , Chair, Committee on Fine Arts, New York State Bar Association, Entertainment, Arts and Sports Law (EASL) Section, Attorney and Faculty at Sotheby’s Institute of Art

Panel:
, Gallerist
Elizabeth Dee, Gallerist
, Attorney at Stropheus Art Law
, Litigation Partner at Sullivan & Worcester LLP

A video of Ed Winkleman’s PowerPoint presentation can be found in the section on his presentation below. A dedicated audio recording of Elizabeth Dee’s comments also precedes her text.

Judith B. Prowda


 

New York Art Law Attorney Judith B. Prowda More than 90 art fairs define the rhythm of globalized art business. There are dozens of NYC art fairs. In fact, when Richard and I were planning this program we made the strategic decision to schedule it between Frieze NY, and Art Basel in Switzerland. With the rise and rise of art fairs, sheer survival in the commercial art context now requires galleries to participate in a half a dozen or more art fairs a year – from New York to Maastricht to Dubai to Hong Kong to São Paolo – with stops along the way.

Some dealers make as much as two-thirds of their sale at fairs. Art fairs have indeed transformed the business of art and even the production of contemporary art. For serious collectors the international art fair circuit is an imperative, while visiting only a few of galleries in NY, London and Berlin seems – well – almost quaint. I recall arriving a few minutes before the opening at The Euro¬pean Fine Arts Fair (TEFAF) in Maastricht and being crushed by a crowd of eager collectors who gathered impatiently for the doors to burst open at 11AM on the dot. And TEFAF is perhaps the most subdued of fairs.

On the positive side, art fairs create a global art dialogue; galleries introduce works fresh from artists studios to the international stage. For the past three years Frieze has commissioned artists projects that have been curated by Cecelia Alemani. Frieze also offers a daily program of keynote lectures, panel debates, and discussions on diverse cultural topics. And let’s not forget the glitzy parties.

Fairs have also been criticized. Participation in an art fair is a very expensive proposition – from a highly selective application process, to fees for booths shipping, insurance and travel. Mid-tier galleries which can’t afford these costs are often left at the gate. Increasingly they are confronted with the financial unsustainability of their brick and mortar.

Also – and I leave this to our gallerists to address – is the question of art production and the responsibility of dealers who may have to pressure artists to turn out a high volume of new work in order to satisfy the demand¬ing art fair calendar.

Along with the rise of art fairs, is the emergence of complex legal and ethical issues. For example, and these are but a few on the legal side – how are relationships among the relevant actors distinct from traditional dealing? How are negotiations affected? When is the handshake deal an enforceable contract? When isn’t it? What about warranties of title and authenticity? Whose jurisdiction laws apply in title disputes if a work is stolen? That of the consigner, or the good faith purchaser, or the country from where the object was stolen? Suppose a work was shipped or looted abroad without an export license? Or it turns out to be a fake, or is seized by the bank as collateral on a loan? What are the consequences?These are but a few of the legal issues.

And there are ethical concerns as well. How are conflicts of interest addressed when dealers are evaluating other dealers in the application process? Are decisions about gallery placements at the fair – fair? Are rising costs making it impossible for some dealers to compete? How are a dealer’s fiduciary duties to their artist affected?

To parse all this out, we will begin with Ed Winkleman. Ed is co-owner of Winkleman Gallery and also co-founder of the Moving Image Art Fair. He is the author of the eponymous blog that demystifies the gallery system, and the book, How to Start and Run a Commercial Art Gallery, published in 2009. Ed will offer an overview of the research on art fairs he is conducting, in preparation for his upcoming book, Selling Contemporary art: How to Navigate the Evolving Market.

Our next speaker is Elisabeth Dee. Elisabeth is the owner of the Chelsea gallery, Elizabeth Dee, and is the co-founder of the art fair, Independent New York. She has produced a number of groundbreaking, first and international exhibitions of an impressive roster of artists. She was also included in Art + Auction Magazine’s list for the 100 most powerful figures in the art world. Elizabeth will report on the chances and risks that art fairs impose from her perspective as a dealer and a founder of an art fair.

Our next speaker is attorney Richard Lehun. Richard is one of the founding members of Stropheus Art Law, one of New York’s pioneers in the provision of unbundled legal and business services to artists, gallerists, collectors and museums. Richard is one of the few people in the US to have completed a doctorate in fiduciary law cross-appointed between McGill and Harvard Law School, and is responsible for gallery, museum and auction house ethics and fiduciary duties at Stropheus Art Law. He’ll be looking at the ethical problems that fairs raise and how their potential is impacted.

Our final speaker is Nick O’Donnell. Nick is a litigation lawyer at Sullivan & Worcester LLP and the practice group leader of the firm’s art and museum group. He has spoken frequently on the topic of WWII restitution litigation, including at a conference in Heidelberg last January about the Cornelius Gurlitt affair. Nick’s widely read art law report offers commentary on legal issues affecting visual artists – the visual arts community. Nick will present on legal issues that art fairs carry with them.

I’m grate­ful for my employer, Sotheby’s Insti­tute of Art, for gra­ciously host­ing this event, as so many New York State Bar Association, Entertainment, Arts and Sports Law (EASL) Section, events, in this beau­ti­ful space which is my sec­ond home. This pro­gram is part of an ini­tia­tive of EASL’s Fine Arts Com­mit­tee to cre­ate dia­logue amongst lawyers, artists, and emerg­ing and estab­lished art pro­fes­sion­als work­ing in the pri­mary and sec­ondary mar­ket. Two years ago we pio­neered a pro­gram on legal issues for artists and gal­leries dur­ing Bush­wick Open Stu­dios Week­end, geared to the pri­mary art com­mu­nity. Last Octo­ber we held a pro­gram on Gallery Ethics and have posted an audio pod­cast and tran­script of that pro­gram on the Stro­pheus Art Law web­site, and we will do the same for tonight’s program.

So please join me in welcoming our illustrious panel and our first speaker, Ed Winkleman.

Ed Winkleman


 

New York Gallerist Ed WinklemanGood evening everyone. I would first like to start off by saying thank you to Judith and Richard for organizing this panel and what I’m going to share with you, as the previous thing mentioned, is just some of the research from my upcoming book. Its title is self explanatory, but in the context of what we’re talking about today – going further and say it really does focus on contemporary art, but the discussion today will extend beyond just that. The book is designed to help dealers strategize with the changes of in the art markets since I wrote the first book, which was about the fundamentals of opening and running a commercial art gallery. One chapter in particular that defines a big part about what has changed since 2008, when I wrote the first book, is the chapter: The Rise of the Art Fair. I’ve read a lot of the literature as well as interviewed some of the directors of major art fairs in the world as preparation for the book, and this part is what I am going to share right now.

Since 2002, despite the quote you’ll see at the top sup­plied by Georgina Adams, the num­ber of art fairs in the world has exploded, and there’s a num­ber of quotes through­out the pre­sen­ta­tion that I won’t read out, because they’re really there for fla­vor. I think I do want to read this one just to set the tone. The num­bers here do tell the story. In 1970 there were just three main events – Cologne, Basel and the Brus­sels-based Art Actuel. The num­ber has mush­roomed in the past decade from 68 in 2005 to 189 in 2011. Georgina [Adams] wrote that in 2012. I’m cur­rently count­ing every art fair in the world, and among con­tem­po­rary fairs only – that’s fairs that show con­tem­po­rary art – I’m up to 220 and I know I haven’t counted them all. If I add in the fairs that I know that exist that don’t include con­tem­po­rary art, the num­ber is close to 300 at this point. So, even from the time that Georgina wrote that, the num­bers are con­tin­u­ing to rise. And they are show­ing no signs of stop­ping just yet. Why the explosion?

I point back to what happened at the NADA Art Fair in Miami in 2002 as the beginning of this notion that the world needed more art fairs. If you were in Miami in 2002, you’ll know that Nada was a satellite to the Art Basel Miami Beach Fair, and a very roughly organized fair by a group of young dealers. It didn’t cost very much to participate but within the four days the fair that took place, those dealers generally sold their booth out one, two, or three times over, and brought in perhaps more money than they would see through their galleries in the space of the six months previous to that. So the perception, as word trickled out, that the galleries had just made boatloads of money at that one weekend in Miami, started to change about what an art fair could be, how much it would cost to produce one, who was qualified to organize one, and eventually more and more people started beginning their own fairs, because demand just exploded.

In 2002 roughly 48 to 60 galleries participated in the NADA in Miami. The applications for the 2003 fair were four or five hundred range. So many more galleries were immediately interested in participating in that fair. Another thing that happened, though, was in response to the recession in 2008. If you’d asked any dealer at the time when they were looking at how the financial crisis impacted their ability to participate in art fairs, they would have expected the number of fairs to start dwindling. We were already having a conversation similar to this one in 2007-2008. There were so many fairs and people expected the recession to start knocking them down.

But one of the inter­est­ing things that hap­pened was a shift in per­cep­tion of who was respon­si­ble for get­ting col­lec­tors to the fairs. One of the peo­ple I inter­viewed for my book is Annette Schön­holzer, the direc­tor for new ini­tia­tive for Art Basel, and she said it was a sur­prise for her, when in 2008 and 2009, gal­leries started to come to her say­ing: “Where are the big col­lec­tors that we’re used to? They’re not here. You have to bring them here.” And Basel was say­ing: “We pro­duce the fair, we put the best gal­leries and the best art in the fair, you’ve always been respon­si­ble for bring­ing the col­lec­tors.” So, being the fair that they are, Basel said: “Okay, this is what you want us to do we will go out, we’ll increase our VIP pro­gram. We will do what­ever it takes to find the new col­lec­tors that are avail­able, as well as make sure the exist­ing col­lec­tors you know and love come to the fair.”

One of things that started to happen, though, is when they would reach out, as they would increase their VIP programming, they would send every participating gallery a package of VIP cards, and those galleries would send their cards out to all of their VIPs. Not surprisingly, some collectors would receive twenty or more VIP cards in the mail. And because they had so many extras, they would distribute them to their friends, and their friends were very often not VIP collectors. So, what you would see in the VIP lounge or at the VIP events were some of the people that the program was targeting, and then a lot of people that it was really never designed for.

So, the fairs start telling the galleries: “You give us your list of collectors and we’ll send out the VIP cards so that they’re not all getting multiple copies. That practice, in and of itself, shifted a huge amount of the power to the fairs. The fairs now had the quintessential collectors list. They had every person who has gallery’s VIP list in the world. And rather than see art fairs start to dwindle, in response to the recession, we started to see their power grow, and their numbers grow.

The other thing that is critical is that during all this time, 2002-2014, we systematically as dealers started to train collectors – that you will see the very newest, the very best, the most exciting work by our artist at the fairs. And even if they were buying them in advance, collectors started getting accustomed to the idea that this is where I purchase art. And this is where I can get an overview of the best art in the world. So, why am I spending as much time going around to all the various galleries? Now some collectors of ours have been collecting for 30 years will willingly admit that they have gone more and more to fairs and less and less to galleries individually because of this.

So, that’s the longest I am going to spend on any one of these slides, but I think that’s important for the background here. So the bottom line in terms of money out, the TEFAF Art Market Report is generated once a year. It’s commissioned by TEFAF. It’s released in conjunction with their fair in Maastricht, and it’s perhaps the best accumulation of data and statistics on the market.

It is still considered somewhat controversial because its author, Dr. Clare McAndrew, doesn’t have what some people consider the strictest methodology. Her sample sizes aren’t necessarily what somebody coming from an industry that uses reports like this as part of their business would consider that significant. But it’s the best data available. So, it does still influence perceptions. And in 2013 she reports that the total amount of money galleries spent participating in art shows was 1.9 billion Euros, and that’s money that comes from the galleries only. So, if you continue to the money – the entire art market was estimated to be 47 billion Euros in 2013, and dealers reported that 33% of their total sales were made at fairs.

I’ve done the math and I hope its right. The total money that galleries sold at fairs, and that’s not the total profit, that’s just the money they made per se, that’s just sales, was close to 16 billion Euros. So it’s more or less 8 Euros per Euro they spend at fairs. I should note that doesn’t represent the money made by every gallery at every level.

The top-tier galleries are probably making much more than that, and the lower level galleries, especially in the mid level, are quite lucky very often if they even break even. So because galleries in the emerging market or in the contemporary market generally have a 50/50 split with their artists, a gallery is probably selling twice what they are paying to participate in the fair, but they’re only receiving half of that, so it’s a one to one. This chart is probably hard to read from the back of the room, but it breaks down the sources of sales for galleries as recorded in 2013, and you can see that 33% is attributable to fairs. The breakdown is 19% for local fairs and 14% for international fairs. This is a chart showing where the most galleries are located.

You can see cities like Paris, London, New York, Tokyo. That’s not surprising that they have the most galleries. This isn’t a finalized chart, but the idea is to show the number of galleries correlates to the number of fairs that these cities also produce. So, a city with a red star on it is a city that has either a lot of fairs – or high profile fairs, very influential fairs. A city with a blue star is a city that’s either going up or coming down in terms of the number of fairs, or the importance of the fairs they have. An example might be São Paolo is coming up, its fairs are coming up its fair are gaining in importance. Berlin is going down. It’s either losing its fairs, or they aren’t as important as they used to be.

Basel is at the bottom by itself. It doesn’t have as many galleries as other cities, but it has the most important fairs, arguably. Despite that geographic dispersion of where the fairs take place, where the sales take place is pretty isolated to the United States. The TEFAF report of 2014 found that 75% percent of sales at art fairs take place at art fairs in the United States. And if you ask – and they did – the dealers around the world, 91% of them said that they needed to participate in just as many or more fairs in the United States because of those sales. If you ask galleries in New York, most will report that everything else being equal they’ll do their best business in Miami.

There’s something psychological about it. It’s where sales happen. We cynically refer to it as it’s like shooting fish in a barrel. The impact of this fair culture, this rise of the art fair on dealers includes statistics of some galleries reporting going to 15 fairs a year, that’s more than one a month. The impact of that on their gallery practice – is they either need to bring on more staff or they themselves are on the road up to 90 days of the year. That’s 90 days they’re not in their gallery, they are not with their families, they’re not as close as they need to be with their artists.

It’s having both a financial and a personal impact on the dealers. And as this quote from a New York Times article about the life on the road of the art dealers illustrates, it’s shifting the culture from this genteel practice where you would wait for someone to come into your gallery or you would have this leisurely conversation with them, to one where you’re constantly on the road and everything is happening much more quickly.

The impact on artists is probably ten times worse in my opinion. At the fairs, the top metric of the success for any given artwork is whether it’s sold or not. And that starts to influence what artists give their galleries to take to the fairs. They want to be a success. They want the piece at the fair to sell. Also, for the galleries to get into the best fairs, and to please the collectors that come to those fairs, there’s an expectation that to every fair you’re bringing something new.

I’ve had a num­ber of col­lec­tors com­plain as they were walk­ing around one of the fairs we were par­tic­i­pat­ing in: “I saw that at this other fair” I saw that at that gallery, at a show they had.” And the per­cep­tion is that artists can’t be doing very well if a piece I saw in a gallery is now at a fair, or a piece that I saw at one fair is now at another fair. And so to cre­ate the impres­sion that all of your artists are very suc­cess­ful as well as to please the col­lec­tors that come to the fairs to see some­thing new, gal­leries are con­stantly say­ing: “I need some­thing new,” and by say­ing that the artists are respond­ing to it.

Even if an artist has a very clear head about it their still com­part­men­tal­iz­ing their prac­tice. They’re mak­ing some works specif­i­cally for the fairs and the other work that they’re com­pelled to make. So, the over­all impact of this is some­thing that peo­ple are now refer­ring to as “art fair fatigue.” And you’ll see a num­ber of arti­cles and the lit­er­a­ture about it.

There are even clever little articles on how to deal with art fair fatigue, what shoes to wear and what spot to be is forming around airports, etc. Despite art fair fatigue, though, 45% of dealer felt that they will still invest in more fairs internationally. I think it’s said that there is a cultural backlash, where more and more dealers are saying: “I want you the collector to come to my galleries, instead of just meeting me at the fair.” A lot of dealers are saying just that to their collectors: “Come visit me. You won’t see at the fairs what we’re doing at the galleries. It’s important for you to be involved in the dialogue that’s happening in the gallery, and for you to come to the gallery.”

And some galleries in Chelsea have enough in the gallery and they don’t see the need to increase the number of fairs they are participating in, but remember that 17% of the sales happening is local, and for New Yorkers, they’re local for US fairs that are selling the most anyway. So, and that is it. Thank you.

Elisabeth Dee


New York Gallerist Elizabeth DeeI didn’t prepare a formal presentation, because we have so many tonight, and I’m typically Ed’s sparring partner, someone to play that role. Ed, thank you so much for giving us your insightful analysis on the situation with fairs and what the risks, rewards, and consequences can be. I’m going to speak primarily from, or just engage a little bit, primarily, from the gallerist’s point of view, because we are the two gallerists and art fair founders.

I founded a fair called Independent, which takes place twice annually in March and November at the former DIA Center for the Arts. And I think it’s really critical to talk about the dynamic of fairs, vis-à-vis those that were founded by gallerists and run by gallerists, and those that have become more institutionalized, or more of their own private enterprises.

Art Basel was founded by Ernst Beyeler who was a very impor­tant noted gallerist, a his­tor­i­cal gal­lerist. And I think it’s impor­tant to think about gal­lerists com­ing together to col­lab­o­rate on the issues of the day and present them mutu­ally. What Ed said was so insight­ful. With the shift to a more cor­po­rate cul­ture of art fair man­age­ment, gal­lerists have lost cer­tain pro­tec­tions that they once enjoyed. I’m not say­ing that there have not been ben­e­fits in that things have become more of an open and trans­par­ent mar­ket for col­lec­tors and for other gal­lerists to see what’s truly going on.

When you have 180 gal­leries from all over the world one is able to get a great index – how­ever, I think there are cer­tain con­cerns that gal­lerists only know and cer­tain infor­ma­tion that gal­lerists only trade with each other, that can inform and develop fair cul­ture in a more mean­ing­ful and in some ways more pro­gres­sive way. And that is why Ed and I both have started fairs with our gallery col­leagues. Would you agree?

Ed Winkleman: Yeah. Elisabeth and I were on a panel all together at Art Basel last summer, and it was about the way that galleries who have been in business for a while aren’t necessarily surviving as well as the top-tier are. And the moderator said in response to what was talking about the number of fairs we were doing and the costs, and the personal costs: “But you both started fairs yourself, so aren’t you both responsible for this in some way?” To which our response was: “We started alternative fairs that are actually not only art driven, they are gallery-centric. Both of our fairs are trying to solve some of the issues that we see with some of the bigger fairs. I think that the fair model itself has a long way to go to even catch up what the galleries are able to do. I don’t even necessarily think that even the galleries are the quintessentially best context in which to view art. My favorite place to view art is in a collector’s home. But I think, through efforts like Independent and some of the fairs out there – pushing the model here and there, experimenting with it, trying to find a better way – because I don’t think the fairs are going away. But I think they have a long way ago.

Elisabeth Dee: I com­pletely agree. I also think that given the kind of econ­omy that we’ve cre­ated, as gal­lerists, doing gallery-cen­tric fairs, it’s allowed for more kinds of exper­i­men­ta­tion in the art fair model. When I first started in 2002, one of my first fairs I ever did was NADA. I think that my costs annu­ally in doing fairs, as an emerg­ing gallery, was prob­a­bly 25 or 30 thou­sand dollars. Now I spend over a quar­ter of a mil­lion dol­lars in fairs, and I’m not a large gallery. And I still want to develop artists and intro­duce artists and develop strate­gic, cura­to­r­ial sup­port for my artists – not just sales. And to me that bal­ance is crit­i­cal for the devel­op­ment of artists in a sus­tain­able way.

So, when you work with many fair organizations and their economies, which are very expensive, you can see your profit margins going all the way down to 50% or 30% of the revenue that you would normally have in the gallery. One has to really analyze and consider those factors. And I think that what we’ve been able to do with Moving Image, which is Ed’s fair – which is devoted to video art, and keeping costs to a place where gallerists can afford to take the risk of introducing new material – or Independent, which is also equally inexpensive, even for the emerging gallery in Europe that may be doing their first fairs of their gallery’s career and their artist’s career.

It’s really important to be able to think about new creative economies for gallerists that aren’t selling things that are a million dollars on the stand, and who want to develop a dialogue and a programmatic curatorial conversation around their program. I think it’s wonderful that we now have so many fairs to choose from, in terms of how we spend our time and our own personal research of galleries and their programs. And I think it offers a lot. I think these kinds of initiatives help the gallerist face the realities of the economy as they grow and develop as galleries.

Ed Winkleman: You have one thing there I’m going to read off of, because I think this is a really interesting point, in the context of this conversation would be great to talk about: the ethical question of galleries being the gatekeeper’s to these fairs. They’re so important and 33% percent of your sales and your competitors have a say whether or not you get in to better fares.

Elisabeth Dee: We switched topics, okay. Because that wasn’t a part of your talk, I didn’t want to introduce a new topic. But, as we know fairs impose certain challenges for the gallerist who is looking to enter a system that already exists; whether it’s Frieze at 180 galleries or art Basel at 200 galleries. Many of the galleries have been are there for many, many years, with very strong programs – and it’s very competitive.

Main­tain­ing a posi­tion in those fairs is also com­pet­i­tive, and the decision-making process of these fairs is extremely prob­lem­atic from my point of view. There’s no sys­tem for rat­ing your peers. When you’re invited to be on art fair selec­tion com­mit­tees, of which I have been on many, I have been pon­der­ing this ques­tion: how does one objec­tively ana­lyze a pro­gram wants to be part of a fair. What’s the eval­u­a­tion sys­tem? How do you eval­u­ate cura­to­r­ial pro­grams on a basis of merit against other gal­leries that may be of a dif­fer­ent gen­er­a­tion, but still work­ing with the pri­mary mar­ket? How do you han­dle aspects of their own rep­u­ta­tion in the field? What is their stand­ing with col­lec­tors? What is their stand­ing with artists? Have they sim­ply careers of artists and put them into the pro­gram, or have they actu­ally done strate­gic devel­op­ment for those artists? There are no clear fac­tors to address this.

And when gallerists get together, even really, really accomplished gallerists may be very unaware of certain programs in certain geographical regions or certain generational regions. I feel that the fair can be often at a disadvantage making decisions about its content and its participants based on a group of dealers that may not have the right tools in order to evaluate this properly. You also have factors of politics involved, because dealers do work together. They often share artists. There is often a long history of working together or competing with each other.

There can be a lot of political factors that are unfair in evaluating other galleries based on subjective experiences that people bring to the table when they have to vote. And this can be quite problematic for many galleries who can be part of these fairs and for the reason of one single committee member be eliminated from the fair for many years and have to deal with the issues that ensue once one was part of something and is now no longer able to participate – nominally for the artists they represent. But the financial impact can be often huge and sometimes extremely debilitating to certain galleries. This is something that I think this has not been clearly addressed in the fair system and I think deserves to be

Ed Winkleman: I totally agree. I don’t know what the answer could be. With Moving Image we have selection by a curatorial advising committee, so it’s not other galleries choosing the participants, it’s curators, but even that is far from a perfect system. I don’t know what would be the perfect system honestly.

Elisabeth Dee: And at Independent we’ve gone the totally opposite route, where no, it’s invitational process with one curatorial advisor, and we have no system for application because we don’t feel we have an adequate system at hand to evaluate those applications.

Ed Winkleman: But there’s no question the impact of certain galleries can be huge and politics plays into it. The chatter that goes around after the list comes out for any big fair…

Richard Lehun: But I think both of you are speaking to very key issue. that I’m also trying to give a structural analysis to, but I’ll wait to do that. I want to just underscore that I think often from a legal point of view, we often as lawyers are not necessarily paying enough attention to. I think the very fact of being able to bring the issues out into the open, to be able to frame them, and to bring stakeholders in and have stakeholders address those problems is very key to whatever a solution might be. The greatest difficulty is to have stakeholders feeling like they’re somehow affected by the process, for which there is no voice or language. And that’s one of the things that were trying to do with these outreach events is encourage a community that has been long entrenched in a kind of self-mythology, which is been both self-serving and also protective. But some of these protective strategies about information, about one’s own positioning, might be devastating bad in times of turbulent change – where the exchange of information and the building of mutual understandings about outcomes, desirable outcomes are necessary, and where those things can’t be done ad hoc anymore, independent of what powerful actors can do on their own. But a collective understanding can only be achieved by this type of bringing to language, bringing into the foreground the multiplicity of issues that you guys are speaking of. I’ll turn the word back to both of you.

Judith B. Prowda: Absolutely. Please Continue.

Elisabeth Dee: We talked about the position of protecting the gallerist. We talked about the need for a peer rating system and how the fairs are organized. One thing we touched on was the cost, but we didn’t really go into that in great detail. I think that also deserves a few minutes. Because, when one art fair raises their prices, the other art fairs that are competitive with that fair tend to follow suit.

We’ve seen that before, especially in recent years the cost that has increased, particularly in New York and London. Galleries fight very hard to sell over these costs, to make their enterprises worthwhile there. The question that I keep asking myself and as gallerists, I think we ask together is – what rights the galleries have and what responsibilities do fairs have to the galleries with regards to these costs.

Clearly a light bulb doesn’t cost $2000 an outlet doesn’t cost $1000, even a Swiss one. As a gallerist, you start to feel like you’re not the client. And we are the clients of these fairs. We generate the revenue for the fair, and we also generate the revenue for all the artists, for all the creators of the works in the fair and that is our unique responsibility. But we do not have leverage over how these costs are allocated. We don’t have a clear system for addressing them with the fair organizers, which clearly have to make a profit as a sound business, but to what degree? I don’t know about the statistics, maybe you do, but I have heard that the application to Art Basel … just the fee alone … I can’t remember how much we paid for that.

Ed Winkleman: Four to six hundred dollars …

Elisabeth Dee: … four to six hundred dollar application fee. And given the level of applications they have, because of their stature, they do well over one million dollars on application fees alone. Now is that being given back to the project, and in what form? And how does one responsibly handle that. This is something that I’d like to see addressed in a more systematized way.

Ed Winkleman: I think I can flesh this out a lit­tle bit. From talk­ing to some of the director’s of the fairs for the book, they col­lec­tively report not mak­ing as much money as it looks like they’re mak­ing, and that may not be sur­pris­ing but the details are. There is a build­ing where an art fair takes place in a major city. I won’t give too much away, that I think, 10 years ago, cost $70,000 to rent for the week, or week and a half. It now costs over $400,000 in 10 years. So, it’s not the fair that is just always rais­ing their prices. It’s every­body around them know­ing peo­ple are com­ing for this fair. I’ve got a cap­tive audience.

If you try to get a hotel in Miami during Basel on Miami Beach, you know that everybody’s caught on. The costs are through the roof, across the board. And if you’re working with union workers to assemble or produce your fair, you’ve got a bunch of extra costs and things there. I don’t want to give any names but almost to a person, each Art Fair organizer has a long list, from their point of view, of rising costs which would make it impossible for them to lower their prices that they charge the galleries.

Elisabeth Dee: I still believe that fairs are a place to exhibits innovation in the field and when fairs cost this level of money to participate – how can one afford the risk of introducing new ideas? New ideas and new artists become risk factors for gallerists, and so that’s what you’re not seeing, innovation. One could be seeing it if there was some way to have a forum where some of these conversations could be discussed and responded to with art fair organizers. I think we’d be in a better position, I think we have the better content.

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Online Legal Clinic on Fair Use and Appropriation Art


Uncomfortable about not knowing how copyright infringement can impact on your work, or is uncertainty preventing you from appropriating things you would like to transform?

Stropheus Art Law is hosting an Online Legal Clinic on fair use and appropriation art on
Wed, July 23rd 1-3 PM EST.

Attorneys Richard Lehun and Judith Prowda will be available live via video and audio feed to respond to your questions. You can participate in this discussion from anywhere by telephone, or by using a multimedia capable computer. More information here.

There is no cost for this event, but pre-registration is requested HERE.


For context, Judith Prowda has prepared a two-part presentation on copyright and fair use for artists and gallerists:




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Art Fairs: Panel Discussion on May 27th at Sotheby’s Institute of Art


Art Fairs: An Irresistible Force in the Art World?

Tuesday May, 27th 2014

Panel Discussion and Q & A: 6.30-8PM

Wine and Cheese Reception: 8-9 PM

Sotheby’s Institute of Art, 570 Lexington Ave, New York, NY

Register here.

Are brick and mortar art galleries the loss leaders in an art world potentially spiraling beyond viable limits? More than ninety art fairs now define the rhythm of globalized art business. This development has profoundly altered the relationships of artists, gallerists, and collectors.

The Entertainment, Arts and Sports Law Section of the New York State Bar Association is holding a panel on the impacts and challenges – legal, ethical and business – of the rise of art fairs. This program is part of an initiative to create dialogue amongst lawyers and emerging and established art professionals working in the primary or secondary markets.

Gallerist Elizabeth Dee will report on the chances and risks that the art fairs impose, in light of the ambitious expansion that her gallery has recently embraced and her perspective as Co-Founder of the art fair, Independent, New York.

Attorney Richard M. Lehun of Stropheus Art Law will examine the plethora of ethical and business issues that art fair participants confront.

Attorney Nicholas M. O’Donnell, a litigation partner at Sullivan & Worcester LLP, will present on the legal issues that art fairs carry with them.

Gallerist Edward Winkleman will offer an overview of the research he is conducting on art fairs in preparation for his upcoming book “Selling Contemporary Art: How to Navigate the Evolving Market” (Allworth Press).

The panel will be moderated by attorney, educator, mediator, and arbitrator Judith B. Prowda, Faculty at Sotheby’s Institute of Art and author of Visual Arts and the Law: A Handbook for Professionals (Lund Humphries 2013).

 

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Online Legal Services on Demand Anytime and Anywhere


As of February 2014, Stropheus Art Law has implemented an Online Client Meeting Platform requiring no client-side software installation.

Clients access a meeting by using a unique URL. Even without this URL, clients can access their meeting by using the meeting ID provided by Stropheus.

The online meeting platform is accessible from any internet capable computer, tablet, or smartphone, and also worldwide through local telephone numbers for audio-only collaboration.

The meeting room allows for:

– secure simultaneous audio and video communications

– secure document transfer

– whiteboard for visualization

– audio and video playback

Together with our online case management system, providing online legal services enables clients to access their documents, and meet with Stropheus professionals from anywhere and at anytime.

Contact Stropheus today for a no-cost initial consultation, and get to know the face of the future of legal services for the art community without leaving your studio, gallery, office, or home.

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College Art Association Report on Copyright and Fair Use


The College Art Association (with a membership of 13 000 practitioners) is the principal professional association in the United States for practitioners and scholars of art, art history, and art criticism. Members consists of  academics, professors, and graduate students who study and/or teach art practice, history, or theory, including visual arts, visual culture, and aesthetics. The CAA represented through

• Patricia Aufderheide, professor, School of Communication, and director, Center for Media & Social Impact, American University
• Peter Jaszi, professor, Washington College of Law, American University
• Bryan Bello, graduate fellow, Center for Media & Social Impact, School of Communication, American University
• Tijana Milosevic, graduate fellow, Center for Media & Social Impact, School of Communication, American University

released the following report as part one of a  four-phase plan to develop a Code of Best Practices for Fair Use in the Creation and Curation of Artworks and Scholarly Publishing in the Visual Arts:

(Excerpt)

The visual arts communities of practice share a common problem in their confusion about and misunderstanding of the nature of copyright law and the availability of fair use. Their work is constrained and censored, most powerfully by themselves, because of that confusion and the resulting fear and anxiety.

The visual arts field is pervaded with a “permissions culture,” the widespread acceptance that all new uses of copyrighted material must be expressly authorized. This assumption has taken its toll on practice in every area of the visual arts field, adversely affecting the work of art historians, museums, publishers, and artists. As digital opportunities emerge, old frustrations with this permissions culture have taken on a new urgency.

The permissions culture is expensive in terms of both money and time, but artists and other professionals in this field rarely embrace the copyright doctrine of fair use: the right, under certain circumstances, to use copyrighted material without permission.

The reasons why visual arts professionals ignore fair use include:
• an exaggerated assessment of risk, because of a lack of clarity around interpretation of fair use, lack of copyright knowledge generally, and excessive fear of litigation
• the importance attached to maintaining good relationships with individuals and entities who hold, or claim, rights
• a determination to honor artistic creativity, the generative force for the entire field

But many in the field need to access copyrighted work without permission in order to accomplish their professional missions.

In the absence of confidence regarding how to take advantage of the right of fair use, professionals cope by overspending on permissions; delaying projects for months, years, or even decades to negotiate permissions; compromising projects by doing without important material; and even abandoning some projects altogether.

In fact, while permissions may be required for some kinds of artistic and scholarly projects, in many cases they are not. The pervasive permissions culture, exercised as if fair use were not available to the visual arts communities, changes and even deforms the work produced. These losses affect future generations and the future of the field itself.

Uncertainty about copyright and fair use within the visual arts communities is a problem that the communities themselves can address. The biggest single issue for professionals is understanding their rights as new users of existing copyrighted material. This can be remedied not only by educational projects but by the formation of a consensus within the communities of practice about the shape of a code of best practices in fair use for the visual arts. Such codes have vastly improved access to fair use for other communities of practice.

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Decision: Calder Estate Lawsuit against Klaus Perls


Calder Estate Lawsuit dismissed by Judge Kornreich: “In other words, plaintiffs are attempting to litigate issues that necessarily stretch back decades without any personal knowledge or contemporaneous records, where nearly all of the people who had personal knowledge of the facts are dead. Rarely has the court encountered a better justification for the statute of limitations.”

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