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Bouncing back from the bust

November 2, 2016
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Indiana residential building permits fell from 29,069 in 2006 to 12,555 in 2009. By 2015, permits reached 18,483. Work is shown at Anson in Whitestown. (IBJ file photo)

The Great Recession reduced Russell Brown’s workload to mostly filing zoning petitions for cellphone towers and caused the attorney to start taking family law cases to keep revenue coming into his firm.

He was not alone. Other real estate lawyers saw their schedules become empty when the housing market imploded in 2008. Some, like Brown, shifted to doing other kinds of work while others left the real estate practice altogether.

Now, attorneys say the number of projects has increased over the past year and they were able to return to real estate, land use and zoning law full time. Brown, of Clark Quinn Moses Scott & Grahn LLP, is happy to be helping clients again with zoning matters, but he is also concerned about the future of his practice area.

The 39-year-old wonders if enough younger lawyers are practicing real estate law to help handle the workload in coming years and replace older attorneys who are beginning to retire. In addition, he has noticed a little more competition for clients coming from nonlawyers such as engineers, land planners and architects who are handling zoning petitions.

Brown Brown

Indiana real estate lawyers note the need to bring new faces into the practice area, but they differ on how to accomplish that. Some advocate for actively recruiting new attorneys while others believe as the market recovers and job opportunities open, the replacements will come.

Lawyers currently in the practice area say they are handling new projects and have the ability to take on more as the rebound continues. However, the work has changed. They are no longer helping to develop 100-acre-plus plots of farmland into housing subdivisions as they did before the crash. Rather, they are more often working on multi-family housing developments and infill projects that entail redeveloping and reusing spaces in urban areas.

Barnes & Thornburg partner Joseph Calderon has shifted back to development projects after having to take receivership work and help with distressed properties during the depth of the recession in 2009, 2010 and 2011. He described the market as now being in a good cycle.

Calderon Calderon

“If it sustains itself at this level, I would probably see the profession requiring new faces to get involved and do the work,” Calderon said. “I don’t know if we’re there yet.”

Still, to attract the next generation will take some salesmanship, he said. Real estate law may not be as exciting as handling legal matters for tech companies or entrepreneurs so attorneys such as Calderon and Brown will have to reach out to younger lawyers and get them interested in property development.

Firms that do not bring in new attorneys could ultimately lose business because, as Calderon and others said, real estate is a relationship business. Developers and lenders are hiring younger professionals, and when they hire legal counsel to help get a project approved, those younger professionals will likely choose to work with lawyers their age rather than firms with only older attorneys.

New lawyers, changing practice

Brown got a taste for zoning law when he was appointed to the city of Lawrence Board of Zoning Appeals in 2004. He held the position until he graduated from Indiana University Robert H. McKinney School of Law in 2007 and enjoyed seeing projects come out of the ground that benefitted his community. Even though he started practicing just as the brakes were being slammed on the economy, he was undeterred.

“I picked the worst time to be a real estate lawyer,” Brown said. “But I wanted to do zoning law.”

Tuohy Tuohy

Although new lawyers coming into the practice area may not have the background Brown has, Brian Tuohy, partner at Doninger Tuohy & Bailey LLP, is confident replacements will arrive. As real estate picks up steam, he expects younger attorneys will naturally be drawn to the field just as young lawyers were pulled into doing foreclosure work a couple of years ago.

He noted he has already encountered “very capable young lawyers starting to appear before zoning boards who seem to be well-prepared and well-trained.”

Wooden & McLaughlin LLP partner Misha Rabinowitch said while the billing rates for real estate land use law may not be as high as some other practice areas, he believes the interesting and sophisticated work will attract new lawyers just like it continues to engage him.

He enjoys his area of practice because he said it is “relationship-driven with clients, with neighbors and with city planners and provides an opportunity to meet interesting people and see developments from the initial stages.”

At Applegate Fifer Pulliam LLC in Jeffersonville, attorney Alan Applegate said his firm tries to organically grow its real estate practice by hiring and mentoring associates. But he would like the growing process to start while students are still working on their J.D. Law schools, he said, could tell students that they can stay busy and build a good career representing commercial, industrial and residential developers.

Real estate law requires a particular skill set that includes hands-on experience as well as mentoring, in part, because the processes for approval vary across municipalities. It is also an area of the law where attorneys say clients demand attorneys be able to handle multiple aspects of a single project.

“I think there’s not really a need for a lawyer that dabbles in real estate. I think there is a need for lawyers that specialize in real estate,” Applegate said, explaining today real estate attorneys must be able to cover the entire process from acquisition to environmental review through zoning approval and into construction.

“If an attorney is only doing one piece of a project,” he continued, “then that attorney is not really capable of truly advising clients because all the pieces are interconnected.”

Nonlawyers claim turf

Bellamy Bellamy

Jeffrey Bellamy of Thrasher Buschmann & Voelkel P.C. describes himself as a courthouse real estate attorney because he focuses on litigation, but he believes his practice has become more comprehensive as he has matured as a lawyer.

Real estate attorneys in today’s market, he said, have to diversify their practices to serve clients. Land-use lawyers cannot simply handle variances, plats and zoning matters without having the ability to also cover declarations, covenants and permits. Moreover, lawyers need to take a broad view of a project and foresee problems so clients do not waste money filing a petition that will ultimately be rejected.

Yet, just as real estate lawyers are needing to be more knowledgeable, attorneys are encountering more nonlawyers appearing before zoning boards presenting petitions on behalf of clients. Although lawyers are not required to make these presentations, the matter can move to court if the ruling of the board is appealed. Once there, the petitioner must have a complete evidentiary record or he or she might not be able to raise all the arguments and issues to the judge.

Solo practitioner David Dearing counters the nonlawyers by explaining to potential clients the advantages to using an attorney and the harm that can result without legal help. Still, he has seen more landowners choosing other professionals and thinks Indiana should prevent nonlawyers from handling real estate legal matters.

“I think it’s practicing law without a license,” he said, explaining attorneys are subject to professional conduct rules, ethics and disciplinary actions. “These protections are not available if (a developer or landowner) uses someone who is not an attorney. I don’t think it should be allowed.”•

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