Future of Murdoch empire comes down to a court in Nevada

Over the next few weeks, the future course of one of the most powerful media empires on the planet will depend on secret proceedings set to take place inside a domed, beaux-arts-style courthouse in downtown Reno, Nevada.

There, the most powerful person in the room will be not the builder of that empire – K. Rupert Murdoch, a man who has made and broken leaders across the globe – but a mild-mannered county probate commissioner, Edmund J. Gorman Jr., who does much of his work without fanfare in his high-desert city.

It was Gorman who several weeks ago agreed to hear evidence in a fight between Murdoch, 93, and three of his adult children that is not about financial benefits but about control over his media companies after he dies. His businesses include Fox News, the Wall Street Journal, the Sun of London and a large collection of newspapers in Australia.

And next week, barring an unexpected last-minute settlement, it is Gorman who, after five days of testimony from Murdoch and his four eldest children in his hearing room, will recommend whether Murdoch should be granted his wish: to guarantee that his elder son, Lachlan, gains full control over the media dynasty after he dies.

That can happen only if Gorman allows Murdoch to change the terms of the “irrevocable” family trust he agreed to some two decades ago. Set in stone after his divorce from his second wife, Anna Murdoch Mann, the trust gives Lachlan and his three oldest siblings equal say over the controlling shares of the family’s companies upon Murdoch’s death.

The final decision in the case will have wide-ranging effects in media and politics, determining whether Fox News and the Murdochs’ other populist conservative clarions stay on their hard-right course, as Lachlan Murdoch prefers, or move toward the more centrist sensibilities of the three siblings, James, Elisabeth and Prudence, who Rupert Murdoch fears will outvote Lachlan upon his passing.

The case could bring the denouement in a decades-old family drama over whom Murdoch would choose as his true successor. It has pitted sibling against sibling and finally created a lasting rift between Murdoch and his second son, James, who has emerged as an open critic of the empire’s right-wing populism and climate denialism.

The saga reached its apotheosis late last year when Rupert Murdoch surprised James, Elisabeth and Prudence by secretly moving to change the trust in Nevada to favor Lachlan – drawing harsh recriminations from the disenfranchised children, who moved to challenge the proposed changes in Nevada probate court.

All of that had been taking place in secret until July, when the New York Times obtained documents detailing the looming court fight.

The case has brought perhaps the most national attention to the Washoe County probate courthouse since it graced the cover of Life magazine in 1937 for its reputation as the epicenter of a relatively new trend: divorce. (The cover image featured a newly divorced woman kissing one of the courthouse columns; the piece called Reno “Mecca of the disillusioned June bride.”)

Starting Monday, the father and the children are scheduled to appear before Gorman to provide testimony that promises to be as gripping and Shakespearean as anything in the hit HBO show “Succession,” which was, after all, based loosely on the Murdoch family.

Gorman has almost entirely shut down legal efforts – including by the Times – to open the case and that testimony to the public. Nevada probate law is popular with dynastic titans like Murdoch for its privacy protections and tax provisions.

Technically, Gorman is not a judge. As the probate commissioner in Washoe County, he is effectively a “special master” assigned to weigh evidence in disputes, including in triallike hearings such as those he will hold with the Murdochs, and then write his legal opinion at the end, as a judge would.

His opinion is formally a recommendation that requires signoff from one of the judicial district’s three probate judges. The judge will have to weigh in more directly if either party challenges Gorman’s recommendation – which must be done within 14 days of his decision. The judge could at that point open the case to still more litigation.

Even after that, the losing side has the right to try to appeal up through the Nevada court system.

“Something like this could go on for years,” said Molly LeGoy, a probate lawyer in Reno. That is, she said, a common risk of such family trust battles, which, geopolitical implications or no, often surface sibling rivalry, betrayal and ancient emotional grievance.

“When legal issues include family dynamics, there’s always the opportunity for more hurt, more venom – and more legal action,” LeGoy said.

Gorman, 43, is a graduate of Stanford Law and served as a local probate lawyer before the chief judge of Nevada’s 2nd Judicial District Court appointed him to his current job in 2019. According to his official biography, he is an avid skier and waterfowl hunter. (He declined interview requests.)

As he rarely warrants mention in the local press, Gorman’s main public profile comes by way of his membership on the boards of the Reno Jazz Orchestra and the Reno Host Lions Club Charity Foundation.

While in private practice, he was so well known for his advocacy of pro bono work that he was named Pro Bono Attorney of the Year in 2015 by Nevada Legal Services. The next year, in an article for Nevada Lawyer magazine, he called on his fellow lawyers to channel their inner Atticus Finch – “the thoughtful, ethical small-town lawyer” in “To Kill a Mockingbird,” he wrote – by doing pro bono work.

In Gorman, the Murdochs will be facing a judicial temperament that local lawyers describe as fair, by the book and serious about the rules.

“He takes his job very seriously, and he’s somewhat of a legal scholar himself and takes great pride in accurate opinions,” said J. Douglas Clark, the founding president of the Probate Bar Association of Washoe County, who has frequently appeared before Gorman. “He has measured levity but conducts everything with proper decorum.”

Among the rules that Gorman takes seriously are those involving confidentiality. For a time, the Murdoch case was even hidden entirely on the court’s official website, an extraordinary level of secrecy, Clark said.

Some news organizations, including the Times and the local site Our Nevada Judges, sued to open the Murdoch hearing room to the press. In resisting, Gorman wrote, “The parties in this case brought their case in this jurisdiction and invoked their rights under the Nevada Revised Statutes under the expectation that this ‘confidential information’ would remain confidential.” (On Thursday night, he reaffirmed his refusal to open his hearing room and almost all of the case record.)

The only visibility into how Gorman is handling the Murdoch case came in the sealed legal documents obtained by the Times, which contained a pretrial recommendation on the two sides’ arguments.

Appearing to play it right down the middle, Gorman determined that Murdoch was within his rights to change the trust, under an amendment clause that allows him to make alterations as long they are solely for the benefit of all his heirs. But Gorman said it was not clear that Murdoch was making a good-faith argument in saying he was pursuing a change to benefit all the heirs.

Murdoch has argued that Lachlan’s siblings could change the editorial direction at outlets like Fox News to be less conservative, or bring constant leadership fights, all of which would harm the value of the family’s holdings, he maintains.

The coming evidentiary hearing is meant to determine Murdoch’s motive, which will determine Gorman’s opinion on the proposed changes.

While many family trust cases drag on for years, LeGoy noted that many were ultimately settled. As the Times first reported in 2019, Lachlan and his siblings came close the previous year to a deal in which he would buy them out of the trust, but it did not go forward.

The Wall Street Journal reported this week that James Murdoch had raised a similar potential deal before next week’s scheduled court appearance, but with no agreement in sight, the dispute is headed to Gorman’s hearing room instead.

This article originally appeared in The New York Times.