Your Building's Counsel A Vital Relationship

Your Building's Counsel

Abraham Lincoln once said: “Discourage litigation. Persuade your neighbors to compromise whenever you can. As a peacemaker, the lawyer has superior opportunity of being a good man. There will still be business enough.”

Certainly since good old Abe’s time, interpretations of lawyers have varied; however, possessing the ability to compromise and be a peacemaker are characteristics co-op and condo boards seek. Whether a building is a large condominium or small walk-up co-op, having competent, accessible legal counsel is vital, with the professional in question serving as both a legal guard dog of sorts as well as a trusted ombudsman.

Finding an Attorney

“Like any other type of legal work, your best marketing is good work that leads to referrals,” says attorney Ronald Steinvurzel of the White Plains-based Steinvurzel Law Group PC. “The majority of referrals come from property mangers. I develop relationships with property mangers, so when a legal issue comes up for one of the buildings they represent, the board president will say ‘We need an attorney,’ " and the property manager will invariably call him.

Like Steinvurzel, whose firm handles upwards of 30 co-op and condominium clients in the metropolitan area, Jeffrey S. Reich of the New York City-based Wolf Haldenstein Adler Freeman & Herz LLP says that a firm’s reputation is a key building block to attracting new clients.

“The great majority of buildings have a relationship with an attorney. Relationships are passed on and bridged one board to the next. If a board is not happy with their current attorney, they will [usually] elect one or two people to do an exploration into finding counsel,” Reich continues. “They will ask their accountant, their managing agent, conduct online research, or attend seminars.”

In one case, for example, Reich explains that an attorney was selected for representation because he was quoted in an article about bedbugs that was researched online by a board member who appreciated the firm’s approach to solving the issue.

“Representing boards and managers encompasses several different areas of law and there are areas of representation that are unique such as the interpretation of bylaws,” says Geoffrey Mazel of the Manhattan-based law firm Hankin & Mazel, PLLC. “I have been asked the same questions over and over, and as a co-op and condo lawyer, I know the generally accepted practices and procedures. We don’t have to reinvent the wheel because for the most part, we’ve seen it all before.”

Moving Forward with Counsel

When securing new representation or revisiting an existing professional relationship, a board must look at their respective bottom line which is always: the budget. Contracts and fees run the gamut with each firm taking a different approach, and individual attorneys within a given firm charging different amounts for billable hours depending on tenure, experience, and credentials. Fees can range anywhere from $150 to upwards of $400 per hour, depending on the situation and the attorney involved.

“In most cases, we require an engagement letter,” said Stephen Lasser, an attorney and partner with the New York City law offices of Stark & Stark, which serves upwards of 200 co-ops and condos in the metropolitan area. “You want to be clear that you have established an attorney-client relationship, and you have set forth your fees so there is no misunderstanding,” says Lasser, whose practice is concentrated in the Condominium and Co-op Group. “Whether they pay you hourly or a flat monthly fee, it depends on a case-by-case basis.” Even if a monthly retainer is entered in to, Lasser says that doesn’t include any litigation costs – which underscores his point that lines of communication on services and fees must be transparent.

“It's usually pay-as-you-go, but for a new building I will take a retainer up front,” says Steinvurzel. “I require that every property sign a general retainer letter; basically a contract between my firm and the co-op and/or condo that they agree to the terms.”

Steinvurzel explains that there are special arrangements. When representing a condo or co-op in a litigation matter, whether plaintiff or defendant, an individual specified litigation retainer agreement is required that is above and beyond the general contract.

Reich, whose firm represents upwards of 250 co-ops and condos, explained they do not employ retainers. “We find that after representing co-ops and condos for so long, very rarely are we reinventing the wheel. We’ve seen it. We’ve done it. We can handle it. We find it is cost-effective to pay-as-you-go,” he continues. “There are some years we will work very closely with a client and will have to go to all their board meetings and attend special meetings, but once issues are resolved we might only see them once a year at their annual meeting.”

Conversely, Mazel supports a set monthly fee. “We are very strong proponents of putting our board clients on a fixed monthly retainer,” he says “The reason we do this is because there are so many little things that come up, and we don’t want a board manager or managing agent worrying every time they call me up that they will be charged for that phone call. Little things can lead to big things, and if you're not on retainer, boards often will not call you until there is a serious issue —and then you will not be as effective a representative of that board.”

Co-op and condo boards are not exactly apples and oranges, but they do require a tailored approach to handling pressing legal problems. “There is no difference in how we approach working with the board, but there may be differences in how we deal with a particular issue,” says Reich.

Mazel agrees that “There is a different vernacular. First, a co-op is a corporation, whereas a condo is a board of managers. There are different statutes that apply to them. They are not completely different, but you have to use different sides of the brain for each.”

What Your Money Gets You

Once you’ve found an attorney and negotiated the financial aspect of your relationship, it’s important to know what your board can reasonably expect of him or her. "A good legal counsel will know and be aware of your co-op or condo’s bylaws, proprietary lease and house rules," says attorney Errol Brett, who has his own practice. Brett, who serves as counsel to dozens of boards of directors and managers, considers himself part of a board’s "cabinet resource." He keeps his clients informed of new laws, city and state policies, and issues affecting the co-op/condo community by generating a monthly newsletter and sending his clients memos covering immediate information, breaking news, and periodic updates.

Your legal counsel should, of course, be aware of the issues pertaining to each individual co-op or condo his or her firm represents. To stay current in the issues facing your board, your attorney should try to attend as many board meetings as possible. In addition, your lawyer should obviously have extensive knowledge and experience dealing with real estate law, corporate practice, contracts and other governing documents, and litigation. Your attorney should be available to assist in issues of financing, leasing, defaults, tenant disputes, and drafting documents, and should make him or herself available to answer general questions as they arise–returning phone calls and answering inquiries in a timely fashion should be any good attorney’s top priority.

When it comes to shareholder disputes, the board, as part of its duty, should try and help them resolve it, explains Mazel. “Very often boards are not trained mediators. I have given the board names of mediators that will help the shareholders mediate their dispute and there is a reasonable degree of success in doing this.” There are cases where boards will sue a resident due to non-payment of dues or maintenance or some sort of material violation. In these cases, Mazel continues, the attorney will usually represent the board.

Clearly, the lynchpin of your board’s good relationship with its attorney is the certainty that your counsel is acting in the best interest of the board and tenants. This includes, as mentioned earlier, knowing when—and having the ability—to suggest bringing in special legal counsel to cover any gaps in your usual counsel’s knowledge or experience. "For instance," says Brett, "if you’re dealing with a zoning issue, that’s an area your general counsel may not specialize in." A trustworthy attorney will also be able to investigate the situation and present you with several options—and not just tell you what you want to hear.

When Issues Arise

While the idea is to have smooth seas on which to sail, problems inevitably arise. Steinvurzel says while this is common in both co-ops and condos, the larger the building, the higher the incident rate.

“If you have a huge residential building with significant commercial space at the base of the building that board will always have legal issues,” he says. “Whether it is infighting amongst the tenants and the co-op or owners and a condo, or people not paying their common fees or dues, or negotiating the drafting of commercial leases, many things can and do go wrong.”

Often, Steinvurzel explains, a property manger will first consult with him to determine whether his services are required or if the situation can be mediated without counsel. “With all these various issues, it makes it difficult for these boards to go for more than a year or so without needing a lawyer.”

If a resident does sue the board over an issue, Reich explains that the managing agent or board member would contact the firm. “The first thing we do is make sure they respond quickly, because there is a very strict time frame to respond to a lawsuit,” he says. “But at the same time, we would exercise the building’s right under its insurance policy. We would immediately contact the insurance company to see if they are covered. If they are covered, the insurance company often will want to assign its own counsel to the case.”

Since an insurance company will be representing the co-op and condo and its policy, the waters can get muddy. If a board prefers to have its counsel represent them in the case, often the insurance company will contribute a portion of the fee and the board agrees to pay the balance.“If the insurance company wouldn’t contribute and the board doesn’t want to absorb costs, we would monitor the case to ensure the board is fully aware of the proceedings and that all their rights are being protected,” Reich continues.

And what if the issue that arises is actually with the attorney? If you think your lawyer isn’t holding up his or her end of the bargain with your building, don’t rush to judgment, but do acknowledge the problem directly and discuss the issue with your lawyer and fellow board members—the problem could be nothing more than a miscommunication between your board and its counsel.

As with any long-term relationship, occasionally, personality conflicts may arise. Perhaps you’re more comfortable with a certain partner than with an associate, or your attorney is having trouble working with a particularly stubborn board member. According to the professionals, swapping cases because of differences in personality is not uncommon among partners in a given firm. Partners or associates might trade the co-ops or condos they are working with if the board members have changed since hiring the firm and the dominant personality has shifted in an unproductive way. In this case, legal counsel should be willing to change their approach to fit the board’s current needs.

To Each Their Own

“The relationship between the building and the managing agent and legal counsel varies from building to building," says Lasser. "Typically, one person will act as a liaison to the legal counsel and deliver information to the rest of the board. In some buildings, the full board is involved in all correspondences and in some cases the lawyer will communicate with the managing agent and the managing agent relays it to the board.” And, he adds, “This is a very specific area of law and it is imperative that a co-op or condo board does its research and selects a lawyer that is experienced.”

Determining best practices to employ when seeking, selecting and working with legal counsel is a subjective process. At the end of the proverbial day, the board must have transparent communication with its legal team; however, respective approaches will differ.

An informed, involved board is key in keeping the attorney-board relationship running smoothly. Your board needs to make sure it's serving its own residents by seeking the best representation your building can afford and taking the time to investigate its options. A long-standing relationship between your board and its legal counsel confers the advantage of having a lawyer who is not only familiar with the institutional history of your building but who feels a personal connection to your board and its residents.

W.B. King is a freelance writer and a frequent contributor to The Cooperator.

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2 Comments

  • What about when a resident accuses the board of managers for abuse of power and willful misconduct. Is the attorney defending them or does the insurance company represent them in any way?
  • Ronald Steinvurzel, Esq. on Wednesday, May 26, 2010 11:18 AM
    Jeanette, in the scenario you propose, unless the Board possesses insurance beyond the usual coverage for personal injury and property damage, the Board is not likely to have insurance coverage for these claims. As such, the Board would have to hire its own counsel to defend against any such action.