Everyone seems to have something to say about lawyers, even their own. That's nothing new. Some like to quote William Shakespeare's idea that killing all the lawyers was a good place to start improving the world.
Maybe the problem is that clients need some help in using their lawyers in an efficient way so that the lawyers can add value to a transaction. If we were to ask Benjamin Franklin about lawyers, he might suggest that legal services work best and cost least in preventing problems, rather than fixing them. No place is this truer than in hotel transactions, whether involving a flagged five-star resort or franchised limited service, or economy sector airport property. So how can clients better use the skills of their lawyers, and the lawyers better serve their clients and add real value to the deal? Some answers are provided in this article.
Like most lawyers, I am zealous about details and meticulous about operational matters. My master initial due-diligence checklist exceeds 12 pages. Then I follow that with a master key- issues list. Everything might not get fixed right away, but at least everything is considered. But if you are buying, selling or financing a hotel or resort property in the current marketplace, this is what it takes to get your deal done right and accomplish your objective of finishing the ìgood deal.î Even if the asset is smaller, economy sector or limited service, the same holds true. Kirby Payne, the treasurer of the American Hotel & Motel Association, recently wrote in Lodging Real Estate (June/July 2000), that using an attorney to draft the purchase agreement is a mechanism to ìcontrol the details of the terms.î And not just any attorney mind you, but one who knows commercial real estate and hotel transactions. Part of the message here is that there is no such thing as a ìsimpleî deal anymore. Think of it this way, there was once a time when, with some modest skill, you could change your car's oil yourself and pretty much do a basic service of your car in your driveway. Cars are more sophisticated now. First you need the right diagnostic tools, then the computer analysis, and then hundreds of thousands of dollars of equipment to effect the repairs. Same thing for hotel transactions. There are more moving parts now. Each part is far more complicated and sophisticated than in even recent memory, and if you get it wrong, well, it can cost you. Big. For example, let's say you...