High profile artists rarely speak publicly about the commercial dimensions of their practices. It is significant, then, that a leading British artist, the usually reticent Peter Doig, recently voiced concerns about the way artists can be mistreated by contemporary art-market traders; he said that some dealers take advantage of artists, especially those who are much more vulnerable when young and ‘just so grateful to be having your work shown and sold’.
Speaking to the Observer newspaper last month, Doig initially explained what can often be the downside of works achieving high market value. Since 2007 his paintings have been resold at auction for ‘crazy prices’, which he estimated as £380m; when these artworks were first sold, however, Doig had received a total of only £230,000. In short, his paintings had generated eye-watering profits for resellers in the secondary marketplace.
The baseline for Doig’s calculations was 2007, because in that year he became ‘the most expensive living painter in Europe’ when his work, White Canoe, 1990/91, fetched £5.7m at Sotheby’s. Following this distinction, resales of Doig’s paintings in the secondary market steadily rose in price: by 2017 his auction record was broken when Rosedale, 1991, sold for £21m at Phillips; and in 2021 was broken again when Swamped, 1990, realised £30m at Christie’s.
Doig went on to criticise the art trade for being opaque and clandestine. He had frequently been unable to identify resellers and buyers of his works in the secondary market – in some cases because resales were transacted offshore. He particularly stressed the need to protect ‘vulnerable young artists’ in business relations with their gallery dealers, who should share information about sales with artists they represent, and should ‘be absolutely transparent in all dealings … especially when the amounts start to get high’.
In Doig’s experience, ‘once an artist has sold an artwork, they’ve got few rights’. Recounting a recent quarrel with one of his previous galleries over their refusal to disclose to him identities of buyers of his works, he explained that he ‘wasn’t after money. I wanted to know where the paintings had gone to’. The gallery refused to disclose not only that information, but also prices paid when he further asked ‘at least tell me what you sold them for’. He says such secrecy is ‘infuriating’.
Non-disclosure, which so riles Doig, is perhaps the most prevalent issue that can put artists at odds with their dealers – sometimes driving an irreconcilable wedge between them, and leading to an irretrievable breakdown of their business relationship. If that is the problem, sound mutual knowledge and understanding of their respective roles and responsibilities can be a solution.
In artist/gallery relations, the gallery acts as an agent when selling works consigned for exhibition and sale by the artist. Under general laws of agency, the artist is the Principal and the gallery is the Agent, who has a fiduciary duty of transparent disclosure to the artist. In practice, many such business relationships are not recorded in writing or, if they are, do not state whether the buyer’s identity will be disclosed to the artist. In which case, the agent’s transparency duty would apply, obliging the gallery to disclose all details of any sale – especially if the artist requested that information.
A relatively recent lawsuit amplifies and illustrates a dealer’s duty. Tried at London’s High Court in 2019, it concerned a dealer’s refusal to disclose a client-buyer’s identity after being legitimately requested to do so. The dealer’s lawyers contended that ‘client confidentiality remained a paramount reason against disclosure … the well-known custom and practice in the art world is that the identity of a private buyer or owner of a painting is not revealed … because fine art is readily moveable and highly valuable … there is a black market in these artworks and a key security protection (particularly for private owners) is the simple confidentiality of the fact of ownership.’
It was further argued that ‘wealthy individuals may wish the fact of buying a high-value artwork to remain confidential, since it can be embarrassing among peers or employees [and] it can reveal the degree of wealth of an individual and have an impact on their security’. Moreover, it was said to be ‘of paramount importance to [the dealer’s] reputation within the industry that it be seen to be able to protect client confidentiality’. In response, the opposing lawyers argued that disclosure would be ‘in the interests of preserving the integrity of the art market in London’.
The court rejected such client confidentiality explanations and arguments: ‘The general custom of confidentiality relied upon has not been shown to be an absolute obligation. It appears to be a market custom adopted by art dealers regarding voluntary disclosure … Accordingly, [the dealer’s] concern that its market reputation would be damaged lacked weight in relation to complying with a court order. [The dealer] chose to give some information in this hearing without a court order, primarily with a view to resisting a court order. This suggests that any general custom or obligation of confidentiality is significantly more fluid than is asserted.’ In its judgment, the court was ‘not satisfied that confidentiality is good reason why this order should not be made … arguments on confidentiality do not outweigh the interests of justice in allowing the claimant to make a good arguable case.’
Judicial scrutiny of art dealers, and their client confidentiality, is as significant as it is rare. Two key take-aways from this case include the following: art market client confidentiality is not an absolute obligation, but a voluntary custom and practice; and where a legitimate need for disclosure of information about a private sale is requested, art market professionals would be wise to cooperate rather than to refuse unless and until a court orders compliance.
Dealers often say that disclosure risks the gallery being excluded from future sales transactions directly between their artists and buyers. Such worries could be minimised or avoided through dealers signing a written contract with their artists clarifying: whether buyers’ identities will be disclosed; and, if disclosed (or discovered), that the artist will not sell directly to such buyers; and, if they did so, that any sales would require the artist to pay the gallery’s normal sales commission. Contracts could perhaps include a non-disclosure clause, whereby the artist undertakes not to reveal any buyer’s identity to a third party.
Successful artist/dealer relationships are often likened to a marriage, the success of which need not be founded on the initial legal joining in wedlock, but on sustained mutual trust. The artist trusts that the gallery believes in the work; that sales can be achieved at the right price; that the gallery regards the relationship as being long term, developing both the artist’s market and cultural recognition. And artists rely on the gallery’s greater knowledge and experience of the art worlds – both market and cultural – that many artists do not possess, and some positively do not wish to acquire. The gallery trusts that the artist is professionally committed to producing quality work that will achieve sales and critical acclaim, and that their business and artistic advice will be welcomed.
Written artist/gallery contracts could and should ideally cover how to settle outstanding mutual rights and obligations at the point of their ‘divorce’ – in addition to framing ways in which the business relationship should operate when still viable. As with successful marriages, challenges and conflicts should be faced and worked through, and artist/dealer agreements can facilitate doing so by anticipating and providing for typical rubbing points.
In 2005 the cross-party Culture, Media and Sport Committee of the House of Commons undertook an inquiry into the UK’s art market, which aimed at ‘establishing what scope exists to promote best practice in the conduct of financial relationships between artists and art market professionals’. The Society of London Art Dealers (SLAD) submitted written evidence describing how ‘responsible art market professionals already operate’; arguing that draft model agreements, or a code of conduct, would not be as effective as the production of a ‘checklist of the points which dealers should keep in mind in drawing up agreements’; and asking for less regulation.
During the Committee’s oral public hearings, SLAD representative Sir Tom Lighten was asked ‘Tell me, presumably you did not get to be a knight of the realm for not showing invoices to artists?’, and ‘Can you tell me a bit about galleries that do not show (invoices to artists). Is the practice widespread? How does it occur? Is it that artists are so desperate that they will accept any practice if the gallery will help them?’ To which Lighten’s reply included ‘… there are obvious reasons that you would not show the sales invoice for client confidentiality – it has the name and address of the client – but I think there is much greater transparency … I am totally in favour of as much as possible being put into writing. Certainly that is the practice we follow.’
In the Committee’s final published report, codes of practice regulating artist-dealer relationships were recommended as the ‘best way forward’, and that galleries ‘must produce a written agency agreement signed by the gallery and artist’. Further, that the government should establish a forum of interested individuals, including artists, dealers and auction houses, to work towards identifying key areas of agreed best practice in contractual relationships between artists and art market professionals.
For the following two decades, successive culture secretaries ignored the Committee’s empirically well-researched, constructive recommendations. It is to be hoped that Lisa Nandy, culture secretary for the UK’s incoming Labour government, will not.
© Henry Lydiate 2024