July 01, 2015

Define Your Real Estate Law Practice

Dean Alterman
From How to Build a Real Estate Law Practice, Chapter 2

Formulate Your Practice Goal

Now that you have decided to build a real estate practice (or you have decided to stick with tax law, but you like this book so far), you need to define what your practice will be. At this early point, don’t define your practice too exactly, but have some idea of what kind of work and what kind of clients you want. Set your practice goal down in writing. It may change—for one thing, the clients you want may not come in the door or may not exist in your marketplace and you may have to change clients or marketplaces—but you need to have at least a starting point. My starting point 25 years ago was something like this: “I want as clients people who have made a commitment to sustained investment in commercial real estate.” Within that sentence I was saying that I was seeking as clients (a) people, rather than impersonal institutions, who (b) had a buy-and-hold, long-term approach to investing (c) in income-producing real estate.

I am not suggesting that my one-sentence description is the best there is. It was the right description for me, at that time, in my market area. It still is. From that sentence, I have built a practice that brings me, on average, one new client every week and one new matter every business day of the year. Your sentence doesn’t need to be my sentence. The important thing is that you have a one- or two-sentence description of what you want your practice to be. Here are some samples of market descriptions that a real estate lawyer might adopt:

  • I will be recognized as the local expert in wineries and vineyards.1
  • I will advise purchasers and sellers of high-end homes.
  • I will advise office landlords and tenants.
  • I will represent owners’ associations in condominiums and subdivisions.
  • I will advise property owners and represent them in condemnation actions.
  • I will become the expert in property line disputes.

Consider Your Market Area: What Real Estate Work Is Available?

Consider your market area when you pick your goal. My friend in winery law is in the middle of Oregon’s wine country—his practice area is perfectly suited to his location. He has kept his general agricultural practice, including advising farmers and food processors (where there are farms, there are processors) on federal and state laws and regulations. It wouldn’t make sense for him to have the goal to represent landlords and tenants of high-rise office towers: the tallest office building for rent in his town has only six floors, and there isn’t enough office leasing there to keep one lawyer busy. By contrast, my city has many office towers, with several dozen different owners, but no vineyards—it wouldn’t make sense for me to try to build an agricultural practice here.

If you want to represent buyers and sellers of high-end houses, then you need to be in an area with a lot of high-end homes. If you want to represent owners’ associations, then you should be in an area where subdivisions have homeowners’ associations. If work that fits with your practice goal doesn’t exist in your ZIP Code, then you should change one or the other.

Make Four Groups to Define Your Practice Goals

When you have defined your practice goal in a sentence or two, try the exercise of breaking down legal fields into four groups:

  • Work that you want to be known for doing and will actively solicit.
  • Work that is outside your primary focus but that you will do if it comes in, whether from current clients or from new clients.
  • Work that is outside your primary focus that you will accept from your real estate clients but won’t try to take on as single-engagement work from others.
  • Work that you do not want and will decline or refer out.

For example, if you adopt the practice goal of “I will advise office and retail landlords and tenants,” you might complete this exercise as follows:

  • I want to be known for advising office and retail landlords and tenants, negotiating and drafting leases, and handling commercial evictions.
  • I am also willing to handle the purchase, sale, exchange, and refinancing of investment real estate for my regular clients and also for others, but I won’t actively solicit or market this work to new clients.
  • I am willing to handle property tax appeals for my regular clients and to assist with their estate plans, but I will not solicit this work or (usually) take it on as a one-time engagement from someone who is not already my client.
  • I will decline or refer out work involving domestic relations, personal injury, and criminal law.

If you’ve been out of law school for several years, you may already have some real estate clients when you start your own practice. Good! You are starting your new practice with a ready-made group of clients to whom you can market your services. You will be telling your clients that you are defining your practice to focus on real estate, and you will have a chance to define your practice area not just to yourself but also to your existing clients. If your clients think of you as a real estate lawyer, they will be more likely to think of you when a friend asks them to recommend a real estate lawyer. And referral networks can be powerful: the longest referral chain in my practice is from a client A, who referred B, who referred C, who referred D, who referred E, who referred F. Client E referred client F to me 20 years after I first worked for client A.

Your existing clients can also help you define your practice area. Ask them how they view your practice. What real estate situations do they send to you? What real estate work are they sending to other people? Their answers to these questions may give you a sense of how to redefine your real estate practice so that your clients send those matters to you instead of to other lawyers.

Just because you are defining one field to be your practice area does not mean that you must turn down work in other areas. Rather, it means that you are deciding what you wish to become known for doing—what will make your office telephone ring. You are taking the first step toward sending a clear message to the clients you want to have that you are prepared and qualified to work for them.

There may be many types of work in the second and third groups: work that you are willing to do, but that you won’t actively develop. For example, your office building owners may have estate planning needs. It makes sense for you to develop the expertise to handle those needs or to develop a good working relationship with a lawyer who does have an active estate planning practice and who doesn’t advise clients on real estate matters, rather than to turn this work away altogether. It’s a field that is closely linked to your practice area.

The fourth group is the one to be most particular about. Among the many reasons to turn down work in certain practice areas are two very important ones. The first is that you should turn down work in practice areas that you simply don’t like to handle. If you take on projects or disputes in fields that you don’t enjoy and that aren’t related to your main practice area, you’re going to put off handling those matters and will develop unhappy clients. The second is that you have an ethical obligation under Rule 1.1 of the Rules of Professional Conduct (RPC) to take on only those matters that you can competently handle. I discuss your ethical obligations to take on only projects that you can competently handle in Chapter X, Section A. You don’t do yourself or your client any favors when you take on a project that you don’t know how to handle and where you can’t associate with a lawyer who has the skill and expertise to manage it.

Provide a Plus Factor When You Learn a Second Practice Area

To provide more value to your real estate clients, you can add a plus factor: Define your practice as real estate with the addition of a practice area, or a specialty, that allows you to provide added value to your clients. You can be more valuable to your real estate clients if you are confident in your knowledge of the tax laws that affect real estate investors, such as the basics of partnership taxation (larger properties are often purchased by limited liability companies that elect to be taxed as partnerships), depreciation, and depreciation recapture on sale. If you handle the purchase and sale of investment property, then you must know the ins and outs of Section 1031 of the Internal Revenue Code, which allows tax-deferred exchanges of investment and business real estate.

You can also study and use a legal field in the second group—the work that is outside your primary focus but that you want to do and will handle if clients bring it to you—as a way to add a plus factor to your primary practice area and differentiate your services from the other real estate lawyers in your community. If you regularly advise clients who are buying and selling land, one way in which you can provide your clients with a plus factor is to become grounded in land use and zoning regulations. In my city, many lawyers practice real estate law, and many practice land use law, but only a few lawyers practice both. Their plates are always full with work from developers who look to them to handle the acquisition of a development site and to obtain the entitlements (permits) from the local government that will allow them to develop the property as they wish. These developers know that they can engage one lawyer to handle both pieces of work and eliminate the chance that their real estate lawyer and their land use lawyer will contradict each other before the government that is to issue the zoning approvals.

This material is excerpted from How to Build a Real Estate Law Practice, 2015, by Dean Alterman, published by the Section of Real Property, Trust and Estate Law of the American Bar Association. Copyright © 2015 by the American Bar Association. Reprinted with permission. All rights reserved. This information or any or portion thereof may not be copied or disseminated in any form or by any means or stored in an electronic database or retrieval system without the express written consent of the American Bar Association.

Endnote

1. The friend I wrote about in another chapter really does enjoy his winery-related law practice immensely.

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Dean Alterman

Dean Alterman’s varied career includes eight years as a real estate agent and three years as chairman of a county planning commission. He has practiced real estate and business law in Portland, Oregon since 1989. After working for three other firms (one of which closed its doors forever twelve weeks after he arrived), he opened his own office in 2006, growing it to a four-lawyer firm and then becoming a founding partner of Folawn Alterman & Richardson LLP in 2009, where he now works. He frequently gives presentations and publishes articles on real estate topics