10 Things To Know About Real Estate Practice
Our president-elect is a real estate developer, so now's a good time to learn more about this field.
Ed. note: Welcome to the latest installment of Better Know A Practice Area, a series introducing readers to different practice areas. Each post is written by an editor at Practical Law who previously practiced in that area and currently writes about it. Prior columns have covered capital markets and corporate governance, securities litigation and enforcement, patent litigation, executive compensation, commercial transactions, and labor and employment.
Today’s topic: life as a real-estate lawyer.
1. What do you do in a typical day?
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There is no such thing as a “typical” day in real estate practice. Each day varies depending on the type and stage of the transaction being worked on. Each transaction presents its own unique set of issues, so handling those issues generally dictates how a workday will unfold.
A typical day may include performing extensive due diligence, which would include reviewing title, surveys, third-party reports, and other items pertinent to obtaining a comprehensive legal understanding of the project. Other days may be spent drafting, reviewing and negotiating documents necessary to complete the particular transaction, such as loan documents, purchase and sale agreements, leases and other ancillary documents.
Closing a real estate transaction requires extensive coordination with the client and opposing counsel. Accordingly, lawyers may spend large chunks of time during the day discussing issues with their client or opposing counsel in order to properly document, negotiate and close a deal.
2. Who do you work with?
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It is common in large law firms for real estate transactions to be staffed with attorneys at differing levels of experience. Small transactions typically consist of one law firm partner, one associate and occasionally a paralegal. Larger transactions involving multiple properties may include, in addition to a law firm partner, multiple junior and senior associates, in order to timely meet the client’s expectations.
Accordingly, it is typical for a junior lawyer to work with a law firm partner or a more senior attorney during the course of a deal. A junior associate may be asked to sit in on conference calls that the partner conducts with the client or opposing counsel and in some instances, a junior associate may be asked to contact third parties directly to complete discrete tasks on a transaction.
Sometimes issues arise during a transaction that require the expertise and involvement of an internal lawyer from another field, such as tax, environmental or land use. When this is the case, the specialized lawyer generally assists the real estate deal team with guidance on the particular issue.
3. What does a common career path look like?
Most lawyers in this practice area will start out as an associate at a large or mid-size law firm to gain experience. The junior years are usually spent learning how to manage and close a transaction by assisting partners or more senior lawyers. As an associate becomes more senior and their skill set grows, it is common to pursue a partnership track at a law firm. A lawyer interested in making partner must be able to run transactions without oversight and will focus on developing their own book of business. Others forgo the partnership track and may transition to a smaller law firm or an in-house position for a client or other real estate company.
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4. If variety is the spice of life, how spicy is this practice area?
Closing real estate transactions involves many moving parts, and each real estate project brings its own complexities and unique issues. Accordingly, there is quite a bit of variety and excitement in this practice area that lends itself to interesting new challenges on a daily basis. Closing a transaction requires extensive coordination, from reviewing title and surveys, to drafting and negotiating purchase agreements and loan documents. It also typically requires interaction with opposing counsel and other parties. For example, when closing an acquisition for a large retail shopping center filled with numerous anchor tenants, a lawyer may need to deal with large national retailers that are tenants in the shopping center. The interaction with multiple parties required to close a transaction helps keep this practice stimulating.
There are also intangible benefits that keep this practice interesting. After closing on the purchase, sale or refinance of a real estate project, it is rewarding to drive by the project and admire the fruits of your labor firsthand.
5. How much wear and tear?
Real estate is an extremely high-paced practice area. The demands from clients to close deals quickly can sometimes take a toll. Long hours and weekends are the norm for lawyers in this practice area in order to complete the diligence, drafting and negotiations required to effectively close transactions for clients.
6. Of the people in this practice group who hate it, what exactly do they hate about it?
The most common complaint relates to the long hours put in by practitioners in order to timely close transactions. Other common complaints involve the unrelenting pressure in large law firms to maintain high billable hours and high collections. These demands can take a toll on a lawyer over time.
7. Of the people in this practice group who love it, what exactly do they love about it?
Most real estate transactions have a discrete beginning and end. Consequently, lawyers in this area derive satisfaction from the fact that deals rarely linger and are completed over a period of months rather than years. In addition, each real estate deal has its own unique issues. Navigating these issues with clients presents its own challenges, but provides intellectual stimulation.
8. Are there common avenues out of this practice area?
While other practice areas are more fluid and offer numerous paths out of the practice of law, this practice area is somewhat limited. Some real estate lawyers will transition during their career from practicing law at a large law firm to an in-house position at a bank, insurance company, national retailer or other institutional real estate company. However, beyond the in-house track, there is not a natural progression from this practice area into other common career paths.
9. What are some market trends that impact this practice area?
This practice area is heavily impacted by general business cycles and trends in the economy. During periods when the economy is growing and interest rates are low, the real estate market tends to prosper, and there are a multitude of real estate acquisitions and refinancings. The emergence of commercial mortgage-backed securities financing for real estate projects has also helped fuel the growth in the real estate market. However, during recessionary periods, many retailers are reluctant to open new stores or expand their footprint, and lenders are cautious about making new real estate loans. These trends affect the pool of real estate transactions that occur.
10. If you had to recommend one candidate from a room crowded with recent bar exam graduates, what specific qualities would he or she have that would ensure success in this practice area?
Qualities necessary to ensure success in this practice area include attention to detail, the ability to anticipate issues, and the ability to provide guidance to clients to help navigate and close a transaction. The ability to juggle competing demands is also important, since many lawyers find themselves working on multiple projects at the same time and need to effectively prioritize their daily workload so that they do not miss critical deadlines.
Julie Schwartzberg
Julie Schwartzberg is the senior state editor in Florida on Practical Law’s Real Estate team. She focuses on acquisitions, leasing and financing related to commercial real estate. Prior to joining Practical Law, she was a shareholder with Greenberg Traurig.
