Being the butt of all jokes is not an envious position, but most lawyers seem to get by. With all the criticism and sarcasm directed towards their profession, credit may be in order for their virtue. So here it is: Even lawyers get the concept of a fiduciary relationship. Condescending, it may be, but it is worth mentioning because the corporate real estate industry doesn’t quite get it.
How can an attorney or law firm represent the plaintiff AND the defendant in the same case without a conflict-of-interest? How can a landlord’s agent, who controls and manages 1.8 billion square feet, ALSO represent tenants without a conflict-of interest?
Like Little Red Riding Hood taking advice from the Big Bad Wolf, corporations across America and around the world have partnered with behemoth landlord reps that also represent tenants. To justify this bass-ackwards reasoning, companies tell themselves “the breadth and depth of So-and-So-Conflicted-Service-Provider helps because they can service us in all these markets. Furthermore, they know when space is coming available before it even it hits market”. This sounds frighteningly similar to wolf-speak. The scary part being that it’s coming from the tenants’ mouth. So long as the tenant doesn’t ask about all those razor-sharp teeth, the conflicted service provider should be in good shape.
The wolf is good at hiding those sharp teeth. Just look at the websites of four largest corporate real estate services firms (by revenue), who all happen to represent landlords and tenants. They are all the best at what they do, and they do everything for everyone. That’s great, but what about that fiduciary thing? Whose interest are they really looking after, the 150 million square foot institutional landlord or REIT, whose buildings they manage and lease, or the tenant with 50 locations on ten-year leases?
The moral of the Little Red Riding Hood Story is that a charming and apparently friendly wolf can do you harm. The moral of the lawyer story is that they have one.
Disclaimer: I work with a non-conflicted, corporate real estate services firm. And I do have lawyer friends.
Rory Johnson 7/31/2007
rory@intelligentcre.com
{ 1 } Comments
Well said. I have worked with conflicted service providers in the past and had suspicions, especially when we toured and looked at buildings in the market. Keep up the good work!
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