News
Law

How to get on with artists, handle mergers and avoid lawsuits

Legal conference tackles issues facing US museums, from commissioning work to developing diversity

The key topics discussed at this year’s annual conference on Legal Issues in Museum Administration included how US museums can best work with artists, the risk of defamation when posting archival material online and legal questions raised when institutions merge. Held in Washington, DC, by the American Law Institute, the three-day event (25-27 March) was co-sponsored by the Smithsonian Institution and attended by around 300 US museum lawyers, art lawyers and museum staff.

Working with artists

Museums collaborate with artists on projects such as exhibitions, artist residencies, commissions and acquisitions. What should the contracts for these arrangements cover?

When a museum commissions a work of art, it generally gets rights of first refusal to buy the work, to be credited in exhibitions, and to apply the commission fee to the purchase price, said John Thomas, a New York-based lawyer. He added: “It is also common for museums to get a big discount” on the acquisition price.

In a fabrication or installation agreement, there are advantages if the museum contracts directly with the fabricator, so if anything goes wrong with its performance, “you can sue the fabricator directly”, said Thomas. “Museums don’t do well in fights with artists,” he added.

To avoid a situation where the artist or fabricator produces a work that is not what the museum expected, “the contract should set out the key points of the commission in language the artist can understand”, Thomas said, and the museum should make sure that the artist does understand it.

Risks can arise when an artist wants to conserve or revise a work; for example, damage caused by an artist’s changes would probably not be covered by insurance. “Create an agreement in each case,” said Margot Stokol, the associate director of legal affairs at the Hammer Museum in Los Angeles.

Diversity: still a long way to go

American museums must become more diverse as the US population changes, Johnnetta Cole, the director of the Smithsonian National Museum of African Art in Washington, DC, told the conference. Museums for too long represented “the three W’s”: they were womanless, reflected Western places and ideas and “run by and catered to white folks”, Cole said. Professional staff must include more people of colour, who often make up a small percentage of senior museum management and only 9% of museum visitors. “If you don’t see anyone who looks like you at the museum, you may be less likely to come back,” Cole said. India Pinkney, the general counsel to the National Endowment for the Arts, said that a museum’s diversity goals and practices need to be continually reassessed. To succeed, “acknowledge your challenges, engage your staff and stakeholders, and implement leadership buy-in,” she said, adding: “Expect mistakes.” Diverse staff should be recruited and retained at all levels, she said, and exhibits should reflect diverse populations and mindsets. She asked: “Do you need a PhD to understand an exhibit?”

Grace Speights, a partner at Morgan, Lewis & Bockius in Washington, DC, advised caution, however. A museum should undertake voluntary affirmative action or aspirational goals only with the advice of a lawyer, to reduce the risk of a claim that the museum illegally took race into account in employment decisions, she said.

Risk of defamation

Objects in collections can create unanticipated legal headaches if put to a new use. A key question, said Eryn Starun, an assistant general counsel to the Smithsonian Institution, is who will complain, and about what? Suppose a museum wants a diary bequeathed by a deceased performing artist to be displayed on its website; the question is not about the donor’s privacy rights but about other people who might be mentioned. “Think about defamation,” Starun said.

The museum, by posting the content on its website, will be the publisher and so could be liable if the diary references someone’s drug sales or sensitive health information, or makes disparaging false statements, such as: “The sound mixer ruined it.” If the material is already in your archives and available to scholars, a defamation claim potentially already exists, “but the risk is materially different when content is available to the public at the click of a mouse”, Starun said.

Museums can reduce risk by seeking additional permissions, blacking out or blurring sensitive information before putting content online, and using terms of use or click-through agreements to put the burden on the user to clear any necessary rights before reusing the material, said Craig Blackwell, an associate general counsel to the Smithsonian Institution.

To authenticate or not?

Throughout the art world, there are increasing refusals to authenticate works of art, said John Cahill, a lawyer in New York; giving such an opinion can trigger lawsuits that museums may want to avoid. And while “it is hard to make scholars and experts liable for authentications, it is easy to sue them”, Cahill said, noting the $7m in legal fees paid to defend an authentication refusal by the Andy Warhol Art Authentication Board and Andy Warhol Foundation for the Visual Arts.

But failing to authenticate permits inauthentic works to continue to be wrongly identified, which is not good for artists, the public and scholarship, said Professor Stephen Urice, of the University of Miami School of Law. Authentications let a museum accomplish part of its educational mission and institutions must balance these concerns when deciding whether or not to allow them.

The College Art Association, for example, recommends that independent art historians obtain insurance, indemnification and a signed release from the owner if giving an authenticity opinion, with the admonition to get legal counsel and use caution if the situation precludes a consensus—meaning someone will disagree. If a museum adopts a policy to allow authentications, Cahill said, get the director’s approval, train staff and require indemnifications and releases from the person seeking the opinion.

Water-cooler syndrome

Confusion can arise when the museum’s lawyer is also a museum employee, said Nicholas McConnell, a lawyer based in Washington, DC. To be able to tell the organisation “what it doesn’t want to hear”, be sensitive to the need to report to others in the institution if the lawyer is not being heard, he said. And while in-house lawyers may know the organisation better than external counsel, they should avoid the “water-cooler syndrome”—in which, by interacting regularly with key staff, an attorney may find it harder to speak up in a difficult situation. For example, would an in-house attorney be too close to the situation to conduct an internal investigation over how a museum employee gave an appraisal that was higher than an object’s true value? Would outside counsel be a better choice in this situation?

In-house lawyers should remember that their client is the museum, not members of staff. “Don’t give legal advice to individuals,” he warned. Also, employees may presume that talks with counsel are always protected by attorney-client privilege but business discussions, for example, are not, so in-house counsel should make clear when the discussion is not protected.

Museum counsels need to be judicious about their proper role, and when to speak. “Acquisition programmes, new building plans—these are not your competencies,” he said. At meetings, a successful general counsel often “does not speak a word. Then, when they do speak, the group listens.”

Mergers

A merger with another institution may ease a museum’s financial woes but it should be carefully thought through, said John Wetenhall, the director of the George Washington University Museum and the Textile Museum. The Textile Museum, which was founded in Washington, DC, in 1925, merged with the George Washington University in 2011. Four “pressure points” are key in merger negotiations, he said. Do resources exist to pay for the merger? Second, has your governing body adapted to the change—or are board members more committed to preserving their own status? Cultural differences may exist; for example, be aware that “hiring and procurement can take little time at a small institution and forever at a big one”, he said. Finally, think about people: are the staff and board members who enter the merger the best ones to emerge from it?

Charles Patrizia, a lawyer based in Washington, DC, described key lessons learned from the merger of the Corcoran Gallery of Art and Corcoran College of Art and Design with the George Washington University and the National Gallery of Art, after the Corcoran slid into financial distress in 2008. In the final merger, court approval was obtained to let the Corcoran deviate from the original intent of the donor. In such cases, seek legal counsel early, said Patrizia. The Corcoran could document that “all other alternatives had been researched” because counsel had advised it to “develop that record from the beginning”. Previously an arrangement with the University of Maryland had been explored, but fizzled due to lack of support.

Tax transparency

Tax-form data for US non-profits may soon become easier for the public to analyse, said Sara Geelan, general counsel to the Barnes Foundation in Philadelphia. In January, a federal court ordered the Internal Revenue Service (IRS) to provide the data in an electronically readable format to the group Public.Resource.Org, which sought the information for nine organisations. The IRS currently converts these forms into non-readable image files, although many organisations already file the necessary form electronically.