by Tom Leddo
I never tell lawyer jokes.
While I would not describe myself as politically correct and I actually do find many lawyer jokes quite funny, my experience with lawyers in our industry is simply too valuable to make light of them. Not to mention the fact that I may find the butt of one of my jokes opposing me in a courtroom one day and I don’t want them to have any additional motivation to defeat me.
I hold lawyers in high regard because early in my career two lawyers from the Washington DC area that worked in wireless industry had a big influence on me – Caroline Kahl and David Lafuria. At the time, Caroline was the Vice President and General Counsel for Columbia Spectrum Management, the company that allowed me to break into the wireless industry after the PCS auction in 1995. Caroline taught me the significance of reading EVERY WORD of the microwave relocation contracts I was negotiating to clear the 1900MHz spectrum for the new auction winners. She was certainly a good enough attorney that I could have gotten away with letting her worry about the legal details after I negotiated the business terms, but she taught me that by fully understanding every word of the contract I became a much better negotiator. A couple of years later, David, who was and still is a Partner at Lukas, Nace, Gutierrez and Sachs helped me put together some ironclad buy-sell agreements and leases for towers that easily stood the test of time and an unexpected legal challenge. I remember reviewing some year-end financials in the late 1990’s and realizing how much we had paid David’s firm. I did not hesitate to acknowledge the amount we paid was far less than how much his strong agreements saved us in the end.
In early 2005, Md7 was transitioning out of start-up mode with our first big opportunity to negotiate some lease amendments and I put together the initial version of the Md7 training manual for the first thirteen Lease Consultants (LCs) we hired. While much of that training manual has evolved over time, one piece is basically the same as I wrote in January of 2005 – what we call at Md7 “Four Cornering a Lease”.
Technically speaking, Black’s Law Dictionary defines Four Corners as follows.
“The face of a written instrument. That which is contained on the face of a deed (without any aid from the knowledge of the circumstances under which it is made) is said to be within its four corners, because every deed Is still supposed to be written on one entire skin, and so to have but four corners. To look at the four corners of an instrument is to examine the whole of it, so as to construe it as a whole, without reference to any one part more than another.”
In the Md7 training manual, we say that the Four Corners Rule means
“In contract law, the four corners rule is the doctrine that the meaning of a document is to be gathered from the entire (or all four corners of the) document. This includes all Exhibits, Addendums, Attachments, as well as all amendments.”
We do not want our Md7 LCs to only limit their understanding of a given lease to the contents of a single document. We also want each one to understand that they must read and understand the lease in its entirety including exhibits, and amendments. NO EXCEPTIONS. Caroline Kahl taught me how to appreciate every word of a microwave relocation agreement, and I hope that I am passing along this appreciation to each LC at Md7.
But let’s be realistic. Md7 processes literally hundreds of lease agreements and amendments each month. It is not possible for every LC to read every word of every lease of each deal they negotiate. Over the last ten years, Md7 has refined a handful of techniques that we systemically implement to allow each lease consultant to negotiate in volume without sacrificing the contractual quality of each deal.
- Negotiate in general terms, then iron-out the details. While every LC has access to electronic copies of all relevant documents at his or her finger tips, you can’t ask someone to “please hold” while you read the entire lease agreement so you can discuss a clients’ desire to modify the site. Thus we train our LCs work in general terms first, e.e. explain to the landlord what we are trying to do in broad terms, thereby seeking to obtain an initial buy-in, then follow-up a later date (after having thoroughly familiarized themselves with the existing documents) to negotiate the final details.
- Train and retrain on the key clauses in lease agreements. Most lease negotiations do not require haggling over every word. Md7 trains each LC multiple times on the key paragraphs such as term, rent, rent escalations (an often ignored clause that often comes back to bite our clients down the road), use rights, premises definitions, upgrade rights and other key clauses that can save our clients tens-of-thousands (often even hundreds-of-thousands) of dollars over the life of a single lease.
- Rigorous use templates. At the beginning of each new project Md7 works with a client to develop a lease template (as many in our industry do), but we actually load this document into LiveTrack (our proprietary software system) and lock it down so that only our legal team acting with client approval can make significant changes to the template. We then rigorously train and retrain our LCs and LPs (Lease Processors) on that specific template for the life of a given project. We also train our team to negotiate very hard to keep all deals “within the box” of that template so that we limit the amount of time needed by our counsel (and our clients’ counsel) to review and approve deals that fall outside of the template and pre-approved business parameters.
- Rigorous oversight by our business and legal team. – Once a deal with Landlord is reached, it goes through an Md7 internal quality check process. All modifications to program template documents are reviewed by a lease processing manager to confirm such variations are strictly necessary. The LC must provide justification for any variations. Additionally, any additional language requested by a Landlord is reviewed by our legal department to ensure there is no other alternative available to satisfy the Landlord’s stated concerns. To the extent that non-standard language is required to close the deal, Md7 will work with the carrier’s counsel to obtain the necessary legal approvals. Throughout this process, wherever approval of non-standard language or business terms are required, Md7 documents the negotiations so that the carrier has complete visibility into the negotiation process.
- Use incentives to motivate LCs to keep deals “in-the-box” – One of the keys to Md7’s success over the last ten years has been incentive based pay. Our LCs are financially rewarded for keeping a deal within preapproved business parameters and all terms on the preapproved template document. You’d be surprised how well this works to limit unnecessarily high rent and lease terms that can significantly impact an operator long after the new or upgraded site is deployed.
- Be smart – LCs at Md7 are well trained, and they know it. They are trained on the lease documents, the equipment being installed at a site, the industry, cell site economics and our software to track each of their deals. Md7 LCs do not read from scripts. They have been trained to master the key elements of their job and are comfortable negotiating the key clauses and business terms for each specific project they are assigned. They are confident in their ability because they have been recruited and trained specifically for their position.
At the conclusion of every training session on “Four Cornering a Lease” I ask our LCs and LPs-in-training to summarize the two-day training in one phrase. As you can imagine, initially I get a variety of answers such as:
- “Read every word, every time!”
- “Don’t try to BS your way through a negotiation”
- “Take your time because each deal is important”
- “If you don’t understand something in a lease, ask for help”
Typically, after three or four guesses, one of the trainees gives me the answer I am trying to draw out of them:
“Respect the Lease.”
That’s right… “Respect the Lease.” Each LC and LP at Md7 is trained to give each cell site lease agreement or amendment that he or she negotiates and/or processes its due respect to ensure a consistent, quality document that our clients can rely on for the long-term.
This training has been a standard practice at Md7 since February 2005 and I don’t see it changing anytime soon.