For the most part, the telecommunications industry has survived a furious buildout period during the past five years with nary a scratch-or so it believes. If we take a long-range view of things, most of the players are going to face serious problems down the road-problems that could have been avoided but for the corporate mind set that has governed their actions throughout their existence.
Specifically, let us view the area of lease processing and the industry’s reluctance to farm out legal review to local, specialized attorneys on a contract basis. With few exceptions, most sites go from a gleam in the eyes of a site-acquisition team to a full-blown operational entity without local review by independent counsel.
Rather, once a lease is executed by a landlord, it is usually shipped off, along with drawings and a title search, to corporate headquarters, which most likely is at least a thousand miles away, to be reviewed by staff attorneys who have little or no concept of local law, state law and the bureaucratic maze that must be addressed on both levels. Unfortunately, this type of review only creates short-term satisfaction and long-term problems.
How can corporate counsel even know what specialized issues present themselves or are attached to a specific site when they have no expertise or training in the areas that are truly specialized on a state-to-state basis. It is easy for corporate attorneys to “pass” on a site because it meets Federal Communications Commission or Environmental Protection Agency muster, or complies with federal flood plain guidelines, for these issues are federal in nature. But what about those issues indigenous to the site state, such as local laws dealing with public and private access, rights of ways and easements? What about state estate laws and laws of intestacy? Survey interpretation is oftentimes controlled by local and state law when dealing with issues of mining, encroachments and the like. Oil and gas rights are also to be found in the purview of local and state law. Riparian rights is another area where, in most states, local counsel’s expertise can be invaluable.
Obviously, divorce law, title by tenancies, state partnership and corporate law, zoning and local setback laws are crucial areas which, without specialized local counsel assistance, great exposure could arise during the lease term. The list goes on and on.
Companies that use corporate counsel rationalize much of the above by believing that the issuance of a title policy solves many if not all of the problems I have noted. Unfortunately, this is not the case. Title policies are extremely self-limited in what they do and do not cover. They are a hedge, but in most states do little to limit the potential disaster that could occur as a result of improper oversight by counsel.
Being a lawyer with 25 years experience in commercial and residential real estate, I have witnessed nightmares too numerous to mention here. Suffice it to say that inadequate legal advice costs buyers, sellers, landlords and tenants millions of dollars in uninsured money on a yearly basis-losses that are wholly preventable with the right mind set.
Contract attorneys who are hired from reputable companies are usually retired, semi-retired specialists or come to the table with substantial experience in the proper areas by virtue of their working in the commercial, real estate and zoning fields for most of their careers.
They are insured by the company who provides them. Most providers put the contract attorney through the paces before they go to work on a specific job and recertification is performed at least bi-annually. Most importantly, if you need them for a buildout in, for example, South Dakota, they are trained in South Dakota law, as opposed to corporate counsel that sits thousands of miles away.
They are also far cheaper than local outside counsel and usually more experienced. In most instances, the provider, knowing what you pay corporate counsel and/or outside counsel on an hourly basis, is able to save the candidate company many thousands of dollars over the buildout period.
The contract attorney’s accessibility to the local market-he or she sits in their own office or your local office, not your corporate office-usually results in countless hours being saved in the transition process and as we all know too well, time equates into money.
Just envision what currently happens when the engineering, operations or site acquisition director has a legal question. Rather than calling corporate or outside counsel and getting a generic answer in 10 days or so, he simply calls the contract attorney or e-mails him at his desk, oftentimes resulting in an instant answer. You get the idea.
It is not a matter of if your company is going to get burned because of the use of counsel unfamiliar with the particular locality. No, it is rather a matter of when your company will get burned.
The industry is both settled and fledgling at the same time and should start to change its corporate mind set, while its losses are still controllable. If it fails to do so, the piper will be paid, I can guarantee it.
Ronald C. Weingrad is an attorney who owns Strikeforce Inc., which provides consulting, contract attorneys and paralegals to the telecommunications industry. (412) 244-3990.
