Is art market secrecy good?

Court battle fuels calls for less art market secrecy

Lines are drawn between those who favour openness and others who prefer a “handshake” culture

By Charlotte Burns |

Art of the deal: The court case between collector Craig Robins and dealer David Zwirner reveals the secret handshakes,
blacklists and verbal agreements that dominate the market

london. The $8m court case between Miami
collector Craig Robins and New York art dealer David Zwirner lays bare
the murky intricacies of the contemporary art world (see link, left).
The accusations reveal the secret handshakes, blacklists and verbal
agreements that dominate the market, prompting some to say it is time
that the whole trade opened up. A few go as far as suggesting
legislation such as droit de suite, where artists receive a fee on the
resale of their work, should be extended to New York (see Opinion).

“A reliance on keeping things hush-hush is built into the system,” said Chelsea gallerist
Edward Winkleman. “If collectors’ resales did not carry a stigma, if
artists benefited from the resales, and if galleries were not placed in a
precarious position between two clients—the artist and the
collector—the lawyers who are now going to make a small fortune off this
case would be busy with more important matters.”

Linda Blumberg, the executive director of the Art Dealers Association of America (ADAA, which has a select membership of
US galleries, including Zwirner), said that transparency is something
the organisation “feels very strongly about. Transparency is healthy in
any market. Our dealers don’t have anything to be ashamed of, so why
not?” She referred to the association’s code of practice, to which all
members must adhere. The document was co-written by the association’s
former president Roland Augustine, who started an ethics committee
during his tenure. He said that the Robins vs Zwirner case “moves
everyone to clearly articulate and memorialise agreements to avoid such
litigation—where there is money involved, there is always room for
misinterpretation”.

“Most dealers, and some collectors, are convinced more transparency would
ruin the market,” said Hans Van Miegroet, Professor of Arts and Markets
at Duke University, North Carolina. “But the counter-intuitive thing is
that the more transparent you are, the more profit you capture. You will
also push out the less transparent people in the market and will create
a more developed market overall. You basically have to share more
information about everything—about the type of transactions, background
on how prices were formed in the past, the type of art.”

Art investment advisors Michael Plummer and Jeff Rabin of Artvest Partners agree, adding: “One of the
powers of auctions is that they set public pricing—a similar verifiable
pricing mechanism for private transactions might allow record prices in
this sector to be brought to the public’s attention as well.”

Nevertheless, some insiders are happy with the status quo. Gallerist Thaddaeus Ropac said: “The
fluidity of our system has its positive sides.” Revealing that his
gallery does not have written contracts with its artists, he said:
“Generally the handshake mentality works pretty well. It would be a pity
to lose it—no one wants to feel like they are run by lawyers.”

Lucy Mitchell-Innes, president of the ADAA, said the real issue is “the relationship between collectors
and dealers, which is built on trust, knowledge, and a sense of
fairness. Once you interrupt that with legal documents, the basic
message is that there is an erosion of trust.” New York dealer Jack
Tilton, who was subpoenaed in the Robins vs Zwirner case, added: “90% of
what happens in the art world is word of mouth—at the end of the day,
you either trust someone or you don’t.”

Even those who are in favour of more formality concede there are practical difficulties. “You couldn’t write legislation that
everyone would agree with,” said New York lawyer Peter Stern of
McLaughlin & Stern, while Michael Moses, co-founder of the Mei Moses
index, said: “How could you make non-public transactions transparent?”

As to droit de suite: “It’s a noble and fair idea—but also totally impossible to practice or police,”
said Michael Findlay of Acquavella gallery. He added: “From an
investment point of view, if I am going to share my profit with the
artist, would they share the potential loss?” Todd Levin, director of
the Levin Art Group, added: “Artists choose to ex­change something they
love, their art, for something they need, money. After choosing that
exchange, they can’t attach an umbilical cord to their artwork.” But
agent Richard Wad­hams, of consultants Hogbens Dun­phy, said that
artists should be given copies of invoices for the sale of their works:
“It would clarify arrangements. All artists want to know is where their
work is.”

However artist Jake Chapman is sanguine about the machinations of the market: “When
someone comes with the white gloves to take your work, you are paid for
your efforts and that’s that.” He added: “The art world is murky, and to
render it transparent is to miss the nature of its dynamic. It’s based
on excessive points of disproportion—it’s a world where a Giacometti
sculpture can sell for £65m. You can’t restrain the insanity of the
market—that would miss the point.”