In wireless consulting for cell site landlords, most of the time qualified, responsible lawyers will offer you their services on an fair hourly fee or a fixed fee project basis.
However, some cell lease advisors who style themselves as “consultants” will push you to have them do the work for a share of future revenues from your cell site.
Be very wary of those pay-me-by-a-rent-share offers. It can be a awful (and awfully expensive) business mistake.
While revenue sharing may be initially attractive because it avoids the need for you to pay fees while your matter is progressing, over the long term, your cost savings can evaporate … and then some!
A simple example: You are told that your wireless lease matter will likely cost you between $8,000 and $10,000 in legal fees coming out of your pocket. In the alternative, the advisor will perform the work at no charge now, but keeping a 25% share of your wireless site rental income for 5 years. In this scenario, let’s say your starting monthly rent is $2,000, increasing by 3% each year.
On the one hand, you’re facing a legal fees cost of $8,000 and $10,000, and that fee will usually be deductible from your income taxes as a business expense regardless of whether you actually enter into a lease (check with your CPA or tax professional). On the other hand—the rent-share example— you’ll end up paying a staggering $31,855 for the very same work performed by a lease advisor who has really become your defacto business partner.
There’s a widely-known wireless consultant that has found a way to “triple-dip” into its client’s pocket for fees. Here’s a excerpt from one of their proposals (taken from a government public record):
If you decide to engage [the Consultant] to assist you in maximizing the value of your Lease, [the Consultant] will provide such services based upon an hourly rate of $250.00 per hour with a maximum cap of twenty (20) hours per lease for such services that could he charged to you (“Capped Hourly Fee”).
Furthermore if [the Consultant], upon reconciling the Lease, whereby you receive recovery of any past due amounts owed [the consultant] would receive twenty-five percent (25%) of any such recovered amount (“Recovery Percentage Fee”).
Finally, [the Consultant] upon finalization of any proposed amendment to current lease or replacement thereof shall receive a one-time fee equal to the amount of any increase in the Client’s monthly current rent (Client to provide evidence of current monthly rent) multiplied by twenty-five (25) (“One Time Fee'”).
In the example just above, the client is paying the consultant three times for the same work! First, the client is paying the consultant an hourly fee. Second, the client is paying the consultant a separate fee of 25% of whatever the consultant recovers in back rent. Third, and as icing on the consultant’s cake, the client is paying the consultant yet another fee of 25-times the monthly rent increase.
Most of the time, rent share arrangements IN LIEU of hourly or fixed fees simply make no realistic business sense…except for the lease advisor who may make out like a bandit. Virtually all of the time rent share arrangements ON TOP of hourly or fixed fees are unconscionable…except for the lease advisor who may make out like much more of a bandit.
Remember that legal fees and expenses are fully negotiable. So is the real amount you pay for an important legal service.
It’s your money. Don’t pay an unnecessarily fee, or pay it three times over.