Cross-border deals spice up practice

Cross-border deals spice up practice: [National Edition]
Czarnecka, Marzena. National Post [Don Mills, Ont] 30 May 2007: FP16.

Abstract:  “As business has become very complex, what real estate lawyers do and what they specialize in has changed and become very complex, too,” says Sheldon Disenhouse, a real estate partner with the Toronto office of Fraser Milner Casgrain. “There are real estate lawyers who deal with straight purchase and sale of land, and others who deal with the finance aspect of real estate transaction, working closely with banking lawyers. We have a group of lawyers who specialize in commercial leasing. Then there is the municipal/land planning aspect. The generalist real estate lawyer isn’t dead — most good ones start out as generalists and build specialized or niche skills on top of that foundation — but in real estate as in other areas, specialization has certainly increased.”

“Lawyers are either part of the problem or part of the solution,” says Mr. [Stephen Messinger]. “What we do, it’s not about beating up the other guy or finding the perfect lease. Nothing in life is perfect. If you get to an agreement that covers 90% of what your client wants, you probably will not achieve the other 10% without killing the other side, killing your client’s budget, or killing your family life.” (What? There are lawyers out there with a family life?)

“In Canada, because we have had fewer landlords than in the larger U.S. market, our historic landlord-tenant relationship has been one of strong landlords and compliant tenants,” says Mr. Messinger. “In the larger and more competitive U.S. market, U.S. retailers and tenants are much more used to getting what they want.”

Full text: 

Tinker, tailor, soldier, sailor, rich man, poor man, real estate lawyer Real estate lawyer? What sort of profession is that?

Good question. Not that Canadian real estate lawyers are in the grip of an identity crisis. They most emphatically are not. Individually, they know who they are and what they do and, most importantly, what their quantifiable contributions to their respective firms are. And the law firms, too, for the most part have figured out whether it pays for them to “do” real estate or not. In the late 1990s, it was one of the practice areas with a big question mark over it. Some law firms shed it. Others chose to specialize. In the process, they have redefined what it means to be a real estate lawyer. And they’re still redefining it.

“As business has become very complex, what real estate lawyers do and what they specialize in has changed and become very complex, too,” says Sheldon Disenhouse, a real estate partner with the Toronto office of Fraser Milner Casgrain. “There are real estate lawyers who deal with straight purchase and sale of land, and others who deal with the finance aspect of real estate transaction, working closely with banking lawyers. We have a group of lawyers who specialize in commercial leasing. Then there is the municipal/land planning aspect. The generalist real estate lawyer isn’t dead — most good ones start out as generalists and build specialized or niche skills on top of that foundation — but in real estate as in other areas, specialization has certainly increased.”

Nailing down exactly what a real estate lawyer is these days can be tough, agrees Stephen Messinger, a partner with the commercial leasing group at Minden Gross, a 50-lawyer firm with a real estate bent. But regardless of what specializations they have pursued, today’s real estate lawyers have to respond to the same pressures their clients do: steady consolidation, faster pace of deals, and more fluid borders. All these factors lead to increased complexity of business and the need for evermore sophisticated, flexible, creative, and pragmatic legal services.

“Real estate has seen a tremendous level of consolidation via take-overs, merger and buyouts,” says Mr. Messinger. “For people who practice and do business in this area, the shrinking market breeds more familiarity, more repeat deals, leases and contracts and other agreements negotiated between the same parties, which has consequences for how those types of transactions are done. And, technology affects the speed at which deals are done, and really fosters a ‘time is money’ kind of attitude.”

That means real estate lawyers, be they negotiating a modest commercial lease or the sale of O&Y REIT or a major Canadian hotel portfolio, have to bring a pragmatic attitude to the table.

“Lawyers are either part of the problem or part of the solution,” says Mr. Messinger. “What we do, it’s not about beating up the other guy or finding the perfect lease. Nothing in life is perfect. If you get to an agreement that covers 90% of what your client wants, you probably will not achieve the other 10% without killing the other side, killing your client’s budget, or killing your family life.” (What? There are lawyers out there with a family life?)

Much of this new attitude, particularly apparent in Canada’s new generation of commercial leases, has come into Canadian real estate from, where else, down south, as the small and cozy Canadian real estate market got an injection of globalization –or at least NAFTA- – when U.S. retailers and other players pursued opportunities up north.

“In Canada, because we have had fewer landlords than in the larger U.S. market, our historic landlord-tenant relationship has been one of strong landlords and compliant tenants,” says Mr. Messinger. “In the larger and more competitive U.S. market, U.S. retailers and tenants are much more used to getting what they want.”

When they arrived in Canada, they had to deal with Canadian landlords very used to getting what they want. The result?

“They butted heads,” says Mr. Messinger. Then came a second wave of conflict: Canadian retailers demanding of Canadian landlords the same terms they were giving to their U.S. tenants. More head butting.

Then, lawyers to the rescue, with a “get the deal done” attitude at the forefront.

“Lawyers really have to become practical — not that they are not practical now — but if objective is to get the deal done, you have to look at these concepts, understand the concept from either landlord or tenant and find a way to message them so it can be palatable to both sides,” says Mr. Disenhouse. “It’s an issue of understanding the issues from both perspectives and being practical.”

Now, Mr. Messinger and Mr. Disenhous are speaking of the smaller universe of commercial leases, but that “get the deal done” attitude is the attribute of top deal lawyers. Not surprising. In the complex and specialized world of real estate, distinctions sometimes blurr.

“There are lawyers who practice primarily in real estate, but who define themselves like corporate/ commercial lawyers,” says Mr. Disenhouse.

‘Cause in Toronto, corporate partner, that’s more sexy than real estate partner.

Toronto has always been more specialized than any other legal market in Canada, so it’s no wonder a distinction between corporate/ deal lawyers and real estate lawyers is ingrained in the market.

Illustration

Color Photo: Simon Hayter For National Post / Stephen Messinger of Minden Gross says U.S. tenants are more demanding than Canadians.

Word count: 913

(Copyright National Post 2007)