Contractual Due Diligence
Licensors typically spend thousands of dollars drafting license agreements with artfully crafted legal language to protect their property and ensure royalties are paid timely and accurately. However, licensors rarely determine whether the licensee has read and understands their reporting obligations under the agreement. In addition, the licensor typically does not verify whether the licensee has the necessary reporting systems in place to report under the terms of the license agreement.
Due to Miller Kaplan’s years of experience, we have the necessary skills to determine, for our licensee clients, whether the licensee is prepared to report properly under the terms of the license agreement. We typically spend a day or two reviewing draft license agreements prior to their execution with the licensee to verify that the terms of the agreement will be adhered to.
We also verify that the licensee will be maintaining a set of books and records in accordance with the license agreement. The performance of due diligence procedures on a prospective licensee, in advance of the signing of the license agreement, can prevent disagreements and legal battles several years after the signing of the agreement.
In some litigation and arbitration matters pertaining to the licensing industry, the absence of credible expertise from an accounting point of view can be the difference between justice and injustice.
For these cases, it is necessary that you have litigation support from a credible firm, with a history of providing comprehensive litigation support, including but not limited to, expert witness work, and additional retroactive and/or projected agreed-upon procedures. Miller Kaplan’s expertise in these matters will assist you and your legal counsel in resolving these disputes.
Our partners and managers are very active in the industry often teaching, speaking and lending our experiences to provide clarity on a variety of issues to industry decision makers and legal counsel. Our litigation support activities have been highlighted by our involvement in several litigation matters including Stephen Slesinger v. The Walt Disney Co.
Agreed-Upon Procedures and Consulting Engagements
In some instances, you may be uncertain if an all encompassing royalty compliance program is what you require. In other cases, you may know exactly what you want to accomplish and need an accounting firm to complete a special project.
For these times, you may wish to consider agreed-upon procedures (AUPs). With AUPs, we can tailor engagements to meet your specific needs and help you get a solid understanding of the issue(s) at hand. At Miller Kaplan, we offer and perform AUPs in accordance with the standards issued by the American Institute of Certified Public Accountants (AICPA).
We can also perform a consulting engagement on our client’s behalf. Consulting engagements are more useful when specific procedures cannot be agreed-upon prior to the start of our work and must be developed while the work is being conducted. Under either reporting format, AUPs or consulting, we provide our clients with the results they need to determine license agreement compliance by the licensee and under-reporting of royalties.