Lawyer-Brokers Combine Expertise : Commission Entitles Clients to Built-In Legal Advice
A business formula that provides both legal and brokerage services under one roof and for one fee--has been operating successfully for MacFarlane, Lambert & Co. Inc.
“Negotiating properties is more than just buying, selling or leasing bricks and mortar,” said Edward D. MacFarlane, co-founder and chairman of the firm with offices in Los Angeles and Pasadena. “One must consider, for instance, the ability of a property to produce a cash flow, and that ability is tied in to a bundle of legal rights.
“Legal rights are crucial to all property buyers, ranging from small investors in syndications to purchasers of multimillion dollar office buildings, as well as to the sellers of those properties.”
Robert W. Lambert, MacFarlane’s partner and president of the firm, said more than 50% of buyers acquire properties on the basis of what they look like and often rely solely on a broker’s marketing analysis. He said too often there is no real expert analysis of the legal documents that underlie the flow of income.
Charge Regular Commission
“Common traps that create legal entanglements may include broken leases, violation of a non-competition agreement, discovery of an easement or other flaws that may appear in the legal rights purchased,” Lambert said.
All of MacFarlane, Lambert’s attorneys are licensed real estate brokers and charge the usual real estate commission. But they also take care of tax planning, escrow instructions, notes, leases and contracts related to each transaction at no additional cost; they also provide traditional services related to property law.
The partners believe they are the first in California to combine both professions in one organization, although the basic concept has long been a practice of solicitor/brokers in Scotland, MacFarlane said.
“Some law firms here have added a brokerage department, but our goal has been to provide the full array of legal and real estate expertise as one integrated service,” he added.
Clients With Questions
Before founding the company, MacFarlane and Lambert, both practicing attorneys in Southern California, had devoted a great deal of time to clients with real estate and taxation questions connected with a sale, purchase or trade.
“This was the genesis of our idea,” MacFarlane explained. “I believe that we are different in that we offer both brokerage and legal services as one package, for one fee--the basic real estate commission.”
The advantage, Lambert said, is in the ability to understand not only the marketplace and being adept at negotiations from a legal standpoint, but also to be able to represent a client’s interests at all levels.
The concept has flourished for MacFarlane-Lambert for five years, and the firm’s transaction value of listed properties last year totaled to $59 million. Its projected transaction value for 1986 is more than $100 million.
Specialized Services
The firm’s offices are staffed by about 16 employees of whom eight are attorney/brokers, each providing a particular specialty, either in the computer field or in tax matters.
According to Lambert, the next six months will offer good opportunities for investment in apartment houses, shopping centers and other commercial properties “simply because there exists a period of uncertainty and dislocation caused by pending tax legislation, the forecast for rising interests later this year or the next, and overbuilding in much of the Los Angeles market.
“Apartment houses and shopping centers may be good investments because rent escalation can frequently be built into the lease contracts, and the same is true of choice office buildings where significant rent concessions do not have to be made, despite high vacancy in the marketplace,” Lambert suggested.
Properties handled by MacFarlane, Lambert & Co. Inc. are limited to commercial and industrial buildings and multi-unit dwellings, as well as hospitals, parking lots and industrial sites, and their developer services include project feasibility studies, tax planning, incorporation, property acquisition, project supervision and marketing.
Two subsidiary property management firms have been formed. These are MacFarlane, Lambert Investments Ltd., and MacFarlane & Lambert Commercial Property Management Co. Five shopping centers have been financed by and are managed by these subsidiaries.
