A second special administrator argued in favor of the icon's estate's former lawyers Charles Koppelman and L. Londell McMillan repaying their commission in the failed $31 million negotiation.
A second special administrator appointed by the judge overseeing the Prince estate submitted findings on Friday (Dec. 15) that the estate should pursue a claim for repayment of any fees, costs and commissions paid to its legal counsel during negotiations of a canceled $31 million recorded-music deal with Universal Music Group from earlier this year.
The second special administrator Peter Gleekel and his law firm Larson King LLC's findings follow an appointment from August to investigate liability in the failed deal. They had been tasked to evaluate whether the estate has a "reasonable basis" to pursue a claim against any entity or individual connected with the recession of the deal in July, and whether it is in the estate's best interest to pursue such a claim. Prince died April 21, 2016.
The UMG deal was negotiated by the estate's former entertainment advisors Charles Koppelman and L. Londell McMillan, and approved by the estate's first special administrator, Bremer Trust, along with the judge. It gave the label rights to a package of Prince's recorded music, including his trove of unreleased material known as "the vault." Soon after the deal was struck, UMG sought to void it over uncertainty whether the rights it had been granted conflicted with those already held by Warner Music Group from a deal made in 2014.
Gleekel's investigation said Trust acted "prudently and reasonably" in retaining the legal counsel that advised and assisted in the UMG negotiations and did not find any reasonable basis to pursue a claim against the special administrator. Given the negotiation's complexity and music industry's specialized nature, it stated, "There has been nothing revealed by the investigation that the Special Administrator acted unreasonably in retaining experts and agents to assist in monetizing the assets of the Estate and specifically with respect to the UMG Agreement."
But that's not all. Citing Minn. Stat. § 524.3-715(22), Gleekel said it must also be considered whether those representatives acting on behalf of the estate breached their duties in making the best possible decisions for the beneficiaries.
Significantly, Gleekel pointed out that none of those representatives or advisors Koppelman and McMillan reviewed the earlier WMG agreements, despite either possessing them or having access to them. Neither did they discuss the agreements with Rhonda Trotter of Arnold & Porter Kaye Scholer LLP who represented Prince in connection with the 2014 WBG agreement. Had they done so, Gleekel wrote, "there would have been material questions raised concerning the scope of the rights granted to UMG in the UMG Agreement in respect of the WB Masters that required further investigation, analysis and diligence."
Ultimately, Gleekel recommended specifically pursuing to recover fees from Stinson Leonard Street, LLP and the deal's advisors, Koppelman and McMillan. "Both have received something of value in the nature of an unjust action and are not entitled to it and under the circumstances; it would be unjust to permit them to retain it," wrote Gleekel. Alternatively, he argued that monies paid to the parties could also constitute as damages to the estate in the form of overcharged fees, of which the court has the power to order repayment.
Gleekel continued, saying there is a reasonable basis to pursue a claim against Koppelman and McMillan for repayment of their 10 percent commission on the UMG agreement, since it does not constitute a commissionable contract. Since the deal was rescinded, he wrote, "it makes no sense to conclude that the Estate has received anything of value that would entitle the Advisors to a commission."