CONTROLLING
THE IDIOT IN THE DEAL
By
Donald W. Hudspeth Esq.
When I was a young man starting in business I read the book
“Winning
Through Intimidation” by Robert J. Ringer. The book, though
denounced by some at the time, was not really about intimidating people, but of
not being intimidated by people, for
example, doctors, lawyers and high powered professionals.
The part of
the book most interesting to me was its description of three kinds of persons
that you may meet in a business transaction (or any dealings really).
The first type, described by Mr. Springer as a “Number 1 #” is the guy or gal who says, in effect,” “I am in this deal for the money – the more for me, the merrier – that’s how I roll.” While often criticized or condemned for being “self-interested” or “greedy,” the #1’s are actually the most honest and forthright because their cards are on the table.
The second type, the “Number 2” says “I’m not after X,” but really is after X, so may be untrustworthy and cut you out of, or gyp you, in the deal if he or she can. This is the proverbial “snake,” treacherous and slippery when wet. Captain Jack Sparrow (Johnny Depp) in the movie, “Pirates of the Caribbean” said that “you can trust the dishonest man to be dishonest.” So, in a way the treacherous man is less formidable than you might expect because he is more predictable. You know he is going to try to cheat you so you build triggers and fail safe mechanisms into the deal. The secret is spotting his type early on.
The third type, the “Number 3,” appears to mean it when he or she originally says “I’m not interested in X,” or “It’s not about the money for me,” but, eventually due to (i) incompetence, or (ii) weakness of character, makes a last minute grab and screws up the deal.
The
problem with working with types #2 or #3 is that you can become the victim. As
the reputed Mafia saying goes: “If you don’t know who the patsy in the deal is,
it’s you.” So, when I am doing a deal or
engaging in an important transaction I attempt to identify the kind of person I
am dealing with as #1, #2 or #3.
Perhaps,
counter-intuitively to you, I fear #3’s the most. Let me give you an example of
how #3’s can get in the way or just screw up the deal for everyone. A firm
recently negotiated a lease for prime penthouse-suite type office
space. Although landlord and tenant brokers were involved,
the space never hit the market; the tenant was taking over the space “AS IS,”
from the existing tenant.
The
existing tenant was a nationally famous and well respected attorney (who
unfortunately does not practice business law).
So, after the new tenant and the landlord – who is heavily influenced or
under the control of the building lender – entered into a letter of intent, the
existing tenant said he wanted to take the rolling file shelving
(because he paid for and installed it) even though the shelves are on tracks
and are probably a fixture. Next, the tenant said that he wanted the front
reception desk (built in) and a “Star
Trek”
type secretarial desk (also built in with no carpet underneath) and the old
tenant also wanted to take a built in dishwasher. All
three were there when the tenant moved in.
Obviously,
when the new tenant signed the letter of intent to take the space “AS IS” it
was not agreeing to replace $10,000 worth of rolling shelving (present value
maybe $500 because of obsolete technology) or to refurbish the area left by
their removal, nor was it contracting to lay carpet – which would never match
or to buy a built in dishwasher.
The
landlord, with the lender’s approval, has agreed to cover the shelving; that
is, to buy the shelving or provide a finished room where the shelving was, but
the landlord – to our knowledge - does not even know the about the issues on
the front desk, “Star
Trek”
desk, or the dishwasher.
This all leads
to my point about “controlling the idiot.” If you do not control the idiot, you
become the idiot. The idiot can make fools of us all. What may happen here is
that the tenant does its thing and removes the built in items. The new tenant could
then declare breach or ask the landlord to cover the cost to fix. The landlord
has shown good faith, so let’s assume the landlord will want to do the
latter. However, the landlord is subject
to the lender, which has been very tight-fisted in the transaction, so far. That
could put a million dollar lease deal at risk: lost lease, lost commission, bad will, etc. All this.…because no one is controlling the
idiot.
Law Offices of
Donald W. Hudspeth, P.C. | By Donald
W. Hudspeth, ESQ.
Business Law |
Commercial Litigation | International Law
www.AZBUSLAW.com | 866-696-2033 | TheFirm@azbuslaw.com
For
more information about business law topics and the Hudspeth Law Firm please
visit our website at azbuslaw.com or call us at 602-265-7997.
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