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Diana Wierbicki, chair of Loeb & Loeb’s Art & Cultural Property practice team, discusses the expansion of the firm’s Private Client practice with the newly arrived art law team, the “iceberg” nature of the art-collecting world and the importance of building strong personal relationships in the market.
Tell us about Loeb’s Art & Cultural Property practice. Who do you serve, and what distinguishes your approach in the space?
The Art & Cultural Property team represents clients who collect fine art and other collectibles such as instruments, dinosaur fossils, rare books, cars and coins. We assist with all aspects of buying, selling, investing in, leveraging the value of and donating these assets. We take a holistic approach by looking at how the art or collectible fits within a client’s estate, planning their charitable giving and considering the appropriate tax structures, while also acknowledging the passion our clients have for their art and that it’s a unique and personal asset.
Over the years, I’ve found that what is most valuable in terms of what we can offer our clients is not necessarily our ability to craft the legal words in a contract but rather our understanding of the art world and the importance of relationships. We talk about the art market as an iceberg—it looks deceptively simple on the surface, but there’s so much going on underneath. We represent clients not only by drafting excellent contracts that protect them from risk but also by talking with them about the art that is the subject of the transaction as well as the greater context of the art market generally. The art market is fluid, so we ensure that the way we serve our clients is also fluid and addresses what’s going on in real time underneath the surface.
What trends are currently affecting the art market and the advice you give clients?
At the moment, we’re seeing a lot of speculation about a softening market. For those clients who are in the market to acquire art, I’m always looking for ways they can invest in high-quality art at very good competitive prices. For those clients who wish to sell—and in particular for clients who may need to sell due to divorce, debt or death and who can’t wait for market conditions to change—I’m trying to ensure that any pieces they put on the market don’t become overexposed.
Why is it so important that an artwork not be overexposed during the hunt for a buyer?
One factor in making a successful sale is “freshness” to the market. For example, if you give artwork to a dealer on consignment for six months, allow the dealer to talk to an unlimited number of potential buyers, and they then fail to sell the work, you now have an asset that’s no longer fresh to the market. Because the art world is so small, the next person to market that work will have a harder time selling it. In a soft market, it is essential to tighten controls on the sale structure.
What laws or regulatory standards govern the art market?
In a lot of ways, the art world creates its own standards, and much of it is driven by collectors, not necessarily by lawmakers or regulators. Because of this, there is incredible value in being represented by a lawyer who works on art transactions daily.
Our clients want to be sure they’re aligned with the industry’s standards and to work with lawyers and other professionals who understand how the art market operates and evolves. For example, it used to be very acceptable when purchasing a piece of art not to have the seller identified. The market is now questioning that practice, in part because it makes provenance challenging and can create unnecessary public relations risks. Buyers and sellers are seeking a higher level of due diligence, and our team takes this responsibility very seriously. We have invested in the skills and tools needed to conduct efficient and thorough analysis of anti-money laundering compliance requirements.
Building and preserving relationships seems critical to your practice. Why is that?
The world of art collecting is very small. As lawyers, we always want to vigorously advocate for our client. But we may be advocating in a deal where the client is selling to a buyer who is also a good friend because of the closeness of the community. So our job is not only to help the client negotiate favorable terms but also to get the deal done and make sure that the transaction is structured so that everybody walks away feeling good. We need to create situations where people feel they’re being treated fairly, because relationships and access are paramount in the art world.
How do you preserve goodwill when negotiating a transaction?
The art world is a community based on trust and often on friendships; transactions historically were handshake deals. We don’t need or want a 20-page contract to paper a deal if we can cover the essential terms in one page. If we understand the most important issues, we don’t need to ask for everything under the sun. What we put in the contract will depend on the facts of the transaction—the type of art being bought or sold, its value and provenance, the parties and the risk levels they are willing to assume.
Do you see any upcoming global shifts that could impact the art world?
It’s sometimes surprising what impacts the art market. For example, Russia’s invasion of Ukraine at first doesn’t seem directly linked to the art world, but there was an indirect link because of the number of active Russian buyers. The impact of the sanctions on those buyers did ripple through the art market. Whatever the development or situation, we always need to look at the two sides of the coin and optimize where we can for clients. So, for example, in a softer market, we often assist clients in using art as collateral for bank loans if a client needs to raise funds but they don’t want or need to sell. Our focus is on identifying and maximizing the opportunities—because there are always opportunities, no matter the shift.
Tell us about Loeb’s Art & Cultural Property practice. Who do you serve, and what distinguishes your approach in the space?
The Art & Cultural Property team represents clients who collect fine art and other collectibles such as instruments, dinosaur fossils, rare books, cars and coins. We assist with all aspects of buying, selling, investing in, leveraging the value of and donating these assets. We take a holistic approach by looking at how the art or collectible fits within a client’s estate, planning their charitable giving and considering the appropriate tax structures, while also acknowledging the passion our clients have for their art and that it’s a unique and personal asset.
Over the years, I’ve found that what is most valuable in terms of what we can offer our clients is not necessarily our ability to craft the legal words in a contract but rather our understanding of the art world and the importance of relationships. We talk about the art market as an iceberg—it looks deceptively simple on the surface, but there’s so much going on underneath. We represent clients not only by drafting excellent contracts that protect them from risk but also by talking with them about the art that is the subject of the transaction as well as the greater context of the art market generally. The art market is fluid, so we ensure that the way we serve our clients is also fluid and addresses what’s going on in real time underneath the surface.
What trends are currently affecting the art market and the advice you give clients?
At the moment, we’re seeing a lot of speculation about a softening market. For those clients who are in the market to acquire art, I’m always looking for ways they can invest in high-quality art at very good competitive prices. For those clients who wish to sell—and in particular for clients who may need to sell due to divorce, debt or death and who can’t wait for market conditions to change—I’m trying to ensure that any pieces they put on the market don’t become overexposed.
Why is it so important that an artwork not be overexposed during the hunt for a buyer?
One factor in making a successful sale is “freshness” to the market. For example, if you give artwork to a dealer on consignment for six months, allow the dealer to talk to an unlimited number of potential buyers, and they then fail to sell the work, you now have an asset that’s no longer fresh to the market. Because the art world is so small, the next person to market that work will have a harder time selling it. In a soft market, it is essential to tighten controls on the sale structure.
What laws or regulatory standards govern the art market?
In a lot of ways, the art world creates its own standards, and much of it is driven by collectors, not necessarily by lawmakers or regulators. Because of this, there is incredible value in being represented by a lawyer who works on art transactions daily.
Our clients want to be sure they’re aligned with the industry’s standards and to work with lawyers and other professionals who understand how the art market operates and evolves. For example, it used to be very acceptable when purchasing a piece of art not to have the seller identified. The market is now questioning that practice, in part because it makes provenance challenging and can create unnecessary public relations risks. Buyers and sellers are seeking a higher level of due diligence, and our team takes this responsibility very seriously. We have invested in the skills and tools needed to conduct efficient and thorough analysis of anti-money laundering compliance requirements.
Building and preserving relationships seems critical to your practice. Why is that?
The world of art collecting is very small. As lawyers, we always want to vigorously advocate for our client. But we may be advocating in a deal where the client is selling to a buyer who is also a good friend because of the closeness of the community. So our job is not only to help the client negotiate favorable terms but also to get the deal done and make sure that the transaction is structured so that everybody walks away feeling good. We need to create situations where people feel they’re being treated fairly, because relationships and access are paramount in the art world.
How do you preserve goodwill when negotiating a transaction?
The art world is a community based on trust and often on friendships; transactions historically were handshake deals. We don’t need or want a 20-page contract to paper a deal if we can cover the essential terms in one page. If we understand the most important issues, we don’t need to ask for everything under the sun. What we put in the contract will depend on the facts of the transaction—the type of art being bought or sold, its value and provenance, the parties and the risk levels they are willing to assume.
Do you see any upcoming global shifts that could impact the art world?
It’s sometimes surprising what impacts the art market. For example, Russia’s invasion of Ukraine at first doesn’t seem directly linked to the art world, but there was an indirect link because of the number of active Russian buyers. The impact of the sanctions on those buyers did ripple through the art market. Whatever the development or situation, we always need to look at the two sides of the coin and optimize where we can for clients. So, for example, in a softer market, we often assist clients in using art as collateral for bank loans if a client needs to raise funds but they don’t want or need to sell. Our focus is on identifying and maximizing the opportunities—because there are always opportunities, no matter the shift.
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Chair, Art & Cultural Property