The 360 Lease Review
In our recent Black Box Series of posts, we exposed what the legal process of commercial leasing is: a balancing act along two intersecting axes of conflict that ultimately results in a finalized lease. Understanding what goes on in the black box is just the beginning when it comes to creating a world-class process for getting leasing transactions done as quickly and cost-effectively as possible, a goal all of our clients share.
Unfortunately most real estate professionals don’t have a methodology for measuring the legal leasing process. Although they all want it done with greater speed and less cost, given the reality that “if you don’t measure it, you can't manage it,” most commercial landlords and tenants find it frustratingly difficult to improve.
360 Lease Review
Going beyond our role as leasing attorneys, we saw an opportunity to partner with our clients by tackling this issue. The result is our 360 Lease Review, an out-of-the-box methodology for quantitatively (and qualitatively) evaluating the legal process of commercial leasing before and after every leasing transaction, so the process can be meaningfully and continuously improved.
Here’s a look at how we developed the 360 Lease Review.
A Tool For Continuous Improvement
Essentially the 360 Lease Review is a business improvement tool designed to be consistently applied to the business of commercial leasing in order to continuously improve it.
In developing the 360 Lease Review, the first step was untangling the legal leasing process. We broke the process open into a series of conflicting and interlocking factors that we described in our recent Black Box Series.
Next we identified the raw materials that go into the black box, including such things as the letter of intent, the form lease, and ongoing client support, and we developed a methodology for scoring each ingredient and how it impacts each performance factor.
For example, a letter of intent that accurately covers 90% of the issues that are important to the transaction will positively impact black box performance in three very important ways: first, it will improve performance on the desire to get it all vs need to accommodate axis; second, it will accelerate the process, contributing to a high urgency mandate score; and third, it will facilitate a greater level of accuracy in the final document, contributing to a high precision insurance score.
The resulting 360 Lease Review for each lease is a series of these and other scores that are weighted in terms of importance, as well as a narrative evaluation, that roll up into a final score that corresponds to how quick and cost-effective the legal leasing process was for that lease.
The scores from each lease review are also quantitative data points that can be compared from lease to lease to identify positive and negative trends, thus enabling real estate professionals to diagnose what parts of the transformation process need to be fixed and which raw materials need to be enhanced in order to consistently improve their legal leasing process until it is second to none.
Stay tuned for a deeper dive into each of these steps.