Law Times

Law Times • November 2, 2015 Page 11 www.lawtimesnews.com The state of the market Brisk sales mean a lot of work amid downward pressure on fees BY YAMRI TADDESE Law Times ising home prices in the Greater Toronto Area have been the talk of the town for some time, and despite the recent downturn in the Canadian economy, the real estate market shows no signs of cooling down so far. But what has it all meant for real estate lawyers? "More work, obviously," says real estate lawyer Alan Silver- stein. "Because of higher volumes, there's more transactions for ev- erybody." But there have also been "spinoff consequences," accord- ing to Silverstein, who says the large volume of transactions has meant lenders have sometimes been unable to release funds as fast as they used to. As a result, buyers now have to wait longer to get their keys, he says. "With us being busy, the lend- ers are also very busy, so we're finding that more often than not, we're getting funds very late in the day, which means clients are getting their key much later in the day than they would like and sellers are getting their funds much later in the day or maybe even the next day because we're closing very, very late," says Sil- verstein. "You're dealing with a lender which is swamped or small and not capable of handling the vol- ume and we're getting the keys . . . at 3 o'clock the day of clos- ing. Trying to get it done in two hours is very tough," he adds. Those are issues lawyers are seeing right now, but Silverstein also worries about problems that may manifest themselves years from today. "I am concerned that there may be more hidden problems than normal because everybody is so busy," he says, noting the volume of work could lead to missing things or doing them sloppily. "If people are rushed . . . it doesn't always come out the way you want and things may have been overlooked," he adds. "Everybody's working so fast. . . . Sometimes, things fall through. A lot of the problems we won't know about for years until we see to what extent mistakes were made because we just didn't have time to be as thorough and cautious as we should have been." Those problems will not be insurmountable, according to Silverstein, but they'll involve non-billable-hour work by law- yers or clients who are stuck with extra fees to resolve prob- lems that were avoidable. Those problems include incomplete title searches or a mortgage that was never officially discharged, he notes. Woodbridge, Ont., real estate lawyer Tony Spagnuolo says his practice, too, is seeing volumi- nous transactions. The months of July and August have been "off the charts," he says, noting he's not worried about the amount of work coming at the risk of re- duced quality of services. "I'm still pretty diligent in my practice. Even though I'm busy, I hire more people; I don't cut cor- ners," he says. "What I'm finding is that there are a lot of newer lawyers coming out that are, instead of setting decent fees to complete transac- tions, they're actually lowering the fees, making it more difficult to do a thorough job." Despite the competition, Spagnuolo says he hasn't lowered his fees. "My fees are reasonable, but I don't lower my fees to meet the new competition because I don't think they offer the same kind of service that I do. There's no point taking on a file if you can't provide the type of service that you're supposed to provide." So is it a good time to be a real estate lawyer? "It's always been a tough time to be a real estate lawyer. Sure, we're doing more volume, but over the years, fees have not re- ally kept up with inf lation," says Silverstein. "We're busy but we're not making oodles of money." And then there are the "out- side threats to our existence," says Silverstein, referring to the Law Society of Upper Canada's consideration of alternative business structures. "Our biggest problem over the years has been survival because of the fact that we're working on high volumes and low margin, and the outside threats have been out there to destroy us and we've been able to ward them off," he says, noting he was glad to see the interim report by the law so- ciety's working group on alterna- tive business structures consider making exceptions for the real estate bar. The report noted several sub- missions during consultations on the issue "cautioned that if any level of non-licensee ownership is permitted, regulation would be required to address areas where non-licensee ownership could create high risks of conf lict of in- terest, such as in personal injury and real estate law." The working group was also sensitive to conf licts of interest that may arise as a result of other market participants owning a share of real estate law firms. "The Working Group recog- nizes that while there may be op- portunities to expand the range of services provided with legal services through ABSs, there may be circumstances where regulatory risk would necessitate restrictions," the report stated. "For example, a service that offers real estate brokerage, mortgage lending or title insur- ance and related legal services would create inherent conf licts with the interests of real estate clients." Another challenge for the bar, of course, is concern over the sus- tainability of the real estate mar- ket. Spagnuolo says that at this point, he sees no signs of a slow- down. But "when things change, they happen quickly," he notes. "What I'm worried about is if it does slow down and you have hired [more people], you can no longer afford to keep them. That's what concerns me," he says. On the bright side, Spagnuolo suggests the work is likely to shift rather than disappear even if the real estate market starts to cool down. "If the economy falls a little bit and people are scrambling, they're going to need to refinance. So real estate lawyers, instead of doing purchases and sales, will be doing more refinances." LT FOCUS WHERE GREAT BUSINESS LAW OPPORTUNITIES AWAIT Market your services I Find others I Build valuable connections Benefit from a wealth of business law development opportunities in the 2015/2016 Lexpert® CCCA/ACCJE Corporate Counsel Directory and Yearbook, 14 th edition. Order now and save 25% Special price $815 (promo code 64834) Regular price $1089 • LX-15CCCA Available on standing order Offer expires March 31, 2016 ORDER YOUR COPY TODAY! 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