Friday, February 2, 2018

Bankers and Real Estate Agents

Sometime in the middle of the night a few days ago I lay awake mumbling to myself, "I hate that stuff!"  I was referring to the practice of law. It isn't normal that similar vitriol percolates but clearly some irksome memory or reflection suddenly haunted me the way I was at times tormented as a law student when plagued by a nightmare that I had not prepared for an examination. While there were obviously "moments" when the job had a bit of glamour, the practice of law was mostly a tedious, laborious affair.  Like the Universe it was ultimately personal and private. There were no possible short cuts; either you read the stuff or you didn't. As inclined as some may be to suggest that the practice of law requires special skills and knowledge, the foremost reality is that it was just like any other undertaking in that its success arose from diligence and assiduity - that is, persistent and meticulous attention to what one was doing.  Occasionally the occupation was elevated by the insinuation of clever argument and analysis but those sparkling moments were infrequent.  Instead the more common discoveries were nothing more exalted than turning over stones, a metaphor equally apt to an attentive gardener (and probably just as riveting for a third-party observer).  If one were seeking glory from one's clients for the cleverness of one's performance, forget it!  At best the client might appreciate the evident toll of getting one's hands dirty and working long hours.  But the inscrutable drama was pretty much a lost cause.  Law was like any trade - just plain work.

The reason I hated it was that so many people who were associated with the practice of law - people who in my case were primarily bankers and real estate agents - were toying with a delicate mechanism that they liberally wielded about as though it were an instrument of their own purpose and advantage.  Seldom did bankers and real estate agents consider law as a stand-alone dynamic which had clinical strictures and rigidity.  I am not saying that I viewed law as removed from the mundane reality of people's private lives; rather that the written word and what people said in the process of commercial negotiations meant what was written and what was said, not what people might have hoped for or anticipated in retrospect.  It is natural that reflection can adduce new perspectives on initial positions but that is what the practice of law is meant to determine. Calling in lawyers after the fact is therefore sometimes a bracing experience.  The reason lawyers are caught in the web of interpretation is that, once the discrepancy is disclosed, the lawyers get blamed if they do not act upon it. In the most succinct analysis, "The buck stops here!"

Being the last resort in the determination of legalities is more than occasion for casual consideration. The assessment of priorities and substance has far-reaching consequences for everyone who has a stake in the mission. What contaminated the involvement of bankers and real estate agents is that they - like the butler in a grand home - answer the front door but too often assume a mistaken importance and influence as a result. This is a bad combination when the servant purports to brandish the authority of the master.  Banks compound the dilemma by investing their staff with putative dominion over the assets of their investors and then girding these minions with in-house regulations which are - granted mostly unwittingly - touted as "above the law" as though their own corporate definition and anatomization is paramount.  It is one thing to play ball by the rules of the house but it is quite another to commandeer the application of constitutionally paramount legislation. For the most part the bankers impose their requirements for convenience only; but when push comes to shove the contest is one between Head Office and the Customer.  The influence of the common law or legislation will inevitably take a back seat to whatever lubricates the commercial advantage of the bank.  It would for example constitute a hopeless task to insist upon the arcane details of a trust (about which the bank makes no bones it wants to know nothing) or the performance to the letter of joint obligation (unless it favours the bank to collect what it considers its due).  In fairness I have to acknowledge that bankers regularly cast themselves in the position of gatekeepers who assume they are thereby bound (and entitled) to manipulate law to fulfill what they believe is prudent under the circumstances (such as prohibiting a hostile common-law partner from unilaterally draining a joint bank account).  While there is an element of practicality to such behaviour it indisputably puts bankers in a far more elevated position than I believe was intended; and certainly affords grounds for malfeasance.

Broadly speaking this result is not unnatural in any mammoth organization which of necessity is immune to accommodation of peculiarities and refinement generally.  Considering the value which banks deliver to most customers - both personal and business - it is difficult to obtain a sympathetic audience for anyone whose complaint falls through the cracks from time to time. But while I accept that deference, the conflict arises because the banks refuse to debate an issue on its merits and prefer to dismiss it as contrary to "policy".  Without getting into a pointless discussion of that taradiddle, the more important thrust of the observation is that banks end by brandishing power which paradoxically derives from the strength which they've usurped from their own clients.  Once we've sold our soul to the devil it is no longer our own!  Remember Polonius' counsel to his hotheaded son Laertes, "Neither a borrower nor a lender be" (Hamlet Act 1, Scene 3)? The seeming ungenerous advice squarely addresses the conflict between domestic thrift and an ostentatious lifestyle.  Yet giving advice is one thing; mandating behaviour is another.

Real estate agents have similarly appropriated to themselves the vicarious distinction of their client's wealth. As so much of real estate is founded upon a slavish relationship with bankers (who effectively provide the means to the end for all parties) it is no surprise that clients willingly capitulate to the persuasion of agents who promise to promote their interests. To expedite the competing self-interest of the agent, attempts have been made to defeat the vital enquiry of prudent purchasers and buyers by foisting upon them meaningless disclosure statements which are capable of far more toxicity and refinement than any normal human being can imagine.  In this context - as in the banking context - the question becomes one of "Cover your derrière".  Though the process expedites the commercial objectives (at least temporarily) it flies in the face of the less popular investigative work that should be conducted by lawyers and their colleagues like inspectors, bylaw officers, environmentalists, etc.  Once again the objective to bypass the encumbrance of law and regulation trumps the less sexy blight of meaningful legal enquiry - a preoccupation which is not only time consuming but expensive.

The answer to many of the academic legal issues faced by bankers and real estate agents is now title insurance, the salve for clients.  In a nutshell, insurance doesn't address a problem but rather buries it. The decision to insure or not turns upon the risk of exposure which becomes incrementally less likely with the effluxion of time.  I have no objection to this method of problem-solving.  It certainly was no insult to the quality of my legal insight.  It was just further protection.  What however remains is the primary objective of insurance companies; namely, to avoid paying compensation.  Too often the public is shocked to discover that motivation. But a mere cursory examination of the underwriting scheme quickly discloses that "Cover your derrière" is once again the driving ethos.  It was for that reason that in spite of the initial and immediate attraction of title insurance I always sought to encourage as well traditional due diligence since knowing and understanding the problem is frequently better than ignoring and burying it.

The upshot is that as a lawyer I had the choice of being an investigator or an underwriter.  There is a small overlap of the two but for the most part they are very different postures.  And it was as tempting to me as a businessman to opt for the same conclusion as the bankers and real estate agents. But it did nothing to promote my affection for the practice of law.  Instead my infatuation was with technology and the underlying binary nature of the electronic world - admittedly a small compliment to the interests and character of the client.  I am glad I got out before being consumed by that facility!

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