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Prince Estate Should Pursue Repayment for Fees and Commissions in Rescinded Universal Deal, Investigation Says

An investigation into the nullified $31 million recorded-music deal between the Prince estate and Universal Music Group recommends that the estate should pursue repayment for fees and commissions paid to its legal counsel and former special entertainment advisors, Charles Koppelman and L. Londell McMillan, according to heavily redacted court documents made public Friday. The total commission earned by Koppelman and McMillan is estimated to be around $3.1 million, according to sources close to the situation.

The investigation, conducted by second special administrator Peter Gleekel and Larson King LLC, was appointed in August to investigate liability in the nullified deal. It said Bremer Trust, the temporary administrator of the estate (which has since been replaced by Comerica Bank), had acted “prudently and reasonably” and saw no basis to purse a claim against it.

However, Gleekel did recommend the estate working to recover fees from legal counsel Stinson Leonard Street, LLP and 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,” he wrote. The advisors were paid for their work in brokering that deal and several others they conducted for the estate during their seven-month term as special entertainment advisers — including agreements for music-publishing, merchandising and performance rights — but the report concluded that in the recorded-music deal they did not provide “anything of value that would entitle [them] to a commission” and that “it appears that the advisors did not comport themselves with the requisite care, skill and prudence called for under the circumstances.”

The $31 million deal — which purportedly comprised all of Prince’s music not under contract to Warner Music as well as the contents of his much vaunted “vault” containing thousands of unreleased recordings — was announced in February and immediately came under close scrutiny from Warner, which claimed it held the rights to some of the recordings included in the Universal deal. Sources tell Variety the main points of contention were the expiration dates of Warner’s rights to certain recordings, which are significant in the case of an artist whose commercial peak was 25 to 35 years ago. After several months of investigation and Judge Kevin Eide’s request that the parties find a way to salvage the deal, ultimately no way forward was found and the agreement was officially rescinded in July.

In a statement to Variety, McMillan wrote: “I have not seen the full report to pursue reimbursement [of] legal and advisor fees, however I stand by my work done as business advisor to the Estate in both negotiating lucrative business deals to benefit the estate and allow distribution of Prince’s music.  Contrary to false rumor I was not hired as the lawyer and any statements of such are simply false.  The lawyers hired to ensure the legality of the UMG deal supported the deal, and I’m confident that the court will ultimately determine I acted in the best interest of the Estate and Prince fans should know I aimed to get them music without delay or interference.” A representative for Koppelman did not immediately respond to Variety‘s request for comment.

While the three other deals the pair negotiated for the estate are not contested, the court documents criticized the pair’s familiarity with Warner’s 2014 agreement with Prince — which sources say granted the artist long-fought-for rights to the majority of his work released on the label, albeit with certain key exceptions — and said that a closer reading would have raised “material questions … 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.” In a February 2017 press release announcing the deal, Universal said that “beginning [in 2018], UMG will obtain U.S. rights to certain renowned Prince albums released from 1979 to 1995” — the years that the artist was signed with Warner Bros. Records and released his most commercially successful recordings by far, including the “1999,” “Purple Rain,” “Parade,” “Batman,” and “Diamonds and Pearls” albums.

Although Warner holds this contract close — the judge had to order the company to share it with Universal earlier this year — the estate had access to it. In a court document released in June, UMG wrote that McMillan said on June 22 that the Warner agreement “could have been drafted better,” and “there is no dispute that these rights are confusing.”

The recorded-music assets at the center of the rescinded deal are now presumably available for licensing — although it will be a daunting task (with stiff legal bills) for anyone who decides to pursue them.

Three of Prince’s six heirs, who are represented by McMillan, filed a petition in October to remove Comerica as the estate’s personal representative for reasons including what they claim is an improper and unauthorized decision to move the “vault” of unreleased recordings to Los Angeles from the artist’s Paisley Park compound in Minnesota; for improperly defending the rescinded recorded-music deal with Universal; and essentially for being insufficiently familiar with Prince’s music and business to be a suitable representative.

In a 65-point document made public Monday, Judge Eide denied that petition. During the course of that procedure, representatives for Comerica and the estate claimed that many items in Prince’s vault were damaged due to neglect and poor storage procedures at Paisley Park; and that the estate’s current entertainment advisor, Troy Carter, headed off a lawsuit from Universal Music Group over the rescinded recorded-music deal.

 

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