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Law Firms Negotiate With Landlords Over Leases

RE3

All businesses have been affected by the COVID-19 pandemic in some way. Some have had to be flexible with their services (such as takeout or curbside delivery) so they could continue to make money. Some have had to be flexible with their workforce (such as offering remote work). Others have had to shut down entirely.

Because the shelter-in-place mandate forced courts to shut down, law firms were left with little business. Not much can be done when there are no judges to hear cases. Courts were open for emergency situations only, which meant that most cases have been delayed.

This lack of business has hurt law firms. When there is little money coming in, it’s hard to pay a law firm’s two biggest expenses – personnel and office space. To deal with the personnel issue, many law firms reduced their workforce and eliminated summer internships.

Law firms are still trying to figure out how to pay for the office space. Many are negotiating payment with their landlords, with varying degrees of success. They want to avoid commercial real estate disputes, but at the same time, they are struggling financially. Lawyers need to use their negotiating skills outside of the courtroom and look for ways to save money.

When parties cannot resolve their differences, though, it’s time for the courts to get involved. This is the case for one law firm, who has been sued for not paying its lease in April and May. The firm is being sued for more than $3.7 million, plus interest and late fees.

The firm allegedly invoked a rent abatement provision in its lease. The provision was meant to be used in a situation where the firm is unable to use the space for its intended purpose. It seems as though a global pandemic would fall under this category, but it would depend on the language of the contract.

In any case, it’s rare that such a case would go all the way to trial. Such a process would be more costly than the owed rent, so it’s the best interest of both parties to come to a settlement outside of court. Law firms actually have the upper hand in this situation because if the landlord kicks them out, they gain nothing. They get no money – just empty space that will be hard to rent out.

While landlords and mortgage companies have largely been very flexible with tenants and homeowners, this can differ when it comes to commercial leases. The degree of flexibility depends on factors such as the financial health of both the landlord and the law firm, the terms of the lease and the future outlook of the leased space. 

Seek Legal Help

Real estate is a huge expense for all companies, including law firms. With the economy still on the downswing, people need as much financial help as they can get.

Whether you’re dealing with lease payment or some other real estate issue, Fort Lauderdale real estate lawyer Edward J. Jennings, P.A. can provide effective representation. Fill out the online form or call 954-764-4330 to schedule a consultation.

Resource:

law.com/americanlawyer/2020/06/10/in-an-uncertain-era-for-law-firm-real-estate-landlords-face-new-pressures-on-rent/

https://www.ejj-law.com/ethics-concerning-privacy-vs-public-safety-in-real-estate/

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