January 31, 2024

In today’s story, I will tell you about a time in the not-so-distant past when I represented a commercial tenant in Manhattan, a yoga studio, which had fallen on hard times during the Pandemic, and just wanted out of its lease.* The building that the yoga studio was in was self-managed by the owner, who also had in-house counsel.

I have been doing the same thing for so many years that, if perchance I do not know my opposing counsel (I usually do), I can tell from the predicate notice in a case (the rent demand or the notice to cure lease default, etc.) with whom I am dealing. This predicate notice gave me the feeling that I was dealing with someone who was, shall we say, not enthusiastic about the work. It was a bit sloppy. There was a holdover proceeding filed against the yoga studio. I submitted an answer to the Court. I did not hear from opposing counsel, although I reached out. That was strange. Was the owner so entrenched in their position against my client that they would not even return a call?

On the first court appearance, I had a much clearer picture of what I was dealing with – when no lawyer walked in. Rather, the owner sent a representative from the company, a non-lawyer. Technically, I could have pushed for the case to be dismissed. A corporation is not allowed to appear in court without counsel. But what would that get me? That would just waste my client’s money on legal fees because the owner would, of course, simply bring the case again. Moreover, it would sour whatever chance I had of productive and expedited communication with my adversary. Therefore, I asked the judge to adjourn the matter, because the parties were discussing settlement. The representative of the owner in attendance that day was grateful for my courtesy. We spoke in the hallway. I proposed a deal. It seemed like maybe we could work it out. And then I had what turned out to be a great idea.

Sensing that this owner was not interested in paying outside counsel, and also having just observed that their in-house counsel was too busy to even show up in court, I volunteered to draft the agreement. Typically, the landlord’s lawyer drafts the settlement agreement. Landlords have the power in the commercial context, so they do the drafting so that all of their wants and needs are sure to make it into the first draft of a settlement agreement. When I suggested that I draft the settlement agreement, the owner’s representative was a tad warry. But I told her, “Look, I work for as many commercial landlords as I do commercial tenants. I know exactly what you need in this agreement to protect yourselves. I will present you with a first draft of this agreement that you will not only be comfortable with, but you will use it as a template for all your settlements going forward.” The representative and in-house counsel agreed to give my draft a shot. In-house counsel, who I never did meet, had only a few changes to my draft and the deal got done. The yoga studio got a big rent waiver, and they got out of the lease.

The lesson is that sometimes the tenant’s lawyer can get farther if they agree to draft the settlement agreement. This is not going to work if the opposing counsel is from a big firm that lives to charge their client as much as humanly possible. A firm like that will never relinquish the billing opportunity. But if the landlord’s lawyer is in-house or from a small busy boutique, they might let you do it! Does it really change anything? A settlement document is a settlement document. It may not change anything about the language of the agreement, but it could improve the deal’s terms. Here, I think it was my willingness to draft the agreement that resulted in my tenant-client getting a few extra free months. It can pay to be willing to do the heavy lifting.

Respectfully submitted,

Michelle Itkowitz

* Some details changed to protect the innocent.