By Perry Cooper, Bloomberg BNA
Kirkland & Ellis LLP faced a conundrum in a pro bono case: how to efficiently distribute copyright royalty payments from composer Tony Geiss’s estate to 10 of New York’s largest charities over the next 70 years.
Geiss is best known for writing “Elmo’s Song” and other music for “Sesame Street,” and the screenplays for the 1980s animated films “An American Tale” and “The Land Before Time.”
The team at Kirkland was stumped about how to deal with the administrative and other burdens that would come with getting the money to the large, diverse group — which included both The New York Public Library and the Nature Conservancy—until New York associate Kristen Curatolo came up with a creative solution.
$580,000 to 10 Charities
She found Royalty Exchange, a Denver-based startup. The company, founded in 2011, runs an online marketplace for buying and selling royalties.
Royalty Exchange bundled the copyright royalty payments, vetted the payment history, marketed them and auctioned them off to the highest bidder, Curatolo told Bloomberg BNA.
The novel approach netted $580,000 for the charities, up from a starting bid of $430,000. That’s over five times the $108,500 in royalties the collection earned in 2016.
The auction winner, identified only as David G., will earn royalties any time the songs and movies are “on TV or online, or if someone buys the DVD or CD, or streams the songs online,” Royalty Exchange says on its website. “Not to mention the bragging rights involved in owning a piece of television history.”
Each charity got a lump sum according to the percentages laid out in Geiss’s will, Curatolo said. The charities include The New York Public Library, Doctors Without Borders, the American Cancer Society, and the Nature Conservancy.
“That was much preferable to the charities than having their financial lives intertwined for the next 70 years,” Anna Salek, who also worked on the case, told Bloomberg BNA. “They were much happier to have the cash value up front.” Salek is a partner in Kirkland’s trusts and estates practice group in New York.
The practice group gets a fair number of trusts and estates cases on a pro bono basis. Usually that means setting up public charities and helping them navigate not-for-profit rules, or helping with estate administration and litigation.
But this case was unusual because it involved so many beneficiaries.
“Sometimes you might represent a person as the beneficiary of an estate, but in this case we were representing the 10 residual beneficiaries as a group,” Salek said. “It was unusual for them to be a group because they’ve probably never all worked together before but in this situation they all had a common interest: to get the assets that were given to them when Tony died.”
It wasn’t as simple as sending 10 checks instead of one, Salek said. Almost all of the royalty payors said there would be just too many administrative burdens involved in issuing multiple checks to multiple charities in different proportions over a long period of time.
This was the first time Royalty Exchange had ever worked with an estate. “It was new to them as well,” Salek said. “They were very happy to know us, and the feeling was mutual.”
Curatolo said she feels lucky to be at a law firm that really values and encourages pro bono work.
“It’s also a great opportunity for associates to roll up their sleeves and get a lot of practical experience,” she said.
“It’s in keeping with Kirkland’s culture that I was given a lot of responsibility and free rein to think outside the box and come up with something that was different,” she said.
And that’s just what she did, Salek said.
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