By Mikhail Stoliarov|Staff Writer
Mr. Bruce DePaola, Esq., is a partner in the Real Estate practice of Paul Hastings, where he represents real estate developers, commercial landlords, real estate investment trusts, and institutional lenders involved in some of the most sophisticated and innovative real estate transactions occurring today. Mr. DePaola generously offered to discuss his experience and perspective on pursuing a career in the area of real estate development law.
Mikhail Stoliarov: So, the first question is, what is real estate development law and how does it relate to commercial law?
Bruce DePaola: Real estate development law is in large part the law where the product is real estate that is to be developed. So, particularly the areas that I work in, it’s commercial law with all the same aspects you’d have in an M&A transaction or an asset transaction, but the product involved, the asset involved, happens to be real estate and that real estate is going to be changed, or developed, or modified.
Mikhail Stoliarov: Got it. How did you choose this area of law to practice?
Bruce DePaola: I always knew I wanted to do some kind of transactional law, and I didn’t love litigation. I realized that transactional law, more so than litigation, had a daily aspect to it that I thought was the daily aspect of litigation. I always enjoyed negotiating, having a battle of wits, and realized that with litigation, those aspects only came up in a very rare circumstance when you finally got to a trial or deposition. In litigation, there is a lot more research, writing long briefs, and a lot of time that I would consider “down time” between the action. In real estate law, particularly real estate development law, every day there’s negotiation. Every day it’s a debate, the testing of your will, your cognitive ability, and your ability to think on your feet which is exciting and why I still enjoy the job I do 25 years later.
Mikhail Stoliarov: Yeah, that sounds exciting. Okay, so can you briefly describe your professional networking during law school?
Bruce DePaola: Yeah. So, there wasn’t a lot of formal networking. I started working at a small shop in Garden City my second year of law school just to earn some money, and that’s where I began to understand what transactional law was about. It was a real estate shop with three guys that had worked at bigger firms in New York City. The head guy was a St. John’s alum. They were sort of semi-retired at age 60 and moved closer to their homes in Garden City to work. I met them through a career posting through St. John’s. I went to go talk to them and started out working a couple hours a week, which moved into about 20 hours a week. And then I left school and I think it was one of the worst years to find a job in the last 30; 1991 was a terrible year. I asked if I could work full-time there, and they said, “Sure.” So, that’s what I did.
So, there wasn’t really a lot of formal networking for me. I’d sort of gone through the on-campus interviewing- with a partial success I’ll call it-because I got a job for the summer, and then halfway through the summer they announced the seven of the 21 of us were going to be getting an offer. So, that was a little disconcerting and disturbing, but it is what it is. I’m one of the seven.
Mikhail Stoliarov: I see. So, besides that, did you have any other experience outside of real estate development?
Bruce DePaola: Yeah. After my first year of law school I worked for a personal injury attorney up in Orange County, and I actually drove every day from Rockland to St. John’s. I used to leave at like 5:30 in the morning, beat the traffic, and get all my work done in the parking lot in my car, waiting for my classmates to arrive.
It was really fascinating. It was the attorney, me, a paralegal and an assistant. The opportunities were incredible. He had me writing motions, he had me working with the court. But, as interesting as that was, I think I realized it’s not what I wanted to do. I didn’t want to do negligence work, and I didn’t want to do litigation. As much as it all was fascinating — because it was all so new — I knew I wouldn’t want to be doing that 20 years down the road. So, that’s sort of my first year.
Second year, I worked at a firm in Connecticut called Cummings & Lockwood. I think it’s still around, still well respected. That’s where the seven out of 21 of us got a job offer. I met some very good people there. I went through a rotation. I was in real estate, I was in corporate, and I was in employment. And that summer, I thought that one of my interests was I wanted to be a labor lawyer, and it was very good to have that experience. I thought I was going be the next great champion of labor unions. You know, because my father was an electrician in the labor union, and I saw what kind of benefit that was. I realized that what I thought labor law was, similar to what I thought litigation was, had very little to do with what the actual practice was.
Mikhail Stoliarov: I see. Got it.
Mikhail Stoliarov: Now I want to fast forward a little bit to your current firm. So can you describe why you value the law firm of which you are a part of?
Bruce DePaola: Yeah. So, I worked three other places before that. So like I mentioned, I worked first in Garden City for three years for that sort of small shop. And I worked at a small real estate boutique shop called Hawthorne, Rebutler & Gross that did a lot of work for Rose Associates which was a big condo conversion group. I did a lot of work with Chase and City Bank community development lending, so, you know, blighted area. They would put low cost financing out, and not require guarantees so that developers would have an incentive to build affordable housing back in the ’90s, early ’00s.
I moved on from there for economic reasons, my first job I earned very little, second job there I earned not much more. I moved to what I’ll call a mid-sized firm, at the time called Parker Chapin which became Champions and Guild Trust and is now Troutman Sanders. I enjoyed the work there, met some really good folks. I got great experience there which built on the experience I had at the real estate boutique, but I understood that it was really a support group to the corporate department.
Having been in the circles of the real estate group I got to know a good number of the folks at what then was Battle Fowler. It has now become Paul Hastings. I really came to appreciate how collegial they were, how professional they were, how skilled they were. They all seemed to enjoy what they were doing, and really enjoyed working with each other. I really wanted to be a part of that.
I got to know a bunch of them and I said “Well I’d love to work with you guys” and they said “We’d love to have you, but, we’re a mid-sized firm, we’re not paying at the rate you’re at now so we can’t, you can come here but it will be a salary decrease.” Which wasn’t particularly interesting at the time, and then when Paul Hastings came calling from Los Angeles and wanted to snap up Battle Fowler and make that their New York office, then they went to market rates and I said, “Let’s do it.” I came over and a lot of things I saw from the outside were consistent with what I found on the inside. It’s incredibly collegial, it’s an incredibly skilled and talented group of real estate folks who cover for each other, who share clients, who share matter credit, enjoy what we’re doing, and really support each other. Amazingly, the people I got to know in the first years, I still work with. They’re all still here, 20 years later.
There’s a reason that so many of us have been together for 20 or 30 years. There have been a lot of opportunities just since I’ve been there to add to practice groups from other big firms in the real estate area, we’ve dabbled with CMBS groups, we’ve dabbled with sort of more traditional mortgage lending groups, we’ve dabbled with REIT and securities fund work people. Every time we got those opportunities, we said, “What is impacting the culture of our department? Is it a positive or a negative?” Each time that we decided it would be a negative, we said no.
Mikhail Stoliarov: I see.
Bruce DePaola: So we really value the culture we have, we really value the relationships we have with each other, we’re just fortunate that we’ve all been talented and driven enough that we’ve managed to secure and maintain a handful of the biggest real estate developers in New York and the country.
Mikhail Stoliarov: Yeah, that sounds great. It sounds like you have a great professional environment for growth and development, that’s wonderful.
Bruce DePaola: Yeah, I do, and I think even for the younger folks. I always tell the younger folks that we start with, we don’t have any set rules -so there’s no work that’s a first year work, or a second year work, or a third year work. That’s the good and the bad. The good is, if you show talented judgment and ability, you’ll get to do some really interesting stuff really quickly; the bad is that if you don’t you’re going to be stuck doing the beginning stuff forever.
Mikhail Stoliarov: Yeah, that’s a great, that’s great. Okay I wanted to ask you what skills do you find helpful in being a successful real estate development attorney?
Bruce DePaola: Since we represent some of the, the most aggressive and I’d say the most successful (successful in part because they are aggressive) clients who take big risks, the most important skill that we need to have, is the courage to say, “hey whoever, this is not a good decision.”
Mikhail Stoliarov: Right.
Bruce DePaola: I know the developers see the dollar signs, I know they see the potential to make this amount of money, but they have to consider specific risks, they have to consider that the market is at a saturation point, it’s considered the market is probably near the end of a very successful, long prosperous run, and it’s not the time to make big, big investments and big gambles.
They also say the lawyers shouldn’t be telling us this, lawyers should execute, but as hard as it is to swallow that sort of bitter medicine, we’ve saved our clients from a lot of very bad decisions. And a lot of times they get so excited about the prospect that they’re willing to ignore a lot of very obvious potential pitfalls and it’s important that we have the courage to tell them about those pitfalls. We understand it’s still the client’s decision, but, they have to seriously consider these factors; what can happen six months, two years, five years, ten years down the road.
Mikhail Stoliarov: Right, I mean it should be a great value to the clients, at least they’re aware of the risks, you know?
Bruce DePaola: That’s right, we don’t make the final decision, but we try and lead them to the right decision by giving them the unvarnished truth about what they’re getting themselves into. Plenty of times I’ve had developer clients says “I Understand, Bruce; we’re doing it anyway.” A lot of those products have been incredibly successful. So there’s a reason that I’m an attorney, I’m risk adverse, and developers tend to be much less adverse to risk.
Mikhail Stoliarov: I think that’s fair. Do you handle both litigation and the transaction side of the real estate development law?
Bruce DePaola: No, not at all, I literally know nothing about litigation, I’ve been to a courtroom only as a witness.
Mikhail Stoliarov: Okay.
Bruce DePaola: In my first job I did do a lot of mortgage foreclosure, in my mind mortgage foreclosures are really more of a structured settlement of a real estate dispute through the courts. I’ve never really been involved in litigation other than as a witness or as a consultant from the business side, for some of our clients.
It’s an interesting thing always, when you’ve worked the transaction and been the transactional lawyer. We’re all human at heart, and we all want to believe we did the best job possible, and when the documents get parsed through the litigation folks, trying to make a case out of something, we often discover that some mistakes got made or things could have been done better.
Mikhail Stoliarov: Right.
Bruce DePaola: A lot of times our clients will not use the same firm for the litigation that they use for the transaction because they’re worried about law firms trying to cover for themselves.
Mikhail Stoliarov: Right.
Bruce DePaola: I don’t get involved in litigation, I don’t write motions, I don’t do any appearance.
Mikhail Stoliarov: I see.
Bruce DePaola: My view is of the facts and the whole. I would present certain things very differently than the litigators, and in a way that is more consistent with how our clients think about things. A lot of clients don’t have the time to read a 100 page brief.
A lot of times they’re going to look to me to review the affidavits and (1) see if it is consistent with my recollection and (2) if I think it presents things in the same sort of fashion and the tenor that they would present it. I end up reading more litigation documents than I would like, but it’s almost as a consultant on a business side rather than as a litigator.
Mikhail Stoliarov: I see. This kind of maybe connects in some way to the previous questions in the interview, do you interact with attorneys from other fields of commercial law when you service your clients? Perhaps if you ever deal with some litigation or maybe just other experts in other fields that you work with?
Bruce DePaola: Yeah, I ask other departments when we’re negotiating parts of the document that we don’t normally touch. There’s a reason that we’re happy they’re there. We don’t have to deal with the indemnity provisions, we don’t have to deal with choice and law provisions, we don’t have to deal with liability limitation issues.
A lot of times we have pre litigations. So an issue arises, there’s a dispute, a debate, and you go back to the document. It would be nice if it said exactly what we’d like it to say and it’s unequivocal, but it often doesn’t. So I try and get at least one opinion from a litigator without them knowing that it was my work drafting this document, and I say give me your honest, unrestricted view of which has a better side of the argument.
But that’s more on an ad hoc, one off basis, when there’s a dispute. But on a daily basis I deal with the tax folks at Paul Hastings, every transaction we work on has tax implications; I know little about that. I always try and get our guys to look at that for us. We often have some complex REIT structure or we’ve got a fund being created, so we have a whole fund group at Paul Hastings that deals with us. Then all the Blue Sky compliance work, and that’s the private offering compliance with us, get that team involved with that.
We have employment issues, particularly doing our hotel transactions, which I do a bunch of. There’s some very interesting employee and collective bargaining issues. Whenever we’re doing something other than plain vanilla we’ve done a bunch of times before, I always want someone to help with that.
So on any given transaction, particularly if it’s a hotel or mixed use, I’ve got tax people working on it, I’ve got maybe a litigation consult, got a fund practice group working on it, REIT/tax people working on it, and I’ve got employment people working on it.
Mikhail Stoliarov: Wow. That’s a few professionals on it.
Bruce DePaola: Yeah, and you add in also the fact that most of the time, at least two thirds of my practice is outside of New York, I need local counsel to really advise on the conveyancing and do local counsel opinions. It often requires you to be the manager, the person pulling the strings for a lot of different people and make sure everybody’s going in the right direction and answering their questions in the right way.
Mikhail Stoliarov: Right. Almost like a contract where you have to navigate all of the subs?
Bruce DePaola: Absolutely.
Mikhail Stoliarov: Okay, I’ll just conclude by asking if there are any other recommendations you may have for students who are seeking career in real estate development law?
Bruce DePaola: Obviously if you can, the one path that is most obvious is through on campus interviewing, you’ve got to call back the firm and you say, “I want to do real estate and you get involved with that, right?”
That’s the most obvious thing. If on campus interviewing doesn’t work out and you still want to do real estate, there’s a lot of firms in New York City that are smaller and outside firms, which may be of a fairly decent size, that do the same kind of work. They do the same kind of work for the same or similar clients. Maybe they don’t do the same size transactions that I would do at Paul Hastings, or maybe it’s not the most unique, maybe it’s a little more of a routine matter, but you’re still learning the same things.
If the goal is to be a real estate professional at a large New York State law firm, other than sort of the OCI path, the path that I think works best, at least I’m on, because we’ll overlook grades and schools at bit, is a lateral hire. If somebody goes through say Rivkin Radler out in Long Island and works there for two years and is really working real estate, not just pretending to work in real estate, that person is very attractive to us.
They might have to start over here, their first year when they come to us, but they’re very attractive because they have the same knowledge base that our third years have. And similarly, the path I took was, starting in Garden City, going to the boutique in Manhattan, going to a mid-level shop, and then going to Battle Fowlers as it became Paul Hastings.
The school becomes much less important the further you’re out, it really becomes a matter of, let’s see your deals sheet. What transactions have you worked on? Okay, those are similar transactions to this place. What was your role in those transactions? Were you just going to get coffee and doing assignments of sub-contractor agreements, or were you actually reviewing the loan agreements, were you reviewing the joint venture agreements, were you reviewing the purchase and sales agreements. If you are, then you probably have exactly the kind of experience we’re looking for. Then it’s just a matter of three or four three-minute interviews. If you can you prove that the experience you had gave you the innate confidence and the perspective that you can convince someone you are up to the task.
Mikhail Stoliarov: Yeah. Alright, I think this is great practical advice and thank you for that.
Bruce DePaola: Absolutely, no problem at all.
Mikhail Stoliarov: Thank you very much for taking the time to answer the questions.
Bruce DePaola: My pleasure, have a good one.