Bar News - May 21, 2014
Real Property Law: The Real Estate Attorney and Allied Professions: A Team Approach
By: Stephan Nix
We have all seen it happen. In a complex commercial transaction, the client tells the lender, attorney and title company that he already has a survey.
A week or so before closing, the bank’s attorney requests copies of the survey to use in preparing the title commitment endorsements. That’s when it is discovered that the surveyor performed a boundary retracement survey, meeting the technical requirements of NH Code Admin. Lan 502 and 503, but not the requirement of the ALTA/ASCM Land Title Survey required for the title insurance endorsement.
The panic, negotiations with the insurer, and possible delay could have been avoided if the attorneys were in direct contact with the surveyors and were aware of differences between the technical requirements.
This is only one example of the interplay between the real estate attorney and the “allied professions.” Attorneys work with allied professionals using a team approach in matters including conveyancing, financing, land use development, environmental permitting, estate planning, conservation easements and litigation.
The allied professions are licensed, registered, and certified professionals, including land surveyors, engineers, natural scientists (wetlands and soils), architects, septic designers, foresters, appraisers and accountants. The attorney must have knowledge of the allied professions’ statutory underpinnings to understand which professional is required to assist the client in accomplishing which goals. Most real estate related allied professional licensing statutes are contained in RSA 310-A.
The Team Approach
Implementing a team approach with the allied professionals is critical to effectively representing the client. Most allied professionals work comfortably within a team.
Generally, in conveyancing and financing matters, the attorney will be the team leader. In other matters, such as planning and zoning, the client and team members will decide which allied professional should lead the team. Whether acting as team leader or not, the attorney should proactively communicate with the client regarding each team member’s role in the process and agree on the degree of attorney monitoring and/or participation.
If the client chooses to limit the attorney’s interaction with the allied professions, the attorney should consider the consequences of limited participation when something goes wrong down the line. The scope of legal representation and participation with the allied professionals should be clearly stated in the engagement letter.
At the inception of the project, the team will develop timelines based on factors such as closing dates, financing commitments, application due dates, board meeting dates and procedures, coordination of approval at various levels of government, appeal periods and post-approval legal requirements.
Even when not serving as team leader, the attorney should maintain internal lists including each allied professionals’ responsibilities and docket project deadlines.
It is good practice for the attorney to review all applications before they are submitted to the governing agency to avoid unintended admissions against interest or waiver of rights. The legal review of applications should be programmed into the project financial pro forma. The added cost for upfront legal review is far less than the cost in dollars and time of having to backtrack when problems arise later.
The attorney also should maintain regular contact with the designated team leader and/or the members of the team to manage deadlines and obtain copies of all legally related correspondence and permits received. Although this sounds daunting, email correspondence with digital documentation provides an efficient means of monitoring a great deal of information at a reasonable cost to the client.
Most allied professionals are now producing their plans and applications in digital format and forward the information as a matter of course. Having this information in the file as it is developed allows the attorney to efficiently produce opinions of counsel and other required legal documentation. This information may also be necessary for drafting motions for rehearings and appeals if necessary. After-the-fact acquisition of this information in an exigent appeal period situation can be costly for the client.
The client and team should discuss which members will attend meetings and public hearings. Whether the attorney attends the hearings depends on a number of factors, including the complexity of the hearing, the added value of the attorney versus economic costs, the perception of an adversarial attorney at the hearing, and the ability to preserve appeals and other legal rights, if the meeting outcome is adverse.
In many cases, a low-key approach to planning and zoning hearings, without the attorney present, bears more fruit for the client. In these situations, care must be given by the attorney in developing a clear record through the written application process.
For example, the attorney drafts the formal variance application memorandum addressing each statutory requirement, which is made part of the written record. The local surveyor or engineer presents the argument in colloquial form at the public hearing. The client makes the final decision on which allied professional attends the meeting. The attorney should follow-up with correspondence to the client outlining this decision-making process with the pros and cons of each alternative.
The attorney needs to remain cognizant in the team approach of attorney/client privilege regarding communication with other team members. Not only should the client be made aware that sensitive information shared with other team members is a waiver of the privilege, but team members should be schooled on the unintended consequences from a liberal overuse of emails.
A protocol for team communication should be established. This is especially important where litigation may result from the matter and electronically stored information (ESI) becomes discoverable. There is always a fine balancing act between allied professionals sharing information as a team, and the attorney protecting the attorney/client privilege.
Attorneys need to remain clear that they represent the client and not the team.
Prior to the client entering into professional services contracts with the allied professionals, the attorney should discuss the issue of ownership of each allied professionals’ work product.
When a team member is removed by the client mid-project, the transfer of the technical information can become hotly disputed, sometimes causing the client to pay twice for the same work.
Removing a team member also raises the issue of possible malpractice claims against a team member. The attorney needs to perform ongoing analysis of whether such a claim could potentially make the attorney a witness in the malpractice suit and the inherent tension with attorney/client privilege.
Perhaps more so than in other legal practices, an attorney practicing real estate law relies on the allied professions during the representation of the client. The attorney must have an understanding each allied professions’ expertise and contribution to the matter at hand, whether real estate acquisition, financing or land development.
Stephan Nix is an attorney and licensed land surveyor with extensive experience representing clients before planning and zoning boards, in real estate transactions and in real estate related litigation.