True Story: How Eight Expensive Lawyers Missed One Word That Cost Tens of Thousands of Dollars
The transaction
Negotiating the lease of an 80,000 square foot commercial building.
The setting
Eight lawyers sat along one side of a very long oak conference table.
On the other side were eight real estate specialists. All 16 were employees of a very large Savings and Loan (S&L) institution.
At one end of the table was the septuagenarian matriarch of the Savings & Loan.
At the other end sat Stan, a salesman who didn’t finish high school. He was the sole negotiator for the building owner, Jerry, who was also Stan’s mentor.
Lacking the patience for serious negotiation, Jerry was off to the side, where he could maintain eye contact and guide Stan with hand signals.
Knowing what he was getting into, Stan had built in numerous stipulations that he knew the other side would never approve. These stipulations were “throwaways” – they looked important, but they weren’t.
As the discussion progressed, Stan let the lawyers and real estate specialists puff up their feathers in front of their boss, the matriarch. He acted like he was out of his league, and they took his bait. Anyone watching would have agreed: the S&L employees were beating Stan soundly on every aspect of the negotiation.
For example, Stan had limited the number of parking spaces the tenant could use. Understandably S&L wanted all of the parking spaces.
After relenting to give the tenant every parking spot Stan complained, “Oh no, that’s more rental income we’re going to lose.”
The negotiations continued, with Stan losing his position on every condition. Finally the negotiators arrived at the Cost of Living Adjustment (COLA). At which point Stan stood, gathered his things, and walked over to where he’d left his briefcase.
“You haven’t agreed to anything I wanted, so you sure as heck aren’t going to give me Cost of Living,” he said, resignedly.
“Wait a minute,” said the lawyers and real estate specialists. “We understand Cost of Living. We’re willing to do something. It’s only fair. Let’s see what we can do.”
Having won every point, they were feeling magnanimous. At the time COLA was between 5 and 8%.
Stan reluctantly dragged himself back to the table. “Well, okay, you’ve already taken away everything I wanted, so what kind of a bone are you going to throw me on this?”
“We’ll do three percent” said one lawyer, and the others agreed. So the negotiations continued for a bit longer, and the two sides settled at three percent for COLA. The deal was agreed to, and the final document sent for preparation and eventual signing.
Not quite two months later Stan received a call from the S&L lead lawyer.
“I was expecting your call,” said Stan.
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