FINfacts Newsletter XVII-3

By Gary M. Tenzer

“When things go wrong in commercial real estate transactions, litigation follows”. According to GSP Senior Director and Co-Founding Principal; Gary Tenzer, ”In the liquidity and deleveraging crisis that we are facing today, economic distress will inexorably lead to disputes, often leading to litigation”.

According to Tenzer, most litigators hired to try a real estate case are typically generalists, experts in issues of law and trial procedure, but not necessarily expert on the technical aspects of commercial real estate; such as financing, valuation and other issues which often underlie real estate disputes. An attorney’s understanding of the nuances of these issues, and how they can be used for strategic advantage, can strongly affect the outcome of a case.

A litigator trying a case centered on the financial structure of a complex real estate transaction must assemble the right team of real estate experts. The following are three critical steps to consider when hiring a litigation consultant or expert witness.

1. Build the team early: A skillful litigation consultant can have a major impact on the outcome of a case by objectively analyzing the relative strengths and weaknesses of the issues to be litigated. These issues may not be well understood by the attorney or even the principals. It is important for litigators to recruit consultants to their team early in the process – perhaps before the lawsuit to properly position the case for trial.
2. Choose the consultant carefully: In forming an opinion, the litigation consultant may review documents and other evidence, read testimony of witnesses or perform financial analysis review market studies, etc. While the consultant’s professional credentials and technical competence are important, it is paramount that the consultant has experience working with litigators and understands the litigation process. Often, the consultant is designated by counsel to serve as an expert witness; and will be asked to testify at depositions and at the trial, assuming the case does not settle.
3. Court testimony experience is essential: At trial, the expert witness becomes a teacher who explains complex technical and business issues to the judge and jury. Strong communication skills are paramount and the consultant’s ability to explain matters in layman’s terms is critical. An effective expert witness must possess strong presentation and communication skills, display confidence and be able to respond quickly to tough cross-examination at trial with confidence.

The widening downturn in the real estate industry will undoubtedly lead to more legal disputes and, unfortunately, bankruptcy proceedings. Whether representing the plaintiff, defendant, debtor or creditor, the litigator must assemble the right team of consultants to bolster the chances of a successful representation.

*Mr. Tenzer has served as a litigation consultant and/or expert witness in over 300 real estate litigation matters. Presently, Mr. Tenzer is serving as a litigation consultant and expert witness in several large bankruptcies as well as other civil matters.