Real estate rebound: Practice area shows growth

This year’s new partner announcements showed a 30 percent jump from last year in the number of promoted real estate attorneys in Missouri. That’s nine new partners in a practice area the financial crisis hit hard.

Has real estate work bounced back?

Well, no, not exactly, said Eden Mandrell, a Chicago partner at Major, Lindsey & Africa, a legal recruiting company. But the increase may signal an anticipatory hiring trend by firms that scaled back their real estate practices when the housing market began to crumble in 2006 and a stubborn credit crunch followed close behind.

When and if real estate picks up again, firms don’t want to be stuck short-handed, Mandrell said.

That rebound still may be years away, said Clay Hagedorn, a new partner at Polsinelli Shughart who maintains a real estate practice.

Hagedorn said he has seen signs the real estate market has dragged itself through the worst of the economic crisis. But his real estate work is definitely not back to prerecession levels, he said.

“For three straight years I had so much work that I didn’t know what to do with it,” Hagedorn said of those glory days.

“But a year from now, two years from now, there’s a lot of indication in the market that banks are going to start loaning money again soon. If that happens, there will be a lot more work. That’s what drives real estate deals.”

In the meantime, Hagedorn dealt with the real estate lull by jumping into a completely different practice area.

A 1996 graduate of the U.S. Military Academy, Hagedorn was getting calls from fellow West Point grads who started their own companies and wanted to do business with the federal government. Hagedorn began advising them on ethical requirements attached to government contracts.

“Banks aren’t lending money, but the government is still entering into contracts,” he said.

“The government, I believe, is the biggest consumer in the country.  Whether they had a stimulus package or not, they’re spending billions if not trillions to buy products and services.”

While legal work on burgeoning real estate deals has waned, litigation has picked up considerably on deals gone wrong, said Michael L. Miller, a new partner and real estate attorney at Lowther Johnson in Springfield.

Instead of prepping documents for pending real estate developments, Miller said he’s called in when general contractors can’t pay subcontractors, developers can’t pay general contractors and banks get stuck with foreclosed properties.

He’s also getting more calls than ever from landlord clients across Greene County. If a tenant loses her job and can’t pay rent, how long should the landlord tarry before booting the tenant from the premises?

“Landlords are doing what they can to help their tenants,” Miller said. “Getting some rent is better than getting no rent and having the apartment empty.

“It’s a fine line to walk in how landlords can help their tenants without coming under scrutiny from their banks.”

Miller also has seen an increase in smaller contractors eager to break into public construction for the first time, to see if the work can maintain their businesses until commercial construction picks up. Miller advises these contractors on how to get bonded and submit bids for city and county construction projects.

“The government may be one of the few entities to stimulate work for these kinds of businesses,” he said.

“We’re trying to confirm where the money is and where clients can get paid.”