The Key Lesson Learned From the Steely Dan Estate Lawsuit
It was already a rough year for Steely Dan fans: Walter Becker, the band’s co-founder and guitarist, died in early September. Now the surviving member, Donald Fagen, is embroiled in a complicated legal feud with Becker’s estate.
At the center of the suit is a buy/sell agreement signed in 1972, the year the band formed, which stated that upon the death or departure of a Steely Dan bandmember, the group would purchase that member’s shares. By 1975 Steely Dan was effectively a duo, with Becker and Fagen accompanied by session musicians.
Fagen’s suit is apparently an effort to head off a move from Becker’s estate: He alleges that four days after Becker’s death from esophageal cancer on September 3, he received a letter that said: “We wanted to put you on notice that the Buy/Sell Agreement dated as of October 31, 1972 is of no force or effect.” The letter also reportedly demanded that Becker’s widow, Delia, be appointed a director or officer of the group, and that she was entitled to 50 percent ownership of Steely Dan.
The buy/sell agreement, if enforceable, would entitle Fagen to purchase Becker’s 50% ownership of the band and, therefore, be the sole owner and retain 100% control of the band. While Becker’s estate says the suit is “riddled with half-truths and omissions,” and regardless of the ultimate outcome of this dispute, there is a lesson both aspiring bands and entrepreneurs can learn from this story:
Estate/Legacy Plans Need To Be Updated Frequently. The buy/sell agreement in question in the Steely Dan lawsuit was apparently executed just before the release of their first album. In other words, it was done when Steely Dan was relatively unknown and had not achieved international success or amassed such a large catalog of music and other properties and rights. At the time, it was a fairly forward-thinking move (most bands have no agreements in place when they first start out). The problem is, however, it was never updated. The structure and governing documents through which a band (or any organization) operates need to be treated as a plan that can and will evolve over time as the band itself evolves. A legacy plan requires continual oversight and must be proactively implemented on an ongoing basis to truly work in the best interest of all parties involved. Bottom line: having an agreement that is 45 years old still govern any type of relationship is usually not a good idea.
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