An Interview with
R. Donahue Peebles
about Client Expectations
R. Donahue Peebles is the Chief Executive of The Peebles Corporation (“TPC”), a commercial real estate investment and development company with particular expertise in public-private partnerships (“P3”). TPC has over $4 billion in active development projects. Peebles founded TPC as a 23-year-old in 1983 and has more than 35 years of experience procuring legal services and utilizing the services of attorneys in business transactions and legal disputes.
Peebles provides insight into the role of attorneys in his book, The Peebles Principles: Tales and Tactics from an Entrepreneur’s Life of Winning Deals, Succeeding in Business, and Creating a Fortune from Scratch . Peebles clearly expects more from his attorneys than the mere drafting of legal documents. He expects his attorneys to know the industry and understand which terms are reasonable and customary. Early in his career, he looked to attorneys to be shrewd negotiators, not only of legal terms, but also of business terms. He has used attorneys to engage third parties, such as lobbyists; to be a calming and strategic force when inevitable setbacks occur; and to provide introductions to local politicians and potential investors, as needed. In summary, this entrepreneur expects his attorney to be a critical part of his team as a business partner who contributes significantly to the overall outcome of winning deals and performing contracts.
Still, I wondered how satisfied Peebles was with his overall client experience with attorneys. Was he getting the level of service he wanted for a price he deemed palatable? Would he make greater use of legal firms and attorneys if we asked for more responsibility and demonstrated value? So, I asked him.
Shavon Jones: You do deals nationwide, but your lawyer may not be able to represent you when the deal is in a different state from where s/he is licensed or has an office. Would you prefer to use the same lawyer on every transaction or to rely on local counsel in each state?
R. Donahue Peebles: There are pros and cons to working with local counsel. A local attorney will be versed in the local market and know the lay of the land in a way that my primary outside counsel does not, and local counsel may have relationships that I can call upon during the course of the deal. But the tradeoff is that local counsel doesn’t know me very well and lacks institutional knowledge about my company and the way we like to do business. Therefore, I prefer for my primary attorney to take the lead and for him to bring in local resources where there is value in doing so.
SJ: As I indicated in the introductory paragraphs to this interview, when you discuss the role of lawyers in your book, you describe many activities that are not traditional legal services. How do you compensate lawyers for that value, or are attorneys providing those “extra” services as a loss leader? Are your current fee arrangements ideal, or would you like to see a different pricing model?
RDP: I do not consider the nontraditional services as “extra.” I try to always hire lawyers who offer a value add. More than just providing the specific legal services, my lawyers also act as business counselors. Without the value-add skills, it is difficult for lawyers, especially transactional attorneys, to distinguish themselves from their competitors. I compensate our lawyers in a variety of ways: hourly, hourly plus bonus, full contingency, or a blended rate plus bonus.
SJ: It appears that you work almost exclusively with attorneys from major, full-service law firms (“Big Law”). Legal boutiques are specialty firms staffed by former Big Law partners. They often have better pricing and more flexibility and risk tolerance than larger firms. How would a boutique real estate legal firm compete for your business?
RDP: Because of the complex nature of P3 projects, every party, including the government, usually is represented, at least partially, by large national or regional law firms. However, we often pair them with boutique and entrepreneurial firms. On many occasions, we use small and mid-sized firms, as they are generally much more engaged and knowledgeable on local business, governmental, and political matters. And, it’s important to note that firms do not provide legal services; lawyers provide them. As a result, I hire the lawyer, and the size of their firm is generally irrelevant.
SJ: Big Law is facing new competition from legal outsourcing companies such as Axiom, which now says it represents half of the Fortune 100 companies. If the price were right, would you consider outsourcing your legal work or bringing in an outsourced attorney, on a temporary basis, to handle a deal for you?
RDP: With entrepreneurs, I think traditional legal firms may have a built-in advantage. We’re more relationship-oriented than large public companies. Obviously, I will listen to anyone who says they have an innovative and cost-effective way to deliver legal services, but the new entrant could have an uphill battle because of entrenched relationships and my predisposition to hire the individual lawyer based upon their skillset and value add.
SJ: Lawyers are trying to keep clients like you and to figure out how to serve private companies of all sizes. Give me your reaction to the use of the following sales tools by lawyers. Is each tool acceptable, yes or no?
In-person solicitation where an attorney approaches you at your place of business or at a conference or community event and asks for your business.
Use of analytics to discover your needs then calling your office to pitch legal services.
Use of a paid professional salesperson to solicit and negotiate with you.
A lawyer having a third party recommend the lawyer’s services then paying the third party a referral fee if you become a client.
RDP: With the exception of the use of third-party sales agents, I find all of them acceptable. That doesn’t mean you are going to get a sale, but those are all acceptable lead generation tools for a lawyer to use. Listen, businesspeople, and most other consumers, deal with sales pitches on a regular basis. We understand that you are interested in making the best deal for yourself. We know how to evaluate whether your offering has value for us and how to negotiate for better terms.
In summary, upmarket entrepreneurial companies like TPC consider multiple factors in fulfilling their demand for legal services. Downmarket prospects are different. As you will discover through examples provided throughout the book, businesses with revenue under $10 million often view price as the sole criterion and prioritize price so much that they sometimes will forgo legal representation on significant undertakings such as mergers & acquisitions or expansion into new domestic or foreign markets because they do not want to pay the cost of an attorney with appropriate knowledge. Figuring out how to serve the downmarket and how to retain market share with upmarket clients, like TPC, is the legal industry’s great challenge of our time. The way that we will meet this challenge is with a systematic approach to sales.