To Sue or Not, That is the Question

duke law suite picture

Click the picture (or here for a PDF of the article Duke University Makes Claim on Estate of Aubrey McClendon – WSJ) and check out an article about how Duke University filed a claim against the estate of the late Aubrey McClendon for close to $10 million in unfulfilled pledges.

We have no doubt that the pledges were legally binding.

What we should be doubting is whether this was the right move by Duke or not.  $10 million is a decent amount of money, even for Duke and its $6+ billion dollar endowment.

But here are a few questions I would have hoped Duke considered before embarking down this road:

  • What is the likelihood that this story will end up on the front page of the Wall Street Journal – embarrassing the university and possibly sending a chill towards major donors making legally binding commitments (by the way, someone from Princeton told me that their policy is make all pledges NON-legally binding)?
  • What is the likelihood Duke will receive their share considering Mr. McClendon may not have any wealth left by the time they get to unsecured creditors like Duke?
  • What if it turns out that Duke will be taking funds while McClendon’s widow and/or kids receive nothing due to the state of his finances?

I am a huge fan of using legally binding pledge commitments when appropriate and even filing claims to collect on them – when appropriate.

But here, I wonder if this was the right move.  I know they had to file a claim before the deadline – and only afterwards will they know the answer as to whether there is enough to go around.  Still, the first negative bullet point already came to fruition today.

One comment

  1. Suing a donor or his/her estate should always be a last resort. However, there are times when taking legal action is entirely appropriate, particularly if doing so honors the donor’s intention. For more on this, checkout a post I published sometime ago by Brian Sagrestano, Robert Wahlers, and me: https://michaelrosensays.wordpress.com/2013/01/25/to-sue-or-not-to-sue-over-unpaid-pledges/ . The post involves legal action taken by the Kansas City Art Institute.

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