Self-Taught MBA: A Real-Estate Lawyer’s Advice, Part 2
In part 2 of my conversation with real-estate attorney Nancy Loftis, she gets down to the nitty-gritty of hiring a lawyer for your entrepreneurial team; points out how to recognize and avoid the most common pitfalls she sees in her real-estate and construction-law practice; and offers some plain advice about how to redefine and find success during tough times.
Consulting services: For most businesses, you need a good insurance agent, a good accountant, and a good lawyer. Businesses vary to the extent they require legal services. Some, such as restaurants, may just need initial corporate papers and occasional advice. But if you’re involved in construction and real estate, you’re going to need an active lawyer on your team. There’s a lot of specialized knowledge in real estate, and a lawyer is just a service you buy, just like you’d buy bread for you restaurant.
You want to find a lawyer you can trust. Ask people who are successful in your business for a reference. In a pinch, I like to use www.lawyers.com because it’s not just a referral service. The company, Martindale-Hubbell, is a long-established peer-rating service for lawyers. The company screens for ethical standing and skill. Ask around or consult Lawyers.com, and then interview a couple of lawyers. Spend 10 minutes and see how you feel. If they are difficult to talk to or you don’t feel at ease with their manner of expression, move on. You want someone skilled in your area that has a compatible working style.
Once you engage a lawyer, have him or her look over any documents you use for major commitments, such as your basic contract, change orders, and corporate documents. Do this, and you may save yourself a lot of trouble down the road. Don’t worry about being overcharged or overmanaged. Good lawyers are busy, and they tell you if they don’t need to see something. If you’re going to base a lot of revenue on one piece of paper-even if it’s a work order you hand customers for a signature before doing small repairs-let someone look at it for 15 minutes. There may be local laws you don’t know about; there may be required language such the right of rescission that makes your agreement valid. The most important thing is that now your lawyer has skin in the game. Your lawyer is not just a vendor; he or she becomes part of your entrepreneurial team.
Trip hazards: The problems that walk into my office daily are based on simple mistakes easily avoided. The first hazard: the handshake deal. Although these often work out just fine, when they do go wrong, you face the risk of uncertainty. They typically go wrong when the original parameters of the deal get changed. The contractor does a lot of extra work in good faith, and then the client says, “I shouldn’t have to pay for this.” No matter what you’re doing, construction always involves lots of little pieces and many steps. The problems accumulate over time, and then you have a conflict of who you’re going to believe. And this is where you end up in court learning a very simple lesson in consumer law: The customer is always right.
The other hazards come with growing too fast. You hit success, you get a lot going, and suddenly you start having trouble with the multiples. Building 10 houses simultaneously is not just 10 times more work than building one. To build 10, you need entirely different systems. Boom times hide minefields. It’s going great until suddenly you cannot keep up, you hit a bump, and the whole thing falls apart.
There’s often a sweet spot. The trick lies in knowing when to taper back, and it’s hard to know. You have to assume you won’t recognize when it’s time to pull back, so try not to become dependent on an overabundance of work and opportunities. Know slow times are going to happen and that they can come when you least expect it.
Finding success in the famine: Nowadays, the clients I see succeeding are the ones that are not afraid to work. They are out actively soliciting. They take jobs they may not have taken years before, but they still do excellent work and say “thank you.” They don’t sit and whine. They make it happen, and often have the same revenue they had before, and just invest more time to make it. Remember that “flat” is the new up, the new definition of success. The people that keep working, well, they’re still working, so don’t stop.
You’ve heard said that millionaires go broke three times before achieving ultimate success. It’s not true, but if it were, it would be due only to their perseverance. More than money, the will to keep at it and do the hard work necessary can almost guarantee a personally satisfying level of success-along with a little luck. I can’t give you advice on how be lucky, but I can say that lucky people tend to be engaged and hardworking.
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Attorney Nancy Loftis' candid, disinterested take on what it takes to make it in construction and real estate provides us a refreshingly realistic look at the ingredients of success.