The Bacon–Marlborough Dispute: A Case Study in Mediation
By Alida Camp
The recent dispute between the Estate of Francis Bacon, one of England’s most important 20th-century painters, and the prestigious London gallery Marlborough Fine Art—described in the British press as “one of the most bitter art wrangles in decades” and “the most sensational legal spat the British art world has seen”—illustrates the limitations of traditional dispute resolution through litigation. Marlborough represented Bacon from 1954 until his death in 1992, and possessed exclusive rights to sell and reproduce Bacon’s work. The Estate of Francis Bacon brought suit against Marlborough alleging breach of fiduciary duty, failure to account, and even blackmail. Significant discovery and motion practice ensued. Counsel for the parties anticipated a 12-week trial. Litigation cost estimates were in the millions of pounds. Success would have meant as much as £100 million for Bacon’s estate. In addition, English law generally requires the loser to pay the victor’s legal expenses.
The case abruptly settled days before the trial was to begin.
Attorneys for Bacon’s estate announced, in their press release following the settlement, “Marlborough will release to the estate all documents still in their possession that belong to Bacon or his estate. Each side will pay its own costs.”
Although the settlement resolved some issues between the parties, litigation left behind a damaged relationship, much negative publicity, a number of still unresolved issues, and legal fees in the neighborhood of £100 million. Had the parties instead engaged in mediation, the results might have been dramatically different.
A Role for Mediation
Mediation involves a neutral third party—the mediator—and allows the parties to resolve their dispute directly. Unlike litigation, where a third-party factfinder reaches a decision regarding the past conduct of the parties and the remedy, if any, to be applied, mediation requires the parties to take responsibility for their dispute’s outcome. They work with a mediator, who facilitates their negotiations and analyzes their situation and the potential court results. The costs, not just financial, of proceeding in court, and the benefits, also not just financial, of an amicable resolution, are also investigated. While attorneys frequently participate in mediations as advocates, the true responsibility for participation and settlement lies with their clients, the parties to the dispute.
By working collaboratively to reach a joint agreement, rather than maintaining adversarial positions until a “winner” is selected, mediation enables the parties to maintain their relationship, or even to restore a damaged one. Unlike litigation, in which the parties’ goal is to destroy credibility and refute each other’s evidence, mediation is conducted in a cooperative environment.
If they had used mediation, both the Bacon estate and Marlborough would have worked together, with their mediator’s and counsels’ help, to reach a solution. By not using mediation, the result was that “relations between the Bacon’s Estate and his life-long dealer are now strained and it may be some time before they can work constructively together” (Art Newspaper, issue 123). Rather than the damaged relationship that arises when each side is attacking the other to establish its own veracity, an improved relationship often results during mediation precisely because the parties work together. Trust is essential to the negotiation process. Restoration of trust that has been harmed through events up to and including litigation can and often does assist in rebuilding the relationship. The parties can choose to continue their business relationship, enter into a new agreement, or terminate their relationship more amicably.
Mediation focuses on the parties’ underlying interests—what is truly important to them—rather than their positions, the strategic posturing of their litigation stances. Addressing their true interests helps them understand each other and reach a mutually acceptable solution. After all, while each side may want to maximize its final position, in the end it is the other’s willing consent that is essential for effective agreement. Any agreement must address the concerns of both sides.
In the Bacon–Marlborough dispute, had mediation occurred early on, each side would have benefited from a more constructive relationship. In particular, as Art Newspaper noted, the Bacon estate might have benefited from open access to Marlborough’s records of the artist’s work, while Marlborough might have been granted rights to create and offer for sale Bacon reproductions. Unfortunately, the broken relationship resulting from costly and drawn-out litigation now makes it difficult if not impossible for them ever to reach an amicable agreement on these, or any other, points.
Mediation enables parties to reach business solutions by allowing them to make any legal agreement to which they concur. Moreover, they are free to address and resolve all issues, including those not necessarily involved in a particular legal proceeding. Creativity counts in this process. Parties often look to their future, structuring a solution to include nonmonetary business agreements that depend on their continuing relationship. They may even enter into a broader or longer-term agreement than the one in dispute. The goal is to create a win-win solution, rather than litigation’s win-lose resolution.
The Bacon estate and Marlborough might have been able to reach an agreement covering not only the contested legal issues but also any other outstanding issues, such as ongoing access and reproduction rights. Mediation would not, however, establish the public precedent that a legal decision can. Some commentators noted that a judicial decision in the Bacon–Marlborough case could “bring about some much-needed change [in the balance of power between artist and well-established gallery].” With a mediated resolution, there would have been no impact on similar artist–gallery relationships.
Apart from the foregoing, mediation in the Bacon–Marlborough case likely would have resulted in substantial savings of time and legal fees. Mediation is often a relatively short process, with disputes often resolved in a day or two. Even where they are resolved at the end of a series (not necessarily contiguous) of mediation sessions, the cost savings are significant. While the Bacon–Marlborough dispute’s complexities might have precluded a quick mediated settlement, mediation almost certainly would have resulted in significant savings of time and expense. After the Bacon–Marlborough case settled, each party indicated relief that it did so and that they could get back to their respective work. The Executor of the Bacon estate, Professor Brian Clarke, noted that “[we] now intend to focus all the Estate’s resources in creative enterprises relating to Bacon rather than the time-consuming investigation of the relationship between artist and Marlborough.” Marlborough stated that it was “glad that we can ... get on with our real business, which is promoting the work of some of the world’s finest artists.” Mediation would have enabled each party to get on that much sooner.
To illustrate, the substantial delay and expense of document production, depositions, motions, and hearings can often be avoided altogether. Even where the parties desire an exchange of information, they can work together to narrow their requests, thereby minimizing the attendant expenses of discovery and discovery-related disputes. The estimated £100 million of legal expenses during the Bacon–Marlborough litigation would almost certainly have been reduced had the parties chosen to mediate. In particular, the Bacon estate might not have been forced to sell some of its paintings to meet its legal fees.
Even where mediation does not produce quick results, settlement of the ensuing litigation is often facilitated by an earlier mediation process. This is largely because issues can be narrowed, facts can be agreed upon, and the parties can begin to think about successful resolution. In any event, even if mediation efforts do not result in resolution, the parties have not been prejudiced in their right to pursue litigation to the same extent as if no mediation had occurred.
Mediation is equally effective in many types of disputes, even prior to the initiation of an adversarial proceeding. For example, mediation can be used to resolve fee disputes between accountants and their clients, professional malpractice disputes, and disputes pertaining to the scope of services for which an advisor has been engaged. The significant benefits of mediation warrant that parties and their attorneys consider mediation as an early alternative to the lengthy, expensive, and adversarial litigation process.
Philip Zimmerman, APM, CPA
Mediator and Arbitrator
The CPA Journal is broadly recognized as an outstanding, technical-refereed publication aimed at public practitioners, management, educators, and other accounting professionals. It is edited by CPAs for CPAs. Our goal is to provide CPAs and other accounting professionals with the information and news to enable them to be successful accountants, managers, and executives in today's practice environments.
Visit the new cpajournal.com.