Hiring a Lawyer to Negotiate Your Commercial Lease

When you’re looking to hire a lawyer, you should ask the attorney about their experience, availability, and fees.

By , Attorney · Santa Clara University School of Law
Updated by Amanda Hayes, Attorney · University of North Carolina School of Law

Once you've found a few good prospects to review your business's lease you should meet with each lawyer. At these meetings, you can size them up and make an informed decision about who you want to represent you. If you announce your intentions in advance, many attorneys will be willing to meet with you briefly at no charge.

When you meet, explain why you're there: You're about to begin negotiations on a commercial lease and want the lawyer to review the landlord's draft and possibly accompany you to negotiation sessions. To help you decide whether to engage this attorney, you'll need answers to the following questions:

What Is a Commercial Lease Lawyer?

A commercial lease lawyer is an attorney who drafts, reviews, and negotiates a commercial lease on behalf of a landlord or business tenant. Depending on when you engage their services, they can have a minimal role—such as reviewing your lease—or they can be present throughout the process.

As a tenant, you probably won't have your attorney draft the lease agreement. The landlord usually already has a lease agreement, probably drafted by their own attorney, prepared for you. Your attorney can:

  • review your lease
  • advise you on which lease terms are in your best interests
  • request changes to the lease, and
  • negotiate the terms with the landlord.

They can also advise you on which terms are common for commercial leases, which terms you shouldn't accept, and which terms are okay to compromise on.

A good commercial lease attorney should know how to bargain for the terms you really want by conceding to terms you're not attached to. They can send a letter to your prospective landlord with requested changes to the proposed lease and have conversations back and forth with them until both sides are satisfied with the end result. You can also use a commercial lease attorney to help you audit your current lease, amend your lease, or terminate it.

When Should You Hire a Commercial Lease Lawyer?

The typical business tenant tries to get by with a minimum of legal assistance, bringing in a lawyer after the lease has been pretty well negotiated and the landlord has prepared a lease to be signed. At this point, many commitments have been made already—some perhaps unwisely. While a lawyer can help by trying to reopen the important issues, it's an inefficient way to proceed.

Bringing in your lawyer before you wrestle with the landlord over concessions and expenses gives you the benefit of professional expertise from the start. You should consider having your lawyer with you at the start especially if you've never signed a commercial lease, you're considering a long-term or expensive lease, you're facing complicated issues, or you're up against a stubborn or sophisticated landlord.

In particular, you can have your lawyer do any or all of the following:

  • Sit with you at all bargaining sessions and serve as your spokesperson.
  • Draft a letter of intent or rewrite the one the landlord prepares.
  • Make sure your legal interests are protected in negotiations over a build-out of new space or major renovation of existing space.

Naturally, you'll be concerned about the added cost of involving your lawyer early on. To understand the real cost of the lawyer's work, however, you need to consider what's at stake. Let's say you're leasing 3,000 square feet of space at $20 per square foot per year—and you're committing yourself to a five-year tenancy with two options to renew for five years each. Well, if you stay only for the basic five-year term, you'll be paying $300,000 in rent over the course of the lease, plus property taxes, insurance, and maintenance charges if you have a triple net lease. And over a 15-year period, you'll be closing in on $1 million in rent and related charges.

Now suppose an experienced small business lawyer in your city charges $200 an hour and you use six hours of the lawyer's time to help you negotiate the lease from the get-go. Your cost will be $1,200 (and it's normally tax deductible as a business expense). That's very little compared with the expense of the lease over time. Even for a cash-strapped business, hiring a lawyer can be a worthwhile investment if it leads to years of peaceful coexistence with your landlord and money-saving terms in the lease.

What Should You Expect At Your First Appointment?

Lawyers are quite independent in the way they run their businesses. The experience will vary from office to office—and even among lawyers in the same office.

Unlike physicians, for example, who have insurance companies and the government monitoring virtually every move, lawyers are free from heavy-handed regulation. As a result, many choose to avoid bureaucratic paperwork, which they view as a time-consuming nuisance.

Old-fashioned as it might seem, the simple handshake is still widely regarded as an acceptable basis for establishing an attorney-client relationship. But not everyone is so casual. At the other end of the spectrum, where the interaction between you and your lawyer is more formal, you could find yourself handed multiple pieces of paper, such as:

  • A client information form. This questionnaire asks for details on your business, your finances, and who (if anyone) referred you to the lawyer's office.
  • A brochure about the law practice. This leaflet usually describes the law firm's practice areas and the education and experience of the firm's attorneys.
  • A retention letter or contract. This letter should detail the lawyer's billing practices and describe the extent of the work the attorney will do for you. In some states, lawyers are required to present you with a retention letter or contract.

If the lawyer doesn't hand you a sheet of paper laying out their fees and services, you should ask for one before you leave. It's best to have written documentation that you can refer back to so that you and your lawyer stay on the same page.

Does the Lawyer Have Experience with Commercial Leases?

While most attorneys who work frequently with small businesses will be experienced with business leases and tenancies, there might be some exceptions to the general rule. It pays to inquire specifically about the lawyer's knowledge of commercial leases.

Ask them how many leases they've drafted in the past and how many negotiations they've been a part of. Find out if they've worked specifically on commercial gross and net leases.

Will the Lawyer Personally Represent You?

Sometimes a lawyer will accept your case but most of the actual work will be completed by another associate or paralegal. If the attorney won't personally perform the work, will the matter be given to an associate? If so, how much supervision, if any, will there be?

Obviously, you don't want to engage a highly qualified lawyer, only to find your lease passed off to a brand-new associate who's just learning the ropes. Find out at the start how actively involved the attorney will be in your case. The answer can help you narrow down your list of prospects.

Has the Lawyer Represented Landlords Before?

Chances are that an attorney who represents both commercial landlords and small business tenants has the knowledge to do a good job for you. On the other hand, you might want to steer clear of lawyers who represent landlords almost exclusively. They might be less willing to go to the mat for you if they worry that their reputation in the landlords' community could suffer.

Will the Lawyer Be Accessible?

Probably the most common complaint against attorneys is that they:

  • don't return phone calls
  • don't respond to faxes or email messages, and
  • aren't available to their clients when needed.

If every time you have a question there's a delay of several days before you can talk to your lawyer, you'll lose precious time, not to mention sleep. So be sure to discuss how fast you can expect to have phone calls returned and how you can contact the lawyer in an emergency.

How Much Will the Lawyer Charge for Their Services?

If your attorney assures you that you'll be well taken care of but tells you very little about the specifics of how you'll pay for the legal service, ask for some information about fees during your first visit. Most lawyers who advise small business clients about a lease use one of the following two fee arrangements.

Paying a Lawyer By the Hour

Paying your lawyer by the hour is the most common method. In most parts of the United States, you can get competent legal services for your small business for $150 to $250 an hour.

Most attorneys bill in increments, specifically in:

  • 6-minute
  • 10-minute, or
  • 15-minute increments.

Understand that these are the smallest chunks of time that the lawyer will bill for, even if a given task actually took less time. For example, a lawyer who bills in six-minute increments will charge you for the full six minutes even though a particular phone call lasted only two.

If you're concerned about runaway hourly costs, you can ask the lawyer to agree to a "cap," or an upper billing amount. When the cap has been reached (or is near), the billing will stop and the lawyer will stop working—until you authorize more work.

You might have to ask for a cap if you run into an unusual snag that requires more hours of legal services than either of you anticipated. For example, if a complex environmental issue pops up during negotiations—involving, for instance, asbestos in your building or an underground storage tank—your lawyer might reasonably expect payment over and above the cap.

If your lawyer will be delegating some work to a less experienced associate, paralegal, or secretary, the delegated work should be billed at a lower hourly rate. Your fee arrangement should specify the rates for associates and paralegals if they'll be in the picture.

Paying a Lawyer a Flat Fee

Sometimes a lawyer will quote you a flat fee for a specific job—for example, the lawyer might offer to review your commercial lease for $450. In a flat fee agreement, you pay the same amount regardless of how much time the lawyer spends on the particular job.

When an attorney is highly recommended by others and the flat fee is moderate, this can be a great arrangement for you. But if the assignment is open-ended—for example, it might involve extensive negotiations or a lot of redrafting—a lawyer won't agree to work for a fixed amount. Merely reviewing a lease is one thing, but negotiating and drafting one is quite another.

To secure a flat fee, dangle the prospect of more work ahead. Explain to the lawyer that your business is small with a limited budget. Especially if you're just starting out, mention that you'll have other legal needs in the future if your business succeeds. The possibility of more lucrative work in the future could persuade the lawyer to offer an attractive fee arrangement to you now.

Paying the Lawyer's Costs

Lawyers might charge you for more than just the value of their services. Typically, lawyers charge clients for costs that aren't included in the lawyer's normal office overhead.

These costs can be for:

  • travel
  • the hiring of experts or other consultants
  • time spent on online legal research databases, and
  • photocopying.

Be sure to find out whether you'll be charged for itemized costs and, if so, what they are and how much you'll pay.

Hiring a Lawyer

You should get all the answers to your questions in writing, if possible. It's particularly important to get the attorneys' fees in writing to avoid any later disagreements or misunderstandings. Once you've had your meetings and taken some time to review your options, you can make your final choice. The cheapest lawyer or the attorney that's been in business the longest isn't always the best. Make sure you consider all the above points before making your decision.

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