TO LAWYER OR NOT TO LAWYER
This post contrasts the results obtained by a property owner who declined legal representation and negotiated his own deal versus other similarly situated owners on the same project who retained me.
I recently negotiated settlements for numerous property owners in a pipeline acquisition project. Now that the deals are complete, I can compare the results obtained by my clients to a particular owner who declined representation and made his own deal.
Each person owned agricultural property in the same county. The unrepresented owner accepted an offer characterized by the pipeline company as its final, take it or leave it deal, assuming that I could not provide him with any benefit. Given the size of the impacted parcel, the offer was for a substantial, six-figure amount.
My clients accepted my advice and waited. Some months later, when regulatory approval was more imminent, the pipeline company finally became serious and we negotiated deals. The negotiations focused on two things, the amount of compensation paid and the contractual terms contained in the easement being imposed upon the property. The contractual terms are very significant, particularly for farmers, because they encumber the land forever and the current and future owners of the property will never have a chance to renegotiate the offer. Negotiating the least onerous easement is particularly important for farmers, who have a higher likelihood of keeping property in their family for generations than owners of other types of property. This means that a farmer’s decision to accept bad contractual terms can come back to haunt his sons and daughters.
The consequences of agreeing to bad contractual terms are real, although the consequences may not be faced for years. The recent pipeline constructed by Wolverine Pipe Line Company is a prime example. Wolverine obtained easements decades ago to install a pipeline. That pipeline was built and Wolverine wanted to build a second line next to it. The form easement Wolverine originally sought to acquire allowed it to place multiple pipelines on the property but Wolverine was willing to remove that language from the easement when pressed by more prudent property owners. This meant that the current owners of the property whose predecessors were not prudent had new pipelines jammed onto their land without receiving compensation. The owners whose predecessors in title had more foresight received just compensation for the same construction.
In the agricultural example where I have knowledge of a deal accepted by an unrepresented owner who declined by representation, I negotiated a payout 150% larger than the amount he accepted, an amount that had been characterized as the pipeline company’s last and best offer. And while my clients paid an attorney fee for my services, their net recovery after deduction for the attorney fee was significantly more than what the pipeline company had characterized as its final offer.
Equally important, I negotiated significantly better terms for the easement that will benefit the property owners for generations. Two examples illustrate the benefits of these negotiations.
The easement that the unrepresented owner signed did not include language requiring the pipeline company to indemnify for any damage caused during the exercise of any rights conveyed by the easement. This means that the property owner has no automatic contractual entitlement to be compensated for the damages he sustains if the pipeline bursts, if contractors hired by the pipeline company damage drain tiles outside the easement, if trees outside the easement are cut, if crops outside the easement are destroyed, if construction debris is left on the property and damages farming equipment, etc. Assuming that the unrepresented owner can seek compensation at all, he must prove who caused the damage. This could be a complicated issue if the pipeline company and its contractors point fingers each other. On the other hand, my clients have an automatic right to be compensated by the pipeline company for damages they sustain that are beyond the exercise of the limited rights granted in the easement, even if the damage was the fault of a contractor and not the pipeline company itself.
The unrepresented owner also granted a much wider easement. The pipeline company requested temporary work space. In the easement signed by the unrepresented owner, the pipeline company can use that temporary work space both during the construction of the initial pipeline and for any future work. In essence, the pipeline company enjoys the permanent right to use the “temporary” work space. My clients signed easements that only allow use of the temporary work space during the initial construction of the pipeline. All future work must be constrained within the boundaries of the easement itself.
These are just two of the multiple examples of terms that I negotiated on behalf of my clients. In the end, my clients were paid more money in net than the unrepresented owner, even after deduction for attorney fees, while my clients granted easements that were less burdensome by giving the pipeline company fewer rights and more responsibilities.
This example demonstrates what I have been asserting for years. If you are confronted by an eminent domain issue, it is absolutely critical that you obtain legal representation from an experienced eminent domain specialist. This extends to everybody, including lawyers who own property. I have been hired by lawyers who specialize in other areas of the law and by real estate companies with their own in-house attorneys because those lawyers recognize that they do not know what they do not know. In fact, I have even represented two Judges who were in the path of a condemnation.
Please do not hesitate to contact me if you have been approached by a pipeline company. I also suggest that you review this blog post, which contains a summary of various issues that arise in pipeline takings.