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April 20, 2011 Article

Leveraging All Knowledge in Real Estate Disputes

From the beginning, both a litigation and a transactional attorney should be involved in dispute cases

by Deanne Koll and Bridget Finke

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A real estate dispute often involves a clash between two property owners. A prospective client with a real estate dispute can also trigger a conflict between attorneys within a firm over who is best equipped to assist the client: a transactional real estate attorney or a trial attorney. For example, a potential client calls for counsel on a boundary dispute, an easement issue, or a seller’s misrepresentation in a real estate sale. The transactional attorney claims she is appropriately armed to handle the case because she is well versed in real estate law and works primarily (if not solely) in that area every day. The trial attorney, on the other hand, claims she is better equipped to handle the case because the matter will inevitably result in litigation and she can set the appropriate stage to create the greatest likelihood of success. Who should handle the case? The often overlooked answer is for both a transactional attorney and a trial attorney to be involved throughout the process. Leveraging all legal knowledge ultimately gives the client the best service and, likely, the best result. (In larger firms, attorneys may specialize in real estate disputes. Those attorneys tend to identify themselves as litigation attorneys; thus, the same argument applies—working with a transactional attorney can benefit your case, even if you are a specialist.)

Knowledge Base

“Play to your strengths” is a phrase often used by a colleague. In the case of a real estate dispute, the knowledge bases of both transactional and litigation attorneys are strengths. So, why not use both?

A transactional attorney typically works on real estate documents and issues on a daily basis. He or she can quickly review title work, legal descriptions, and easements. He or she may rapidly identify the applicable statutes and recent case law interpreting those statutes. He or she is likely to have relationships with local professionals needed for consultation, such as surveyors and title companies. A transactional attorney’s day-to-day practice requires that the attorney possess a broad real estate knowledge base to assist his or her customary clients. That knowledge is equally useful whether a deal is being put together (transaction) or a deal is being taken apart (litigation). However, the transactional attorney may seldom need to draft a jurisdictional statement in a complaint or take a deposition. Consultation with a litigation attorney may reduce needless drafts of pleadings and research of local court rules.

On the other hand, a trial attorney is often, by definition, a generalist. A trial attorney’s toolbox contains such skills as drafting pleadings, conducting discovery, and arguing motions. However, he or she may handle only one or two real estate litigation disputes per year. While handling those cases, the trial attorney will research and gain in-depth knowledge of the issues specific to the case. As an illustration, while prosecuting a buyer’s claim against a seller, a trial attorney may gain a comprehensive understanding of the interrelationship between misrepresentation and fraud claims or the impact of the economic loss doctrine. However, he or she may not use this knowledge for extended periods of time. So, the trial attorney may be able to draft a complaint quickly but not have the specialized real estate law at the tips of his or her fingers. Consultation with a transactional attorney may cut research time or aid in preliminary issue spotting.

Analysis of Claims

A transactional attorney’s view of a client’s potential claim can vary drastically from a trial attorney’s view of the same dispute. A transactional attorney may lean toward solutions that are most familiar and make use of his or her skills: problem solving and negotiation. Accordingly, a transactional attorney may view the claim as an opportunity to make a deal and bring practical, win-win solutions to the table. What do both parties want? Is there a creative alternative that will satisfy both parties? How will this affect insurability of title? In contrast, a trial attorney will analyze the claim in the framework of trial, in terms of liability, damages, collectability, and the likelihood of success. Who will testify? What is the appropriate evidence needed to win? How much will it cost to pay an expert? Neither of these assessments is incorrect. In fact, both views are immensely helpful to decide whether to take a case and to determine the proper course of action.

Client Expectations

A client’s expectations are difficult for an attorney to control. How many times has your colleague answered a call from a friend, given some general legal advice, and then said, “But this isn’t in my area. I’ll get you to my partner who can help you.”? When you, as the lucky helping partner, get that caller, the potential client already has an outline from your colleague about how you will handle the case. Too often, your colleague’s off-the-cuff assessment vastly differs from your anticipated plan of attack. You are then faced with the unenviable task of reframing the client’s expectations.

Litigation and transactional attorneys approach their prospective clients in different manners. However, if both attorneys meet with a real estate dispute client at the initial conference, the client’s expectations can be appropriately molded from the start. At first, it is often unclear whether the client needs immediate litigation or whether the matter can be resolved with a few phone calls and drafting of documents. This uncertainty is dangerous if both a transactional attorney and trial attorney are not at the initial meeting. One can imagine the client’s dismay when the client is told it will only take two phone calls and an easement to resolve the issue only to find out that the matter needs to be fully litigated. The initial contact can make all the difference in setting the client’s expectations when both attorneys are there to assess the matter. In addition, it comes as no surprise that a client’s initial expectations often set the tone for his or her final assessment of satisfaction with the attorney and firm.

Joint Representation

Two heads are better than one. This is certainly true when the two heads process information in completely different frameworks. To give your client the best value, use both a trial and a transactional brain to work through a case.

It is common for a trial attorney to take a file and sit on it, thinking over time about the best trial strategy. Unfortunately, this does not always provide the best service to a client. The better alternative is for the trial attorney to sit on the file, think about the file, come up with a strategy, and then go next door to a transactional lawyer to discuss it. Trying out the strategy and analysis on a colleague adds value to the case. The transactional attorney will view the case through a different “lens” and will give the trial attorney feedback on the strategy that another trial attorney may not consider. The transactional attorney may ask, “But what about when the client wants to sell the property 10 years from now?” Or, “Have you called the title company to verify insurability of title?” These may very well be issues that the trial attorney would not have considered through the lens of a litigation-based world. Alternative views are certainly value added to the case.

Now, take the same example and reverse the roles. A transactional attorney has a client conference regarding a boundary dispute with the client’s neighbor. A transactional attorney might suggest this solution: “Let’s just sell the neighbor the strip of land in dispute and be done with it.” The client makes a little money, avoids a lawsuit, and maintains harmony with the neighbor. Why would this not be appropriate? Why would the transactional attorney want to discuss the case with a litigation attorney? Because the case benefits from an alternative viewpoint. The transactional lawyer is thinking low-cost, fast result, and a happy fix for all involved. The transactional attorney is likely not thinking, “What if the sale doesn’t go through and this ends up in litigation?” or “What if this is construed as an admission against interest?” This is where the litigation attorney can add value to a seemingly simple real estate sale matter.

In conclusion, why not leverage all knowledge? Both a litigation and a real estate transactional attorney can add value to a real estate dispute case. Whether it’s for their knowledge, analysis, or client control, both attorneys should be involved in real estate dispute cases from the beginning. The client benefits from dual representation—and the attorneys do, too.

Keywords: litigation, real estate disputes, transactional attorney, practice tips

Deanne Koll and Bridget Finke are associates at Bakke Norman, S.C., in northwestern Wisconsin.

Copyright © 2011, American Bar Association. All rights reserved. This information or any portion thereof may not be copied or disseminated in any form or by any means or downloaded or stored in an electronic database or retrieval system without the express written consent of the American Bar Association. The views expressed in this article are those of the author(s) and do not necessarily reflect the positions or policies of the American Bar Association, the Section of Litigation, this committee, or the employer(s) of the author(s).