Art, music and design are among India?s growth sectors. You would think with business booming and intellectual property being as complicated as it is, there will be gangs of lawyers servicing these sectors. You would be very wrong. There are very few (if any at all) bulge-bracket corporate law firms that have an art, design, and music practice. Why?
Those in the business of selling art, music and design, in theory, have the great need to ensure the deterrent/inhibitor effect, as well as to ensure the enforceability and protection of intellectual property rights. Law firms can do this job. In the US (especially in California and New York), as well as in Europe, many law firms have strong practices that cater to the exact needs that any party in these businesses would have.
On top of the fact that niche practice areas are traditionally tough nuts to crack initially, there?s the issue of what for lack of a better description can be called the Indian mindset. This refers to the strong aversion most art/music/design entrepreneurs have to hiring impersonal (which translates as insensitive) corporate law firms. These are businesses that run on personal relationships, goodwill, and, of course, the hopelessly skewed balance of power in favour of one deep-pocketed entity or individual. It is tough for a law firm to convince a firm in these sectors that his profit maximisation and risk minimisation goals are more important than the network of personal relationships. This is the general problem. There are problems specific to each sector.
In design, although there is ample interest from international designers and buying houses, the problem is two-fold: lack of awareness and lack of volumes. Most Indian designers?while being extremely talented, savvy and entrepreneurial?are not au fait with procedures and laws that can protect their intellectual properties as well as enforce their rights. The central goal here is to prevent others from poaching your ideas. However, even if designers start appreciating the value of IP protection, there?s a second problem: the lack of volumes in the Indian market. This makes an additional expense (legal services being notoriously expensive) unjustifiable, especially for couture or other products tailored to the upper-income bracket. From the perspective of a low-margin design outfit, IP-related expenses look like a luxury. A fallout of this is that designers get a perverse incentive about not following IP rules for their own products, since they are not sure whether their designs infringe, even if unwittingly, somebody else?s work.
So legal services in the design industry will become imperative only when the industry is sophisticated and lucrative enough for international entities to become a target for global M&As and partnerships. The moment such commercial interest is expressed, it will be in the interest of Indian designers to protect their work so as to get the best value from a deal.
The music industry calls for complex contracting that factors in ownership of IP, redistribution rights, royalties (both step-up, as well as steady), incentives, and confidentiality issues. Plus, there are anti-piracy and content-protection. Why aren?t armies of lawyers doing all this? Principally because of the leverage that music companies and production houses have?it?s a ?sign or else? situation. Artists have little leverage in India at present. When there?s more competition in the music industry, when Indian artists acquire savvy agents and their managers evolve, the complexion of this industry will change and inevitably the lawyers will come in.
Art? This is the biggest enigma. India?s art mart was booming before the slowdown and is expected to recover fast. India?s art business has acquired global recognition and Indian artists are big draws in global markets. There have been unheard of investments in art funds, exceeding hundreds of crores. Artists whose paintings were once valued at a few lakhs have commanded crores. Laughing all the way to the bank, that?s what art galleries and buying houses have been doing; their advantage being longstanding relationships with artists and collectors. Sotheby?s and Christie?s have strengthened their presence in India. There are domestic big players like Osian?s.
In short, the potential is big. And, more than design and music, you would expect India?s art business to employ big law firms.
But every player in this business has his own reason for not being keen on Indian law firms. International collectors and buying houses as well as auction houses are already either well-represented by in-house counsel or employ international law firms. Jurisdiction is important and it is likely that many of the agreements are subject to governing law and jurisdiction clauses that are based on British laws and venue. Indian artists are unlikely to bring in lawyers at this point, until and unless the entire process becomes complicated and thoroughly commercialised. This essentially means art galleries and/or agents who manage these artists will have to see the need for maximising or protecting their clients? interests and benefits. Other stakeholders who are capitalising on the art boom obviously don?t want lawyers to come in and complicate a good thing.
Will design, music and art entrepreneurs in India learn to love lawyers? The process could start, as it does where lawyers are concerned in other cases, when one of the major parties gets burnt by a deal.
?The author is a sports and entertainment attorney at J Sagar Associates. Views are personal