The letter of intent is executed. The details of the transaction are negotiated. It's time to hand this deal over to outside legal counsel. The real estate broker representing the hospital has assured you he will stay on top of the process to insure things keep moving along. The sixty-page lease that just landed in your in-basket is someone else's responsibility. The transaction is in good hands and you can relax.

A few days later your attorney calls and informs you there are a multitude of business decisions that must be made. Is your attorney shirking his responsibilities? No! Though a lease is a legal document it is much, much more. A lease defines the business relationship between the landlord and the tenant, and the negotiation of a lease is chock full of business decisions which will impact your organization's operations for years to come.

So who is the best person to make these decisions? The first requirement is someone who understands the specifics of your industry and organization. The second and most important requirement is someone with a contractual or fiduciary responsibility to that organization. Let's exam each of the alternatives.

REAL ESTATE ATTORNEY

A lawyer's overarching mission is to protect the interests of his or her clients to the fullest extent of the law. Your attorney will review drafts of the lease to:

• Provide consistency with the business terms contained in the letter of intent;
• Identify areas of potential risk and liability, and take steps to minimize both; and 
• Insure existing rights under the law are not diminished.

If your real estate attorney has previously represented your institution, he will have some familiarity with its positions on common business points, such as assignment and subletting or insurance provisions. However, a good many of the business terms of a lease are deal specific and require more familiarity with operational considerations and objectives. In addition, your real estate attorney will be looking for guidance on which of the identified risks are of concern to the client, and how vigorously to try and modify the language governing a particular area of risk.

REAL ESTATE BROKER

A broker's primary role at this stage is to provide information on current market standards, and, if possible, recent lease terms for other tenants at the same property or with the same landlord. A broker's willingness or ability to provide this information will be influenced by his relationship with the property owner and standards of confidentiality. If a broker has an exclusive listing for all the vacant space at a property or is repeatedly the listing agent for the owner's properties, he or she will be fairly single minded in promoting the best interests of the landlord. Even if the broker's primary relationship is with the tenant's organization, the landlord, not the tenant, pays his commission. So though an attorney is paid directly by his client, and his responsibility, therefore, lies unequivocally with the client, a real estate broker has a more complicated relationship with his client. Typically the relationship between a broker and tenant lacks any written documentation, and is frequently not even bound by a confidentiality agreement.   This fact, coupled with a somewhat superficial knowledge of the specifics of the tenant's business, means a real estate broker should not have primary responsibility for negotiating the business terms of a lease. Rather, the broker should be viewed as a resource.

DIRECTOR OF FACILITIES AND/OR GENERAL COUNSEL

Both of these individuals will know the institution's business goals and operational considerations. Their ability to fully address the business issues of the lease will depend in large part on how much previous experience they have with commercial real estate transactions.

FEE FOR SERVICE REAL ESTATE ADVISER

Retaining an outside real estate adviser is an increasingly common approach for organizations lacking the in-house expertise to properly address a commercial real estate transaction. Like outside legal counsel, a fee for service real estate adviser has a clearly documented responsibility to the client. Selecting the correct adviser for the project is key to the success of this approach. Selection considerations should include:

a)  What is the adviser's experience with healthcare transactions?

b)  Does the adviser have other business activities and/or clients, such as real estate brokerage, development or property management services, which could potentially compromise his ability to represent the institutions best interests?

WHAT'S THE BEST APPROACH FOR MY ORGANIZATION?

The answer is specific to the situation. It will depend on the size and complexity of the potential transaction, the level of in-house expertise and the personnel's workload, and finally the knowledge and relationship of the outside real estate counsel to the organization.