Recently, I’ve listened to this comment from several people who handle distressed commercial real estate loans at banks: “Well, we thought that we would avoid being personally named in a law suit on one of these bad loans. But no. We’re starting to be sued. And the suit names me . . . personally.”
I’ve ventured over to the “personal” side several times in prior blogs – most notably my tips on oral communication.
I know, I know – “it is just business.” But for some of us, being personally named in a lawsuit “feels personal.” It is personal. It’s your name on the piece of paper.
From here to eternity, Google your name. There’s the law suit. Great.
So here are a few thoughts for you to reflect on if (and when) you’re named in a lawsuit; when your “favorite” workout morphs into litigation:
- It Stinks On Purpose: admit it, there could be a vindictive element to the lawsuit. Mean people are mean. Bad is bad. It stinks.
- Legal Fees Drive It: yes, one motive, cause or reason could be that there is a lawyer involved, who sees an opportunity to make some money; and things aren’t real “busy” in the law firms right now
- Legal Fees Solve it: yes, the legal fees alone might be the basis for a settlement
- You’re A Partner But Didn’t Know It: even though (i) your loan did not give you the opportunity to share in profits of the project, (ii) your loan documents expressly stated that you were NOT a partner in the success of the project, (iii) the sponsor couldn’t build the project without debt (only the Germans own real estate without debt); you really are a partner – the “silent” partner. (Oops, someone just forgot to include you in the partner meetings.) And since all of the other partners have taken their “hit” on the deal, now it is your turn.
- Irreconcilable Differences: reasonable people can disagree, and they get divorces all the time. This just is an ugly divorce.
- Never Say Die: your borrower (or sponsor – ok, your partner) simply doesn’t believe in the after life, and won’t accept the “death” of the project (the dream)
- This is America: Any one can sue any one. Other countries focus on building things. We focus on our “rights” and we love to use them. (And our courts seem to bend over backwards in NOT throwing out a lawsuit.)
- Creative People Are So Creative: Bright people go to law school, and these people can be imaginative, and very creative. So, your innocent comment, or silence (or whatever) during a conversation months ago, is now cast as the “smoking gun” pointing to your inner Darth Vader. Ahah! You’ve been discovered.
- Honey, I"m Really Not A Banker: this gets confusing. Were you really the banker in the deal? After all the questions and statements that you’ll hear during the litigation, you won’t know "what" to tell your loved ones "what" you do for a living
- Let’s Do This: it is what it is – and it is reality. So, get a good lawyer, be prepared and get back to work. (No: you don’t need to put on a happy face.)
If you have you own favorite perspective, please comment below.