Painting a Picture of Art Law

[00:00:00] John Reed: Georgia O'Keeffe described art as "filling a space in a beautiful way." But then Andy Warhol said, "Art is anything you can get away with." Wow. Talk about a definition of gray area. My guest today brings black and white clarity to the business of art. 

[00:00:17] Steven Schindler, founder of Manhattan-based Schindler, Cohen & Hochman, leads the firm's art law group and is one of the nation's foremost authorities on legal issues in the art market. Steve started his career as a BigLaw litigator handling a range of commercial cases, none of which involved art-related disputes, but as often happens with Sticky Lawyers, one matter came along that changed his trajectory.

[00:00:42] We'll hear about that case, the growth of his art law practice, and how he shares his unique knowledge and volunteers his valuable time.

[00:00:50] Steve, welcome to the podcast. 

[00:00:52] Steven Schindler: Pleasure to be here, John. Thanks for having me. 

[00:00:54] John Reed: So, I am a sucker for a good origin story. As I understand it, you didn't major in art history in college. You're not an artist, apart from your creative lawyering. And other than an appreciation for fine works, nothing about the initial phase of your law practice involved an art law focus. Is that right? 

[00:01:15] Steven Schindler: That's right, John. Uh, I was none of those things. Although I took a lot of art history classes in college and have always had a keen interest in the arts, but it was never really part of my plan to be an art lawyer. I didn't even know that there was such a thing as an art lawyer at the time that I graduated from law school. 

[00:01:34] John Reed: Talk to me about your practice before that first case. And then the turning point. I'm kind of curious to hear about the transition. 

[00:01:44] Steven Schindler: Sure. As you indicated, I started my career at a big law firm. It was then called Winthrop, Stimson, Putman, and Roberts; it's since morphed into some other things. And it was a good training ground for becoming a commercial litigator and a trial lawyer. 

[00:02:01] One of the formative cases involved a partnership co-counsel arrangement that the firm had on a case with a wonderful trial lawyer - his name is Steve Susman - and his younger, brilliant colleague, Neal Manne. And up until the time that I was a senior associate at Winthrop, I really never thought about trials as storytelling, as simplifying. I think everything in BigLaw tends to seem complex. And then I tried a case in New York with Steve and with Neil, which we won and got a substantial jury verdict for our client. And it really changed the way that I thought about the practice of law and really focused me a lot more on, on how to try a jury case. It also, with Steve's encouragement, caused me to rethink what I was doing in BigLaw. And it was really partly with his encouragement that I left Winthrop Stimson 25 years ago and started with two other colleagues, Schindler, Cohen & Hochman. 

[00:03:01] The first, probably 10 years of our practice was straight-up complex commercial litigation. Around 2005, I started doing work for an art client -- a large family that has been in the art business for several generations and had a number of art businesses, including a gallery in New York. And I started doing cases for this client, and it dawned on me that this was a practice area that I could really develop.

[00:03:31] And so I started to do what you do really very much equivalent to when we started the firm. I started to do a little bit of investigation into what art law was. It was still a pretty young field. There were several very prominent lawyers and academics who were active in the field. But unlike today, it was still pretty much an open territory. 

[00:03:51] John Reed: I'm curious what the nature of those initial disputes were. I don't know why I had it in my head that the bulk of art law, if you will, would be more transactional. But of course, there's a lot of disputes that go on, and I'm just kind of wondering what are the things that drew you in? 

[00:04:06] Steven Schindler: I was really drawn in by litigation because, at the time, that's what I did. We've broadened the practice to be transactional, but it really is half litigation and half transactions. The litigations are far-reaching. Initially, we had disputes relating to the title to artworks. We had disputes relating to the authenticity of artworks. And then we had just flat-out fraud cases, again, relating to what was represented about a work of art at the time that it was sold. We have also handled restitution cases where owners of stolen or looted art sought to reclaim that art. And cultural property cases also involving the restitution sometimes of ancient cultural property by nations that have become much more aggressive about recovering their artworks.

[00:05:02] So that's sort of a broad-brush approach to the litigation. 

[00:05:06] John Reed: I want to lay a bit of a foundation here. The kinds of art you encounter in your practice are primarily visual or fine arts, right? 

[00:05:17] Steven Schindler: That's right. Almost exclusively. 

[00:05:19] John Reed: And as I understand it, as, as broad as the term "art" is, that's everything from ancient antiquities, cultural properties, to paintings and sculptures to now NFTs in the digital space. 

[00:05:31] Steven Schindler: That's right. That's a pretty good description of it. 

[00:05:34] John Reed: So, talk to me about the various stakeholders that are involved. I mean, of course, there are artists, and there are collectors, and of course, there are museums. I'm just kind of curious about the players that you run into and who you represent in various matters. 

[00:05:49] Steven Schindler: Well, you've named a few of the major stakeholders. We represent collectors and, somewhat analogously, family offices, which are just the sort of family corporations that often wealthy individuals who collect art firms to manage their affairs. We also represent galleries, art galleries; that's a very significant part of our practice. We represent museums and other nonprofit organizations in the art space, for example, artists' foundations or catalogue raisonné companies that work to promote the legacy of artists. 

[00:06:30] We also represent, on occasion, art finance companies because there's a great deal of art finance that is part of the practice of art law. And today, somewhat relatedly, there's been an increase in the prevalence of equity art funds or companies that are securitizing interests in art. And so, I would sort of broadly lump those into art finance, which is a big part of our practice. 

[00:06:58] John Reed: And of course, there are criminal matters, and there are insurance matters, but I didn't get the sense that those are in your wheelhouse necessarily. 

[00:07:05] Steven Schindler: They're really not. I mean, we have litigated a couple of insurance claims, but there are folks who do that more regularly, and we certainly do not get involved in the criminal justice system.

[00:07:16] John Reed: In a prior conversation, you mentioned that you're not necessarily representing a lot of artists, but you are representing those that are commissioning artists to create works. 

[00:07:26] Steven Schindler: Yeah, that's true. We represent companies, usually companies that are commissioning works of art. We just finished a representation of a real estate company that was entering into a commission agreement with a pretty well-known artist for a mosaic or a large commercial building in New York City, and there are a lot of sort of technical aspects to that. So that's an area that we get involved in. We do represent artists from time to time and, in fact, were just retained by one, but there are a couple of firms that tend to represent artists. And when I say artists, it's usually artists with a track record. One of the things that is difficult is that even though I would say most artists who are engaged in selling their art in some fashion probably could use access to lawyers. It costs money, and that's not always possible. 

[00:08:20] John Reed: A recurring theme that we see a lot with Sticky Lawyers and their niche practices is that there really aren't any new frontiers, despite names that we have -- sports law, art law, entertainment law. Instead, very specialized practices are simply different combinations of core areas. So, contracts and property and torts and perhaps criminal law. Do you agree? Or are you and your colleagues creating a new space that is art law? 

[00:08:51] Steven Schindler: No, I agree with that. Art law is very, the analogy that you use to sports law or entertainment law is really the correct one. It's really a practice area in which different areas of substantive law recur. And that might be contracts, intellectual property, First Amendment law, the Uniform Commercial Code. All of these things that you study in law school are really sort of separate substantive areas, but they recur in working in the commercial art space.

[00:09:24] I will say these days, I feel like we are creating a little bit of law, which is that in the NFT space, which you alluded to -- non-fungible tokens -- a lot of the rules relating to the transaction of tokens in the art world are new and are constantly being written by lawyers. So, it's an exciting time to be working in that space because the rules, as I said, are changing, and they're sort of being done on the fly. 

[00:09:54] John Reed: One aspect of art law and the art law practice that is fairly distinct from others is authenticity, provenance to be more specific, which is different from copyright. You mentioned it before, but how much of your practice involves fraud cases and provenance contests? 

[00:10:14] Steven Schindler: Quite a bit. I have actually got a couple that are going on right now. Some of it's fraud. Some of it are simply individuals who have decided to sell works of art that they know are fakes that are not authentic, and maybe they make up the provenance. 

[00:10:31] There was a famous case of the Knoedler Gallery in New York, which resulted in both criminal and civil litigation. This was an old established gallery going back to about the time of the Civil War and very recently started selling fakes and forgeries by modern masters. And once that was discovered, a range of litigation grew out of that. So that's an extreme example of a situation where someone or an entity knows that they're selling or should know that they're selling fakes and forgeries.

[00:11:04] Other times, you have situations where somebody may sell a work of art 20, 30 years ago, believing it to be authentic, having no reason to believe that it wasn't authentic. But what happens particularly with old masters and impressionist works of art, scholarship changes over the years. And we see works that were considered to be inauthentically attributed to masters. And then, we also see with the change of scholarship works that might once have been considered to be authentic to no longer be considered authentic. And so that, how do you cope with that? How do you address someone who bought a work of art 25 years ago, believing it to be very valuable now, uh, finding out that it's not? So that's definitely a big part of what we do. 

[00:11:52] John Reed: I would think as a forger, I think, you know where I'm going, it would help if you actually spelled the artist's name correctly, wouldn't it? 

[00:11:59] Steven Schindler: Yeah. Well, that was one of the examples and the Knoedler case that I mentioned, and this was a gallery that was selling very, very high-quality fakes to very sophisticated collectors, some of whom were advised by multiple advisors. The way that the scheme was unraveled was that the provenance of these works continued to change as questions were raised. And then eventually, a forensic conservator, who we actually represented, discovered that the paint on some of these masterpieces by Rothko and Robert Motherwell did not exist at the time that those artists were supposedly creating the works. It became clear forensically that these were fakes. In hindsight, one of the works by Jackson Pollock was sold to, again, a very prominent collector who was advised by a prominent art advisor. And when you went back, and you looked at the spelling of Pollock, it was incorrect. So, there it was in plain sight, but of course, with any good fraud, it depends a lot on the victims of the fraud, wanting very much to believe that they're getting a work that's new to the market, a work at a good price. The con artist has a fertile ground in a lot of cases to create that mystery around a work of art. 

[00:13:25] John Reed: The extent of my knowledge of art law prior to talking with you today comes from really two movies. Um, three, “The Thomas Crown Affairs” -- both versions, Steve McQueen and Pierce Brosnan. And “The Woman in Gold” with Ryan Reynolds. “The Thomas Crown Affair” had to do with art theft and insurance coverage, which aren't necessarily part of your role. But the second dealt with international disputes over returning Nazi plundered art. Have you handled many matters involving looted artwork and international law? 

[00:13:54] Steven Schindler: So, yes, John, we've worked in a couple of different areas when it comes to individuals or governments trying to have art that was taken from them restituted. And that comes in the form of Nazi-looted art. And that is a very complicated area. It involves often -- sometimes, the cases are clear where the heirs of victims of the Nazis are seeking to get their works of art back many years later. Sometimes it's not clear. Sometimes it's not clear whether the work in question was looted. Sometimes it's not clear whether or not the heirs are, in fact, the rightful descendants. And so, there's, there are some gray areas here, and of course, the statute of limitations issues are very important in that area. 

[00:14:42] But the second area is what I would call the countries that are sometimes viewed as source nations -- nations where cultural property, art, or artifacts that were taken out of the ground, excavated, and then found their way to countries in Europe and the United States predominantly. And now, a lot of the modern-day nation-states that are located in the areas where these works were taken. Often, they were taken -- sometimes, they were taken due to colonialism, cultural colonialism. Sometimes they were looted; sometimes, they were paid for. But there's a question about who got paid for them. 

[00:15:26] A number of those nation-states, Turkey being one, Egypt being one, have passed what are known as patrimony laws, where they have staked an ownership claim to work that came out of the ground in the areas that now constitute their countries. And they are aggressive about trying to get works back that were taken, and they have found their way into museums in Europe and here. 

[00:15:53] And we see that now also happening in Sub-Saharan Africa. Some of the countries there are now also making claims to work that are in museums, principally in Europe, but also the Metropolitan Museum in New York. And I would say in this area, at least initially, a lot of receptiveness by museums to these claims. And hopefully, they get resolved without litigation because these are kind of areas where I think the museum communities should be receptive to returning works of art that left these countries under suspicious circumstances.

[00:16:30] John Reed: So, in the news recently, there's been the very highly publicized story of the Roman bust discovered in a thrift shop or something like that. It turned out to be worth quite a bit, an antiquity. And I understand most recently that it will be on display in the United States, I think, for a year, and then it will be returned. And I'm curious, your take on that in terms of what the founder or the discoverer, what rights that person had, if, to the extent that there was dealings with the source country, and what the arrangements would have been to keep the piece in the United States for a year. 

[00:17:07] Steven Schindler: I can say that these are often delicate negotiations. We have, for example, just to use an analogous situation that has been litigated, a situation involving the government of Turkey had become aware that a cultural artifact called the Guennol Stargazer was being auctioned by Christie's the auction house and was owned by a fairly well-known collector of antiquities by the name of Michael Steinhardt. And when Turkey became aware in 2018 that this work was going to be auctioned, it immediately brought a lawsuit in the United States to recover that antiquity. And that case is still pending in the lower court. In the district court, Turkey lost. They lost for a couple of different reasons. One principal reason was that because the Guennol Stargazer left the Anatolia region of what's now Turkey many, many years ago potentially, and there's no clear record of when it left, Turkey's burden of proof, at least according to the judge, was to prove that that the Guennol Stargazer came out of the ground in modern Anatolia after 1906, which is when their patrimony law dates back to.

[00:18:26] But because there was insufficient information about where the work was discovered and when it left, the district court judge ruled in favor of Michael Steinhardt and Christie's. The district court judge also said under an arcane theory of law called laches that essentially Turkey waited too long to bring this lawsuit, that they should have known that the Stargazer had disappeared, if you will, years ago and taken more steps to try to recover it. That case is now on appeal to the Second Circuit, and it's not clear how they're going to decide. But once a sovereign nation with a patrimony law identifies the work, then in this particular case, the owner of the work, if it turned out that the work was taken out of the country in violation of a patrimony law, the owner would be obligated to give it back. If there is no patrimony law, or if it's outside those boundaries, then it's really a question of a discussion and negotiation. And I'm not sure in the case that you identified where this sort of falls out. 

[00:19:32] John Reed: So, it could just be the generosity of the garage sale picker. 

[00:19:36] Steven Schindler: It could be, or there could have been a settlement. Also, the laws relating to stolen property are different here in the United States than they are in Europe. In the United States, for example, a thief can never convey good title. So even if you're a good faith purchaser, even if you buy something or acquire something or find something, if it was stolen, you're just going to be out of luck here in the United States as long as the claim is made within the statute of limitations. In Europe, on the other hand, they have a system which is akin to our adverse possession. Which basically means if you're a good faith purchaser of a work of art, you didn't know it was stolen, and you possess it openly for a period of years, you get good title. And then the, uh, the original owner can't get it back.

[00:20:25] John Reed: So, squatter's rights for art in Europe. 

[00:20:28] Steven Schindler: That's correct. 

[00:20:29] John Reed: And not to get too far into the weeds here, Steve, but you've talked about litigation in the United States with a foreign country. Is there such a thing as forum shopping between countries? What determines proper venue? And is there a similar forum, like The Hague, for international art disputes? 

[00:20:49] Steven Schindler: Yes, of course, there's forum shopping. Whenever you get lawyers involved in a litigation, of course, they're going to think of what is the best forum to bring a lawsuit?

[00:20:58] Sometimes, you don't have a choice. Usually, if you're trying to recover a work of art that's here in the United States, you've got to sue in the place where it is. So, you don't always get to choose. You also have to be mindful of where the defendant is. If you're a plaintiff, you may be able to get jurisdiction over a U.S. plaintiff, say, in Europe, maybe that might be a more favorable forum, but might not be able to collect if it's money that you're after.

[00:21:27] So there's always going to be some kind of at least thought given to where the most appropriate forum would be to bring a case. Now, arbitration is a very favorable forum in art disputes. The main advantage of arbitration is that it's private. And so, very often, parties favor arbitration for that reason.

[00:21:48] The only thing is, as you are aware, in order to arbitrate a dispute, both parties have to agree to the arbitration. So, it tends to come about when you have a contract that has an arbitration clause in it. Sometimes you can get parties who are squaring off and ready to litigate to agree to arbitrate after the fact, just because both parties recognize that perhaps arbitration would be a better forum.

[00:22:17] There is a new forum for the arbitration of art disputes in Europe called the Court of Arbitration. I'm actually a, theoretically, an arbitrator in that forum. But it's a relatively recent forum, and it takes a little while for it to catch on; the notion there being that this is an arbitral forum that is with a certain amount of concentrated expertise. It would be a good forum to choose because you're going to get arbitrators and experts who are well-versed in art-related topics, including authenticity. But again, in order to take advantage of a forum like that, you have to agree to it. 

[00:22:58] John Reed: We've been talking about plundered art and World War II, but we have another war being waged in Europe now with several art-related issues. Beyond the destruction of art in Ukraine, we have a cast of money laundering oligarchs, as well as bona fide buyers and sellers seeking to perhaps execute transactions in Russia. Can you help us understand the money laundering that takes place with art and what effect the sanctions are having on the art market right now?

[00:23:30] Steven Schindler: It's a very timely issue, particularly the sanctions as they relate to so-called Russian oligarchs. To take it back one step, there has been a lot of attention given in recent years to the potential problem of money laundering in the art world. And the notion being that because art is expensive, because often transactions are done in private, and because it's portable, that it appears to be, or could be, a good vehicle for taking money that was obtained or made illegally and laundering it -- so-called -- by buying art and then storing the art and then eventually selling the art. We see that same issue, for example, with jewels and diamonds. We see that problem, particularly in places like New York and London in the real estate market. And so, the art world has been focused on this now for several years. 

[00:24:30] The European Union, and now the UK, which was part of the European Union and now has the same rules, back in 2020, extended essentially the rules that apply to banks for keeping careful records relating to art transactions of more than, say, 10,000 pounds in the UK and reporting any kind of suspicious activity to a government agency just the same way that a bank would. And so, the art market is now very much a part of the anti-money laundering scheme -- the so-called Fifth Directive -- in the European Union. 

[00:25:09] And everyone thought that that same set of regulations would find their way here to the United States, particularly since in 2020, the United States Senate did an investigation and issued a report tracking the activity of certain Russian oligarchs as it turned out in the auction market. And everyone thought that that would result in the application of the Bank Secrecy Act here to the fine art market. That has not happened. If they have been, these regulations were extended to the antiquities market and the antiquities trade.

[00:25:47] But the U.S. Treasury issued a report just a couple of months ago, indicating that they did not think that most parts of the art market were being used to launder money and to support terrorism. They had some reservations about NFTs and the implications for trading NFTs, and whether that might be more susceptible to money laundering.

[00:26:11] So the bottom line now here is that the art market doesn't seem like it's going to be subjected to the kind of money laundering regulations that they have in Europe. That said, though, of course, it's a crime to knowingly participate in money laundering. While there are no reporting requirements here now in the art market, you have to be alert for red flags. For example, if somebody came into your gallery and said that they want to buy an expensive work of art that, you know, a million dollars and wanted to pay you in $20 bills, you would recognize that that was a red flag. If they said they were going to send you money from some location that didn't make a lot of sense, that would be a red flag. 

[00:26:52] And in fact, the major auction houses here in New York have very rigorous anti-money laundering procedures so that they will no longer just take a work of art, not knowing exactly who the beneficial owner is, and they won't accept bids in an auction unless they know precisely where the money is coming from.

[00:27:12] Now, you talked about sanctions and the new regulations with respect to what's happening in Ukraine and the Russian sanctions. And that has had a very immediate impact in the art world because it may come as no surprise that some of these hyper-rich Russian individuals are on the sanctions list. And so, you have to be very careful if you're a gallery or an auction house that you are not selling or transacting, buying or selling work to anyone on that list. Not surprisingly, very often, individuals who are on the sanctions list are not necessarily transacting business in their own name. They're doing it through a series of corporate shells, for lack of a better word. And so, it is your obligation now to make sure that you know who the beneficial either owner of the work is or who the ultimate person who is engaged in the transaction is. And if that person is on the U.S. sanctions list, then it's against the law to do business with them.

[00:28:19] So it's a very serious thing. That list used to be considerably smaller. But now, the list is a lot longer, and the individuals on the list have been very active in the art market over the last couple of decades, for sure. 

[00:28:33] John Reed: We've been talking about the practice of law, your practice of law, but I want to discuss the business of law. I talk to many attorneys who think that doing good work and getting good results generates new business, and that's all they do. And sometimes it works. But clearly, you've made a name for yourself with not only in the initial cases you litigated, but you've also taken a more deliberate path to promoting your practice. I'd like to have you tell us about what you did to get your name out there and become a go-to name in art law. 

[00:29:07] Steven Schindler: When I decided that I wanted to try to expand the practice of Schindler, Cohen &Hochman into the sort of art world and an art practice, I started writing some articles about current topics and had them published in the New York Law Journal and other journals as well, just to try make a name for myself in this area. Just like in any other kind of business development, you start to try to identify who the players are, and then you try to network, you try to get introductions, to take people out to lunch. You speak at conferences. I became pretty regular on the speaking circuit. And those are some of the ways that we started spreading the word. 

[00:29:47] It was a number of years later that we started the Art Law Podcast. My partner, Katie Wilson-Milne, who runs the art practice along with me, she and I decided to start the Art Law Podcast, which is now, uh, in its sixth season.

[00:30:01] I also started teaching art law first at Sotheby's Institute for Art and then NYU, where I still teach art law. I think that's how we did it and continue to do it, but it's a continual process because, as in any area, the people who are active change. It's not the same people from year to year. And you have to go out and continue to show people that, to tell them that you're here, and tell them about what you do. 

[00:30:28] John Reed: Your timing was good, your choice to be prolific in writing pieces and getting them published. You created a real bedrock for yourself on the internet, such that when somebody went to search, they probably had a greater likelihood of landing on your article over others because you had more credibility, more clout, and probably more domain authority out there. So, I could see where that's benefited you over the long run. 

[00:30:55] As busy and successful as your practice has been, you found ways to share your knowledge and give back. And you've mentioned teaching, but you're also involved in nonprofit leadership and volunteering, and I'd like to have you tell us more about those. 

[00:31:10] Steven Schindler: I've always thought that it was important to be involved in causes that you thought were good causes that helped people in different ways. My wife and I have both been very involved with Human Rights Watch, a fairly large organization involved in exposing human rights violations around the world and trying to advocate for changes to protect human rights. And that definition of human rights has expanded greatly. For example, now human rights watch is very active in Ukraine and is issuing almost daily reports about the atrocities that are going on there. So, a very important organization. 

[00:31:51] Closer to my practice area, I became involved with a nonprofit organization called Artist Space, which is approaching its 50th birthday. It was initially started by artists who were somewhat successful to provide resources for artists who were just emerging, and over the years, has become both a source of resources for artists but a tremendous exhibition space for less commercial art. And I have been on the board of that organization now for probably over ten years and the president of its board for I can't even remember how long now. I love the organization, and it's a privilege to be involved in it. 

[00:32:33] The other nonprofit that I've also been involved in and on the board for a number of years is something called the New York Lawyers for Public Interest, a nonprofit in which law firms contribute to a staff who are engaged in other kinds of social justice projects, mostly here in New York City. And so, another incredible organization that I've been lucky to have been involved with over the years. 

[00:33:00] John Reed: Well, they say a picture is worth a thousand words, which is probably pretty short for a contract involving a major piece of art. But I want to thank you, Steve, for painting a portrait of what you do as a Sticky Lawyer in the art world.

[00:33:13] Steven Schindler: Well, thank you, John. It's a pleasure to be here with you. 

[00:33:16] John Reed: I'm sure our community of listeners will want to learn more about you. Where can we direct them? 

[00:33:21] Steven Schindler: Direct them to our website at www.schlaw.com. You can also direct them to subscribe to the Art Law Podcast wherever they get this podcast. 

[00:33:38] John Reed: It's a twofer! Terrific. We'll put that information up on our website and in the show notes. Steve, thank you again. I really appreciate you being with me today. 

[00:33:49] Steven Schindler: It was fun. I enjoyed it. Thank you. 

[00:33:52] John Reed: And thank you for listening. Are you a first-time Sticky Lawyers listener? If so, please subscribe to the podcast and hear other episodes on Apple Podcasts, Google Podcasts, Spotify, and whatever platform you use. If you're a longtime Sticky Lawyers fan, isn't it time you gave us a rating and review? You can do that wherever you get your podcast or by visiting stickylawyers.com, where you can also view episode transcripts, see additional information about our guests, and recommend a standout attorney who might be a future guest. 

[00:34:23] Until next time, I'm John. And you've been listening to Sticky Lawyers.