The artful dodgers: Graham Southern and Harry Blain

If there is one question on the lips of collectors, critics, curators and the merely curious, as they gather for London's art week, it is this: why have Harry Blain and Graham Southern, founder-directors of Haunch of Venison, left the gallery they set up in 2002? A gallery that became so successful that

Not only have the pair left – provoking headlines such as 'High-profile divorce stuns art world' and 'Smoked Venison' – but they have opened a new space and taken four of Haunch's most prized artists with them. Blain Southern, as their new premises on Dering Street are called, opened this week with a show by the prominent YBA Mat Collishaw. Artists Bill Viola, Rachel Howard and Anton Henning have decamped with him. As if that's not enough, Harry Blain tells me that a total of ten or 11 artists have gone with them – more than a quarter of their old gallery's roster. 'We didn't put out a list,' he says, 'because we didn't want to be hurtful.' But Matthew Carey-Williams, Haunch's new director, appears not even to be aware just how many of his stars are defecting. 'Will we see a couple of others go? It's very likely that we will,' he tells me. 'Will it be ten? Absolutely not.'

Blain and Southern may have set up the gallery seven years ago, but for the past three years Haunch has been owned by Christie's International. It was clear that this was never an entirely successful enterprise for the auction house: strains began to show after less than two years and for the past 18 months Blain and Southern were in discussions with Christie's management about the future direction of the gallery. 'It was a constant topic of conversation,' says Blain. Eventually, they tired of the internal politicking and of the carping by an art world that never forgave them for selling to Christie's. 'It made them pariahs,' says one respected critic. 'They may have made a huge amount of dosh, but people lost respect for them.' The pair decided they wanted their freedom. They offered to buy the gallery back, but negotiations failed after Christie's, according to one source, 'wouldn't offer a commercial price'. We could be forgiven for thinking that a state of war has been declared between two of London's most influential contemporary art dealers and the world's largest auction house.

Haunch of Venison has always been a talking point. When it opened its doors in October 2002, it did so with none of the diffidence that might have been expected of a new gallery hoping eventually to compete with established stars such as Gagosian, Hauser & Wirth or White Cube. Instead, Haunch immediately competed in London's major league, starting with a major new 7m-high sculpture by Rachel Whiteread, the Turner Prize-winning artist, and continuing with an array of well-known names including video artist Bill Viola, sculptor, photographer and painter Richard Long and arthouse film director Wim Wenders. It also snapped up that year's Turner Prize winner Keith Tyson, who had previously shown at the South London Gallery. Its private views, held in a three-storey townhouse off Bond Street that was once home to Lord Nelson, were events attended by everyone from artists such as Sir Peter Blake and Julian Schnabel to the Royal Academy's long-time éminence grise Sir Norman Rosenthal and its current head, the former National Gallery director Charles Saumarez Smith, as well as the likes of Jude Law, Kate Moss, Matthew Williamson and Boy George. The newly renovated 10,000sq ft space, with its sky-lit ballroom, echoed to the tinkling of champagne flutes. This was high-octane yet tasteful glitz to match a turnover that grew, in just over six years, to 'several hundred million', according to Blain (although official figures state that in 2007 turnover was £66 million).

If Haunch of Venison seemed sure-footed and confident, it was no surprise. Harry Blain, a disarmingly unpretentious 43-year-old former stockbroker, had been running Blains Fine Art, first from a mews office and then in premises on Bruton Street in Mayfair since 1992, dealing privately in Bacons, Warhols and Hirsts. A former schoolboy athlete raised in Surrey, his background working at Berkeley Futures (a bullion and futures brokers in Savile Row) enabled him to bring the worlds of art and finance together during a period when the bonus culture took off. 'He came from the City and he sold to the
City,' says the London dealer and international curator James Birch. 'No one else had managed to do that. Before, people in the City just bought sporting prints.' Within ten years he was
making annual sales of around £14 million, putting him in the top tier of UK contem-porary art dealers.

His partner Graham Southern had been head of Christie's post-war and contemporary art department from 1994 until 2001, when he left to become a director of the Anthony d'Offay Gallery, whose artists included Joseph Beuys, Jeff Koons and Anselm Kiefer. However, within months d'Offay, a pre-eminent figure throughout the 1980s and 1990s, suddenly decided it was time to retire, abruptly closing his business and firing his staff.

With Blain seeking to move to the inter-national level, the opportunity to join forces with the scholarly Southern, who has an encyclopaedic knowledge of contemporary art and the contacts and credibility in that world that Blain was still developing, was irresistible. Southern is quieter and more reticent, whereas 'Harry is the one who'll be buying drinks at the Groucho at 1am,' says a friend, but the pair share remarkable similarities. Neither went to university, both are highly cultivated, married with children, and are churchy – 'but not born again' – the pair even share the same dress-sense: smart but open-necked shirts, and go to the same tailor, Timothy Everest. 'The similarities with Gilbert and George end there,' jokes the friend. To make a bold statement about their intentions for their new gallery, the pair needed a space to match their ambition. A building d'Offay had never managed to utilise as he had wanted to in Haunch of Venison Yard, tucked between New Bond Street and South Molton Street, was ideal. Previously, plans by Norman Foster to renovate it had been refused permission. But the duo bought the lease and succeeded in having a £1 million design by Nick Malby, a student of Renzo Piano, approved.

Once completed, with many of the artists who had shown under d'Offay, such as Viola and Long, moving to the new venture, Blain's access to the City and Southern's unrivalled art-world address book, the new gallery could hardly go wrong. And to all intents and purposes it didn't, until 2007. In that year, Christie's announced it had bought the gallery from its two owners. The sum paid has never been disclosed, but would have run into the tens of millions. This move was greeted, according to veteran art markets correspondent Colin Gleadell, with 'shock and disbelief'. One of the art world's deep divides had been crossed, to the fury and disapproval of many.

On the surface, it may seem that galleries and auction houses are both about art, and therefore about artists. But there is a very big difference. On one side is the primary market: galleries, which represent artists, nurture their careers and are selective about just who is allowed to buy their pieces – respected and knowledgeable collectors, preferably, who will act almost as custodians of the works, and lend to prestigious museum shows. Even Charles Saatchi has been left in a fury after being refused works that he knows are for sale, just not to him.

On the other is the secondary market, where the work has already passed through the hands of one owner: this means private dealing, the kind Blain made his name with at his first gallery, often called 'backroom' because it does not relate to the exhibitions on the gallery's walls. It also refers to the big sales at the auction houses which, for all the care they put into their catalogues, their rigorous selection on quality, and the passion and knowledge of their specialists, sell art to whoever still has their hand up when the hammer falls. As one major international gallery owner puts it: 'We come out with publications, select writers, enable artists to produce their work whatever it takes, and then occasionally we talk about selling to a curator or whoever. That's the primary market. The secondary market is the marketplace. Artists are nervous about it. They don't produce cars, and they don't want someone to sell their work on quickly for a profit. If someone sells their work, it is personal.'

So when Haunch was bought by Christie's in 2007, there was consternation in many quarters. 'Is it about business or is it about art?' asked Nicholas Logsdail of the Lisson Gallery, whose artists include Anish Kapoor. 'Artists need freedom of spirit.' There was a considerable degree of preciousness in some of the reactions, for it is not true that Christie's has no regard for the work in which it deals, nor should its collaborations with the Tate and the Hayward Gallery be forgotten. But not many were prepared to see it this way. 'The cultures of the two worlds are very different,' explains Sarah Thornton, author of the behind-the-scenes bestseller Seven Days in the Art World. 'It's not easy to incorporate them under one roof, especially in a business where credibility is everything.'

The fear was that for all the talk of the Chinese walls that would keep the two companies strictly separate, the commercial spirit of the auction house would contaminate the pure, otherworldly air of the gallery. Haunch's new director Matthew Carey-Williams denies this was ever the case. 'We are not part of a system that functions to funnel art into the auction house,' he says. 'We are not there as some sort of Petri dish.' But that was exactly what many worried. And there were consequences.

I can almost hear Blain sigh when I bring up this period with him. 'The motivating factor was not the money. We saw [selling to Christie's] as an enabling move. There was significant financing and unprecedented access both for artists and collectors to the Christie's network. In us, they had a dedicated team for their private sales [in which a vendor asks for a buyer to be found discreetly], so they could concentrate on the auctions. From our point of view it was ideal, and for them, too.'