Choosing the right lawyers for a property loan

Borrowers underestimate how many people need to work together for a loan to go from application to draw down. The borrower frequently has just one point of contact; the broker. Behind the broker is an army of professionals that assist them; the lender, the valuer, the lawyer and perhaps even an accountant.

In these challenging economic times, brokers may be compelled to close the deal swiftly and therefore it has never been more important to ensure that the professionals on whom the broker is relying are the right ones. The broker formulates strategic partnerships to ensure they can provide their clients with a particular level of service.

The same principle applies when selecting a lawyer – on both lender and borrower side – and therefore a strong legal partner is essential.

The selection process is often mistakenly price-driven, particularly in scenarios where dual representation is required. However, as the old adage goes “if you pay peanuts, you get monkeys”. If you select a lawyer based solely on price you may quickly find yourself in a situation where the transaction has stalled, is delayed or even worse, has fallen through with no ability to resuscitate.

Before recommending a lawyer, look at the intricacies of the borrower, security, deal structuring and really understand them so the right lawyer is appointed.

With a plethora of experience in Commercial Property and Secured Lending, here are some things to look for when partnering with a law firm:

Capacity

We are all in people businesses and recommendations are always of a particular solicitor in a particular firm. As with any profession, there are busy times and quiet times and just because one is a good lawyer it does not mean that they have the time to take on your case at that given moment. Equally you are unlikely to bring a multi-asset high-value deal to a one-man band –  they simply won’t have the manpower to deliver the quality of what is required within the timeframe.

Tip: Before you recommend, pick up the phone and ask how busy they are to ensure your deal receives the attention it merits so deadlines are not missed and work isn’t subbed out to an inexperienced junior and lawyers – be honest by return!

Availability and communication

If a relationship is going to work and flourish, you need to talk to each other. Brokers and lawyers need each other and their relationship is founded on one core principle; effective communication.

Tip: Even the most technically gifted lawyer may not understand the importance of keeping you in the loop. It’s your introduction, your deal, your reputation at risk, find someone who understands and performs.

Team work

In any deal, the whole team needs to work together. Some professionals sadly though believe face saving or point scoring is more important. It’s not.

Tip: Find someone who recognises that and invest some time in building a rapport with them.

Experience

To a borrower a loan is a loan – it’s just money! For a lender however, innate intricacies differentiate a regulated loan from a Buy-to-let loan, a Bridging loan, or a Development loan. View your legal partner likewise. Ensure that the person you are recommending a development deal to is someone who is familiar with its complexities from a finance and Real Estate perspective.

Tip: Check the lawyer’s experience out on LinkedIn or their website, even seek oral references from others before engaging their services. This will save you hassle down the line if issues with which they are unfamiliar crop up.

Pragmatism and proactivity

There are two types of people: those who create problems and those who solve them. When time is of the essence and your reputation is on the line, you need a lawyer who has a commercial and proactive approach; someone who can take a step back and think how a problem can be overcome in order to move forward. Of course sometimes the problem cannot be overcome or the solution is just not commercially viable, and that’s an inherent risk of the work. However, with experience, team-work and effective communication most problems can be solved.

Tip: Partner a problem solver; someone who can offer you creative realistic solutions; someone who thinks outside the box.

Create your own panel

With experience you will see which firms work well together and whether there is positive and productive chemistry between them. Create your own “panel”, a trend that many professionals in the property industry are developing and investing time in.

Tip: Try to ensure the borrower and lender are represented by firms that have previously worked together harmoniously. It makes the channels of communication easier, increasing the likelihood of your deal completing.