Honestly, I learned all about this subject from a lawyer!

There is as we all know a place for everything (and everyone), and everything and everyone should, in a perfect world, be in its’/their place. Lawyers included, as I learned from the general counsel of one of the nation’s top aerospace contractors.

Two broker’s had just completed arranging the terms and conditions under which a prominent aerospace contractor would lease several hundred thousand square feet of manufacturing and high-bay warehouse space from a local owner/developer. The property had been vacant for well over a year, so the facility was pretty much immediately available.. The contractor needed immediate occupancy; the broker’s were already counting their hefty commissions, as they are prone to do.

The LOI called for occupancy in thirty days or less – or no deal. Both sides needed to know a deal could be completed swiftly. The landlord had other interested parties in the space. The contractor needed to begin planning for a significant relocation and installation of heavy duty machinery. The landlord was insistent on using his lease document. The Fortune 500 behemoth was of course intent on using its’ own lease document. Over the course of the next 48 hours absolutely no progress was made in determining which document to use. Both sides stubbornly held to the position that they would not budge. The landlord figured the tenant really needed the space, the contractor was used to getting its’ way and figured the landlord would cave because of the lengthy vacancy he had endured.

On day three, at the broker’s suggestion they both agreed to have a look at each other’s leases. On day ten, a week later, the parties convened for a conference call to discuss the situation with their respective counsel. The call lasted less than fifteen minutes ending in a stalemate. Neither party’s counsel could envision negotiating an agreement using the other’s lease within the remaining twenty day period.

And then a funny thing happened. The lead counsel for the aerospace contractor called the landlord’s counsel at 9:00 am the next day and made the following suggestion. Meet us in 24 hours at the facility with a single attorney and a single representative who can make binding decisions on behalf of the landlord. Be prepared to wordsmith the two leases into a single document which can be fully executed the following day. The division president for the aerospace contractor had given his lead counsel marching orders to have a lease signed within 48 hours or move on to other options.

The landlord’s counsel called the landlord and explained the offer. The landlord was hesitant. The typical lease took weeks and weeks to negotiate, and often several more weeks to get completely executed. The landlord called to speak with the aerospace division president. The president repeated the marching orders he had provided to his lead counsel, and assured the landlord the task could be accomplished if the landlord was truly intent on putting a deal together.  The landlord expressed his hesitancy, recounting his experience with protracted lease negotiations and lengthy execution delays.

A lawyers place as it turns out, is often at the negotiating table. Put two lawyers from opposing camps in a room together, in front of their clients. Give each lawyer a client’s representative with decision making authority, and tell them nobody is leaving the room (literally) until the document is completed. Start turning the pages, focus on the meet and potatoes, negotiate in good faith, and wordsmith an agreement.

The aforementioned lease document was negotiated in less than twelve hours. The word processing, review and execution was complete 24 hours later. The cost to the contractor was the fuel in the corporate jet they used to fly their two employees in, and a  days pay for each of them, plus some administrative overhead. The landlord’s cost included a couple of round trip coach tickets, a days pay for his employee, a days pay for his attorney, his administrative overhead, and the catered lunch he provided. The landlord figured he saved several thousand dollars in legal fees. He now puts his attorney in front of his prospects attorney whenever possible. His annual legal fees have dropped dramatically.

© 2008 HCI Newsletter

 David Stuart publishes “High Commission Income”, an E-Newsletter dedicated to The Top Producing Real Estate Professional. Get his FREE Special Report, “The Perfect Storm Of The Century” at highcommissionincome.com