The Blind Men and the Elephant

August 17, 2016 • The importance of systemic thinking is graphically illustrated by the parable of the blind men and the elephant. Depending on what part of the elephant the blind men feel, it could be a column, a snake or a rug. The same thing goes for the legal process of commercial leasing.

Unless you approach the legal leasing process with an understanding of all the parts and parties, and how they fit together over the long and short term, there’s a good chance you’ll get it wrong, with costly ramifications.

The Holistic Imperative

This imperative provides the underpinning for our Black Box strategies that minimize the time, cost, and risk of getting leases that withstand the test of time over the finish line. And these strategies apply before, and during, the negotiation process.
 
For example, before we get inside the Black Box, we work with our clients to ensure that the raw ingredients that go into the Black Box, such as the letter of intent and form lease, will facilitate an efficient negotiation, rather than slow it down. Using a form lease that is one-sided and doesn’t meaningfully consider the other party’s perspective is not a smart way to expedite negotiations.   
 
When we’re in the Black Box, the first order of business is to develop a more particular understanding of the needs, goals, and challenges of everyone involved: our client, the other party, the other attorney and the brokers, construction and operations professionals, all of whom we will be working with at different points in the process.  
 
During the leasing process, we think a lot about what will happen after the lease is signed. We strive to create a lease that will facilitate a positive, long-term landlord/tenant relationship so that the revenue stream for both the landlord and tenant is protected for the duration of the lease term.

Don’t Be Fooled By The Snake

This discipline of systemic thinking during lease negotiations means considering issues from all perspectives over the short and long term. Without it, ramifications range from a costly, slow, and inefficient negotiation to a derailed lease that never gets signed. In the extreme, a lease might be signed but end up in litigation.
 
One recent example of a signed lease that was the subject of litigation went all the way to the California Supreme Court. The landlord brought suit to challenge the enforceability of a former tenant’s remedies. Evidence presented at trial established that the tenant's demand for these remedies was not based on any analysis of what its future damages might be. This failure by the tenant to engage in systemic thinking during the legal leasing process was the basis for the Court’s finding that one of the remedies was an unenforceable penalty.  

The Whole Elephant

In future posts, we’ll continue to illustrate how systemic thinking during lease negotiations creates value for both landlords and tenants.  
 
Your leasing transactions demand the attention of attorneys who won’t mistake the elephant for a snake, column, or rug.